Encryption startup Fortanix targets channel expansion with just-closed $23 million Series B funding round

The company’s investments here include the appointment of Tammy Schuring as the first head of sales, and the development of a channel expansion strategy.

Ambuj Kumar, Fortanix’s Co-Founder and CEO

Today, Mountain View CA-based startup Fortanix is announcing that it has closed their $23 million Series B funding round. Intel Capital led the round. That’s no surprise, since Intel SGX is Fortanix’s underlying foundational technology. Sunil Kurkure, Director, Intel Capital will join the Fortanix Board of Directors. Initial investors Foundation Capital and Neotribe also participated in the Series B round.

Fortanix brands itself as the Runtime Encryption technology company, addressing cloud security and data privacy by running applications in secure management enclaves and providing Self-Defending Key Management Service [SDKMS] protection in the cloud, in hybrid environments, and on-prem. Their runtime encryption overcomes a traditional weakness of encryption, that it iss effective when data was at rest, but not when it is in use and in-memory.

“The funding is very important, but it is a means to an end,” said Ambuj Kumar, Fortanix’s Co-Founder and CEO. “We are fortunate to have Intel on board. They are a  globally recognized name, and in many areas, they are the most recognized name in venture capital.

“The funding has also allowed us to hire people like Tammy Schuring – heavy hitters,” Kumar added. “Building sales and channel machinery is expensive. We couldn’t have hired her and given the resources she would have needed to succeed a year ago. Her position is new, and was created because our business was scaling faster than what we anticipated. We needed somebody to do this job full-time who has done it successfully in the past.”

Over the last year, Fortanix has moved from looking for lighthouse customers to landing them.

“We have got into some very large customers, like Intel, Pinbank, and Cubic – and others who endorse us privately, so we can use their names when we knock on doors,” Kumar said.

Tammy Schuring, Fortanix’s SVP of Worldwide Sales and Field Operations

Schuring joined Fortanix as SVP of Worldwide Sales and Field Operations at the beginning of December, with the fleshing out of the channel top of mind. Fortanix’s strategy from the beginning, even as they were selling direct in their initial Proof-of Concept stage, was to take their offering to market early on through a partner-led strategy.

“This is my third head of sales position, and most recently I was at Voltage Security for 13 years,” she said. “I’m known for helping companies break through and building out the whole Go-to-Market. That involves building out the partners we work with in each part of that pyramid. At the top are the global systems integrators who are already in the C suite, and we build strong partnerships with them. Then come the regional SIs for enterprise accounts. Further down the pyramid and more into the mid-market, we work with VARs and leverage Cloud Service providers for strong SaaS offerings.”

Much of this needs to be built out, but Schuring explained the plan to do so.

“We already have a very significant group of customers who have validated us,” she said. “That’s a major turning point that allows us to narrow in on key use cases, and produce the ‘why it matters’ stories. We started out focused mainly on the enterprise and on typical enterprise use cases. What we are finding as we go more downmarket is that there are new use cases in emerging industries like autonomous cars, and blockchain and IOT businesses like ones who provide wallets around cryptocurrency. They are not enterprise-sized, but they have intense security requirements.

“We are bringing in a channel team to build out the relationships across the right channel partners – both VARs and GSIs,” Schuring continued. “A year ago, we had great ideas and great supporters, and were flirting with our first beachhead customers. Now we have over a dozen, as well as major strategic partners like Alibaba, Equinix and IBM.”

While the plan is to build out the channel internationally, the initial focus is on North America.

“We are building out both a sales team and a partner enablement team, and some very experienced people have joined the business,” Schuring stated. “In North America, we have built out in the U.S. Northeast, Southeast, and West. We are currently looking for teams in Canada. Our team in the Northeast has done a number of deals in Canada already in the banking industry, and there is a lot of movement in Canada in terms of protecting data, which works in our favour.”

While the technology is complex, ultimately the messaging is not.

“The core of it is protecting the data so it can’t be monetized  if it gets in the wrong hands, and ideally to make sure it never gets in the wrong hands,” Schuring said. “We take key management and encryption and make it easy to use for the entire pyramid down to the SMB, and bring that to the channel in an easily consumable way.”