Defendify Pursues Estimated $300B Cybersecurity Market With SaaS Product

Andrew Rinaldi (left) and Rob Simopoulos, co-founders of cybersecurity startup Defendify (photo/Kevin Bennett)

Small business owners are notoriously harried, their attention pulled in a dozen different directions—one moment responding to a customer complaint or emailing that key vendor, the next crunching sales figures to determine if they can invest in that new piece of equipment. So, it’s no surprise most small business owners don’t spend the time or resources necessary to look into—let alone stand up—a formal cybersecurity program.

And the bad guys know this. Nearly 70% of small- and medium-sized businesses reported being the target of a cyberattack, whether a phishing scam or ransomware attack, with 58% experiencing a data breach, in the past 12 months, according to the 2018 State of Cybersecurity in Small and Medium Size Businesses study.

And the results can be devastating. The average cost to a small business that falls victim to a successful cyberattack is roughly $380,000, according to the same study.

To help small businesses protect themselves is why Rob Simopoulos and Andrew Rinaldi founded Defendify. The Portland-based startup has built a cloud-based platform to provide a cost-effective and convenient way for small businesses to handle their cybersecurity. The two-year-old company already has an 11-person team and is growing sales rapidly.

The venture-backed startup has developed a cloud-based platform that provides small- and medium-sized businesses a comprehensive suite of cybersecurity tools and services, everything from the development of cybersecurity policies and employee education to penetration testing and ethical hacking. Defendify’s software platform, which small businesses pay a monthly fee to access and use, will even scan the Dark Web to discover if employee credentials have been compromised.

“We want to be the QuickBooks of cybersecurity for small businesses,” said Simopoulos, a 20+ year veteran of the security world. “It might sound cliché, but that’s the opportunity and we’re really excited about it.”

preparing for a $300 billion market

With 30 million small businesses in the country, the opportunity is substantial—and getting bigger. Cybersecurity was an estimated $120 billion market in 2017, but is expected to grow to more than $300 billion by 2024, according to a new research report by Global Market Insights.

To stay ahead of the competition and preserve its first-mover advantage, the company recently raised a $1.6 million seed round. Investors include 3dot6 Ventures, Maine Venture Fund, and York IE.

The company will use the proceeds to ramp up sales and marketing efforts and further development of the software-as-a-service (or SaaS) product.

“Next step is to really ratchet up the product and the sales and marketing,” Rinaldi said. “We’ve done this on a pretty modest budget and it’s time to execute on the roadmap moving forward.”

Cybersecurity in a box

Simopolous and Rinaldi didn’t start with the idea for a SaaS cybersecurity product. The pair, who met because Rinaldi’s cousin is one of Simopoulos’ closest friends, had originally founded a consulting business called Launch Security in March 2017 to help small businesses manage their cybersecurity.

Simopolous, a Toronto native, is a 20+ year veteran of the security world, beginning his career installing physical security systems in Canada before eventually moving to Maine and working his way up to become president of Advance Technologies, a systems integrator in the Portland area. Rinaldi comes from a web development and business background, having previously run his own web development firm in Boston and helped run the family business in Connecticut before moving to Maine in 2013.

But Launch Security was a client-focused business that required them to visit clients, evaluate their current cybersecurity programs, put in place new policies and procedures, educate employees, etc. It required a lot of man-hours and ongoing support.

It wasn’t long before they began discussing how they could take what they did and productize it.

“Why doesn’t cybersecurity in a box exist?” Simopolous remembers them asking themselves. “We started looking and there was nothing on the market.”

So they began to build it. They raised $500,000 at the beginning of 2018 to fund development, followed not long after by a $250,000 development loan from the Maine Technology Institute. They didn’t outsource the building of the platform; instead opting to hire their own developers.

An MVP and quick sales strategy pivot

In September 2018, they launched a minimum viable product and rebranded as Defendify. Rinaldi and Simopoulos successfully converted all of their existing consulting clients onto the platform, which like all SaaS products is based on a subscription-based revenue model where companies pay a monthly fee to access the platform and benefit from the cybersecurity services it provides.

While the pair attempted to sell direct to small business owners out of the gates, they soon realized that a more efficient method to reach the largest number of potential customers would be to partner with IT service providers and allow those companies to re-sell the Defendify platform to their existing clients for a cut of the revenue. It’s estimated that 70% of small businesses use an outsourced IT partner, according to Simopoulos.

The company currently has a few channel partners in almost every state and Canadian province. It also has been contacted by partners who want to offer the Defendify platform in Australia, Europe, Africa, and the Middle East.

“Honestly, it grows so fast it’s hard to keep track,” Simopoulos said, referring to the number of IT service providers it has enlisted as channel partners. “We now have cybersecurity consultants asking how they can use the platform with their clients.”

Simopoulos wouldn’t reveal how many companies are monthly, fee-paying customers, but did say that Defendify at this point has thousands of end users (each employee who uses the platform is an end user). The company also declined to share revenue figures, but said they expect the company to average over 200% year-over-year sales growth in the coming years.

The company currently has 11 full-time employees but expects to be over 20 people by the end of this year.

“We’ve just started to scratch the surface and need to continue to move quickly to execute existing go-to-market strategies while ramping partner acquisition and success,” he said. “It’s a massive opportunity before us and 2019 should be a critical year of acceleration and growth for Defendify.”

resonating with investors

While Maine Technology Institute and Maine Venture Fund have both provided capital support to Defendify (MTI has provided a $50,000 grant and $250,000 development loan), the company’s pitch has also resonated with investors outside Maine.

York IE, a venture capital firm based in New Hampshire recently invested in the company. Adam Coughlin, the fund’s managing partner, said he was impressed with Defendify’s automated platform and believes it will attract small business customers looking to protect themselves from cyberattacks.

“It is simple to deploy and cost effective, allowing SMBs to protect themselves without interrupting business operations or breaking the bank,” Coughlin told Maine Startups Insider, referring to small- and medium-sized businesses as SMBs. “Cybersecurity is no longer an option for the SMB and Defendify is well positioned to take advantage of this new market opportunity.”

Like most smart investors, Coughlin and his team also needed to believe the team could pull it off.

“Rob and Andrew exemplify the traits York IE looks for in founders,” he said. “They are both repeat founders with experience in the industry they are trying to disrupt. Their combined experience along with their knowledge of the market they are attacking made us believe they will be successful in their mission. Before investing in any company we ask ourselves: do we want to spend our time with this leadership team? Will we be fully invested in their success? For Rob and Andrew, those answers were a resounding yes.”