Bugcrowd picks up $1.6m funding



blog There might not be enough capital floating around in Australia’s IT startup ecosystem for it to expand at the rate some would like, but some startups, at least, are not finding much difficulty with raising capital. Crowdsourced security startup Bugcrowd today revealed it had picked up $1.6 million in funding from Australian and US investors. The company’s media release:

Crowdsourced security startup Bugcrowd today announced it closed a $1.6 million seed round from top investors including Icon Venture Partners, Paladin Capital Group, Square Peg Capital and select angel investors. The capital will be used primarily to develop sales and marketing operations, expand the team, and support a fast-growing community of more than 3,000 security testers.

Bugcrowd offers outsourced ‘bug bounty’ security testing. Bug bounties provide unprecedented coverage of security issues, but they are expensive and resource-intensive to run — beyond the means of all but large corporates and tech giants, such as Google and Facebook.

Bugcrowd makes bug bounty programs accessible and affordable. Bugcrowd provides enterprise customers with a technology platform and a vetted community of security testers to allow them to outsource their bug bounty program. Bugcrowd customers are able to perform penetration testing on their web and mobile platforms using a burgeoning community of security researchers vetted by Bugcrowd and competing for cash ‘bounties’ as well as community status.

Bugcrowd was founded by Casey Ellis and Sergei Belakomen, long-time security researchers who met while Bugcrowd was incubated in Australia’s Startmate startup incubator program. The team also includes Startmate graduate Chris Raethke as VP, Engineering.

“We’re very excited to announce this funding round,” said Bugcrowd CEO Casey Ellis. “We greatly value the contribution made by each of our seed investors, not just for their capital but for the expertise and connections they bring.”

“Square Peg Capital is founded by Australian startup veterans with a portfolio of young, fast- growing startups including Canva, BiNU, Scriptrock and Ninja Blocks. Icon Venture Partners specializes in high-growth enterprise infrastructure investments, and brings us access to a broad network of enterprise IT experience through its Tech Partners Program. Paladin Capital Group has an unmatched record of success in commercialising early-stage investments in security technology for government and private enterprise, our key markets.”

“We’re pleased to be announcing our investment in Bugcrowd today,” said Lieutenant General (Ret.) Ken Minihan, a Managing Director at Paladin. “The company’s technology shows
considerable potential as a solution to the growing asymmetry between security threats and security testing resources. It allows corporates and governments to access a global, 24×7 resource of trusted security testers.”

Charles Beeler, General Partner of Icon Venture Partners, said he was impressed by the founders. “The Bugcrowd story is highly compelling. This is a strong team with a big vision, and I’m thoroughly enjoying working with them. Many industries are leveraging the scale of crowdsourcing business models and it makes sense to apply those same market mechanisms to the growing challenges of securing user and financial data online.”

David Liberman of Square Peg Capital said the firm was excited about the rapid customer growth Bugcrowd has already achieved. “Bugcrowd changed from an idea to a startup when Ellis and Belakomen were accepted into Startmate in January of this year. Following three months of incubation and customer discovery they spent a further three months in the Bay Area pitching to customers and recruiting security testers. In that short time, this small team has secured significant clients such as Coles Myer, Rabobank and Big Commerce. Their business is highly-scalable and we’ve seen great repeat business and a lot of word-of-mouth referral.”

Niki Scevak, Startmate founder, said Bugcrowd’s continuing success was a credit to the determination and creativity of the founders. “It can be tough for Australian startup founders to take innovative ideas to market. Bugcrowd has a strong team with a great work ethic and significant domain expertise. It was clear from early in our 2013 program that they’d be one of the stand-out successes.”

“The founders have attracted an A-list roster of international investors, and are proving you can launch a truly global company from Australia,” he said.

Image credit: Fernando Mengoni, royalty free