Transmit Security Raises $543 Million for Password-Free Future
(Bloomberg) -- In an era of rising incidents of hacking, cybersecurity startup Transmit Security has raised $543 million to expand its business providing companies with biometric authentication systems instead of user passwords.
The cash injection brings the seven-year-old company’s valuation to $2.2 billion, Transmit Security announced Tuesday. Investment in its first funding round was led by New York-based firms Insight Partners and General Atlantic.
Mickey Boodaei and Rakesh Loonkar founded Transmit Security in 2014 with the goal of easing the tensions between the logistical headaches of passwords and cybersecurity. Transmit’s BindID product uses fingerprint and face-scanning techniques to eliminate passwords from the login process. For devices without biometric scanners, users can simply use their phones to log in to platforms on other devices. Transmit’s customers include retail, banking and telecommunications leaders such as UBS Group AG, Lowe’s Cos. and HSBC Holdings Plc.
The funding comes amid a wave of recent cybersecurity attacks across the U.S. and Europe, many of them a direct result of breached password security. The Colonial Pipeline Co. ransomware attack, which took the largest fuel pipeline in the U.S. offline in May, was the result of a single compromised password. The account’s password has since been discovered inside a batch of leaked passwords on the dark web. JBS USA was the subject of a cyberattack earlier this month that disrupted meat processing across North America and Australia and forced the company to pay hackers $11 million.
Password-based security settings have become outdated and expensive, according to Transmit Security. Cybercrime was expected to cost the global economy $2.9 million per minute in 2020, according to a World Economic Forum report last year cited by the company. And some 80% of attacks are password related.
Using passwords can also be frustrating for people and lead to lost business, Transmit Security says. The company’s own research shows that 55% of customers stopped using a website due to the complexities of the login process and 92% of customers abandoned their purchase to avoid resetting their login details.
“We started to focus on how to build a layer that sits between technology and organizations that allows them to always offer the best customer experience and the best security that technology has to offer,” Boodaei said in an interview.
Transmit Security uses technology that stores biometric data on users’ devices. That gives it a significant advantage over passwords to defend against cyberattacks because, unlike passwords that can be hacked and used elsewhere, the biometric data isn’t able to leave the device doing the verification, according to the company. The so-called privacy gated technology also means there’s no biometric data collection.
“Privacy-gated technology means that we don’t hold any information about end users -- definitely not biometric information and not even private information” Boodaei said.
In February, Transmit Security joined the FIDO Alliance, an industry standards group founded by tech companies such as Lenovo Group Ltd. and PayPal Holdings Inc. and whose board includes Microsoft Corp., Amazon.com Inc. and American Express Co. “Relying on passwords as the primary means for authentication no longer provides the security or user experience that consumers demand,” said Andrew Shikiar, executive director and chief marketing officer at FIDO.
Transmit Security has its headquarters in Boston but much of the company’s business occurs in Tel Aviv and its development center is based there. Israel has become a hub for cybersecurity defense with support from the the government. In 2015, Israel launched its National Cyber Security Authority and pursues a competitive advantage through early education.
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