Any technology company’s success is decided by two factors- one is its technical competence, or how extremely technically superior it is. And second, its financial feasibility – says Saket Modi, co-founder of Lucideus Tech, a startup working in the field of cyber security.
It is with this rationale in mind that Delhi-based Lucideus, which had earlier raised funding from Snapdeal’s former CPO Anand Chandrasekaran, roped in another angel investment round from Flipkart CFO, Sanjay Baweja in July. And just this week, it has raised an undisclosed amount of funding from Amit Choudhary, director of Motilal Oswal Private Equity Advisors Pvt. Ltd.
Because Saket is clear it’s not about the money but the mentorship. He explains, “Anand has come from a technical background and is guiding us in validating our platform. On the other side, financial feasibility of the product is validated the moment people like Sanjay Baweja or Amit Choudhary are on board.”
And he has good reason to be this clear. The firm, co-founded by Saket along with college mates Vidit Baxi and Rahul Tyagi in 2012 in the fourth year of their engineering college, now claims to have a PAT of nearly 25%. For a startup that’s merely four years old, it is a good number.
Says Saket, “I had been taking cyber security workshops for all the initial years of my college along with Vidit and Rahul. In the fourth year I was going to graduate, so I thought it made sense to start a company.”
A decision that has proven fruitful so far.
In 2012-13, the first year of its operation, Lucideus clocked revenues of $3,735(INR 2.5 Lakh). That increased to $37,359(INR 25 Lakh) in 2013-14, jumped to $179,324( INR 1.2 Cr) the following year, and has touched nearly $600K(INR 4 Cr) in 2015-16.
Roughly put, the firm is expecting to grow by another 200%-250% this financial year.
With stalwarts like Sanjay and Amit on board, this is is not a distant dream for team Lucideus. Says Amit, “Lucideus has shown significant growth in the last four years of their business. They have a strong business model and with the rise of digital in the country, cyber-security is going to play a key role. It has a clear vision and I am investing in that vision and hope to help Lucideus build a global business.”
Meanwhile, Sanjay Baweja is helping to create the financial model for Lucideus’ new offering. All the three angel investors have put in amounts in the range of $50K-$100K.
A Hundred Clients Across 11 Geographies
The IIT-Bombay incubated startup monitors, identifies and responds to cyber threats pertaining to an organisation’s technology system. Interestingly, it doesn’t have a product per se. It is a pure cyber security services company.
Or as Saket likes to say, “We are IT risk managers.”
Clients typically request it to scan a particular application or infrastructure. Depending on the man hours required, the services rendered are billed. As digital security is now a requirement in every sector, the firm is open to all sectors. But the largest demand for its services comes from the banking sector, ecommerce, insurance, and aviation companies as these sectors are very aware of threats. Saket points out that these sectors in particular chase cyber security more proactively as they are shifting their businesses to Internet models.
Lucideus currently works with about 100 clients, including National Payments Corporation of India (NPCI), Coca-Cola, Indigo Airlines, ICICI Bank, ecommerce startup ShopClues, among others. As of now, 20% of the clients are based outside India in cities such as Hong Kong, Amsterdam, and San Francisco.
Lucideus is also one of the 160 startups selected by the Government of India and has worked with various ministries including the Ministry of Corporate Affairs and Ministry of Defence. Additionally, Saket was a part of the Forbes’ 30 under 30 lists for India and Asia under the Technology domain.
With funding in place, the startup will use the proceeds to expand its team and business operations. In the coming year, the company plans to add 30-40 more clients across India, the US and Western Europe. Additionally, team strength is expected to grow from its present count of 70 to 100. However, Saket is more excited to be able to leverage the immense experience of the investors as the startup gears itself up towards raising Series A funding early next year and building stronger products.
“In the next 12-18 months, we will be focussing on developing the product and expanding globally. See for us, funding was not a challenge as we are cash flow positive and revenues have been growing year on year. The challenge for us is to capitalise on the inbound requests we are receiving from global clients in the Netherlands, UK, and the US, and develop an enterprise-wide risk management platform,” shares Saket.
The World And Cyber Security
As per a Marketsandmarkets research last year, the current global spend on cyber security is roughly $70 Bn and is expected to go to $170 Bn by 2020. With digitalisation becoming the need of the hour for every business, it is no wonder the need for cyber security is on the rise. Even in our own country, initiatives such as The Digital India will vastly bring more and more SMEs and businesses online. Consequently, there is a spike in the number of firms which require cyber security.
With increasing digitalisation, the awareness around cyber security has also increased. Last month, TAC Security Solutions, another cyber-security solutions provider raised an undisclosed amount of Pre-Series A funding from Vijay Kedia. In June this year, Kalaari Capital invested $500K in ParaBlu, a cloud security startup. Last year, Pune-based cyber security startup Uniken secured around $2 Mn in bridge funding from Exfinity Ventures.
But Saket is unfazed by the competition. He says,
I am not too worried about the competition. The pie is considerably big enough to get a considerably big slice of it and walk away happily.
Besides startups, Lucideus competes with big boys like E&Y, KPMG, Deloitte, and to a small extent with large system integrators like TCS and Infosys,” he adds.
However, according to Saket, what differentiates Lucideus from the crowd is the fact that it is a niche cyber security only company. With the top management of businesses realising that they require niche advice rather than a generalist opinion when it comes to cyber security, Lucideus believes it has a tremendous advantage as it only does cyber security.
And Saket believes that’s the precise reason most companies would choose Lucideus over other big brands. Hence the potential to grow is immense. He concludes, “To understand the potential of the cyber security market, one has to focus on the digital market. Digital is not a cost centre anymore. It is something which now really adds to the top line. Thus, with more and more businesses going digital for the first time, it is natural to feel unsafe. Hence the opportunity here is massive.”
The opportunity is so massive that Lucideus is pretty confident of clocking a revenue growth of 200%-250% this year. No wonder, with new mentors on board, funding in place, Saket is pretty gung-ho about the coming 12-18 months where major developments are expected on the product front. This is reason enough for digital businesses to feel more safe and secure.