Date: Jun 24, 2013 Author: Stephen Fleming Source: Academic VC (
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by Stephen Fleming
A news article a couple of weeks ago announced an $11 million investment in one of our local startups, Pindrop Security.
Pindrop makes systems that help banks detect and block scammers engaged in spoofing phone calls to unwitting bank customer reps. Its core acoustical analysis technology is an example of innovative systems developed expressly to defend against a comparatively narrow type of attack--one in which the bad guys continually innovate, and continue to find success plundering banks.
It's a big problem, costing the financial industry billions of dollars per year. (In the shorthand that I used in my VC days, solving phone fraud is a "painkiller," not "candy.") Pindrop looks like they have a technology that can stop phone fraud in its tracks.
But technology startups such as Pindrop don't just appear on our doorstep fully formed, ready to close Series A rounds. They are the result of years of work by the founders, and by many people inside and outside the Institute. Georgia Tech and the state of Georgia have built an ecosystem that can repeatedly spin out high-potential startups such as Pindrop. This month, I wanted to walk you through how Pindrop exemplifies the technology commercialization ecosystem surrounding Georgia Tech.
The Pindrop story starts with Vijay Balasubramaniyan, a graduate student in the College of Computing. His thesis advisor was Mustaque Ahamad, then the director of the GT Information Security Center. He was working on a number of security topics--including identifying malicious Twitter users -- but filed an invention disclosure with GTRC on "Using Single-Ended Audio Features to Automatically Determine Voice Call Provenance" in May 2010.
About half the time, VentureLab detects an interesting invention on campus by monitoring who has filed an invention disclosure. (The other half, VentureLab "walks the halls" on campus, and frequently nudges professors and graduate students: "Hey, maybe you should file an invention disclosure...") Vijay triggered the first pathway, and Keith McGreggor met with him in July 2010. Vijay and Mustaque became a VentureLab project in September of that year. In October, with two other GT colleagues, they presented a paper at the annual ACM Conference on Computer and Communications Security that gathered a lot of attention. With VentureLab's help, they quickly formed a company -- then known as Telineage -- and joined ATDC in December, while applying for an NSF SBIR award.
Late in 2010, Mustaque introduced Vijay to veteran Atlanta software entrepreneur, Paul Judge. Paul is a "Morehouse Man" who earned his Computer Science Ph.D. from Georgia Tech. Recognized by MIT's Technology Review Magazine as one of the top 100 young innovators in the world in 2003, he was CTO of one successful Atlanta startup (CipherTrust) and founder of another (Purewire, an ATDC graduate, sold to Barracuda in 2009). While not leaving his position at Barracuda, Dr. Judge became Chairman of Telineage.
2011 turned out to be a very busy year for the company. VentureLab ushered them into the GTRIC competition, while simultaneously making connections across the Atlanta technology community. In quick succession, the company (now renamed Pindrop Security) placed second in Startup Riot, was named one of TAG's Top 40 Most Innovative companies in Georgia, and won the TAG/GRA Business Launch Competition.
By May of 2011, Pindrop had moved into VentureLab space in the Centergy building, and the buzz was growing steadily. It was a busy summer: the company won its NSF SBIR award, GTRC filed patent applications for the underlying technology, and Vijay somehow found time to defend his dissertation and be awarded his Ph.D. The company obtained a license to the intellectual property from GTRC, while VentureLab supported the company for a Phase I commercialization grant from the Georgia Research Alliance (GRA). And since the technology was still very much in the research phase, Georgia Tech's Telecom Services group in OIT was able to provide Pindrop with Session Initiation Protocol (SIP) access and data from a test laboratory -- one of the strengths of being associated with a major research university.
By September, Georgia Tech was forming Flashpoint, and with a year of momentum, Pindrop was an obvious candidate for the first cohort. During sixteen grueling weeks of "startup engineering," the company made great progress in nailing down its core value propositions and identifying its initial customer targets.
At the end of the year, ATDC launched its new Select program for high-potential companies ready for acceleration, and Pindrop was one of the first companies invited to join. By January of 2012, the company made headlines before and during the Flashpoint "Demo Days" (Atlanta, New York, and Palo Alto) as the first member of the first cohort to score a substantial seed round... and they did it not only with respected local angel investors, but also with Andreesen Horowitz, one of the hottest West Coast VC firms -- and one who almost never invests outside Silicon Valley.
Soon after, the company received another round of GRA funding, moved downstairs to ATDC's second floor incubator, and was one of the first companies to participate in ATDC's "Industry Connect" program. "Industry Connect" establishes meaningful interactions between ATDC startup companies and corporate strategic partners. Pindrop continued to gain national attention, being named one of the 10 Most Innovative Companies at RSA 2012 (a major industry conference).
By summer, the company had significant trials with major potential customers, and attracted an investment from the GRA Venture Fund (a for-profit fund that partners with the not-for-profit Georgia Research Alliance). GTRC continued to support the core technology by filing international patent protection.
In early 2013, the company continued to add staff, and won a much larger second NSF SBIR grant to continue the work started in summer 2011. And, last week, the company announced a major Series A investment by top-tier national venture capital firms: Andreesen Horowitz (again), Citi Ventures, Felicis Ventures, and Redpoint Ventures. That's an incredible syndicate, and it's a tribute to the quality of the team and the innovative technology behind their products. And the team and the investors are all committed to growing the company in Atlanta, not relocating them to parts unknown.
Now, raising money doesn't mean the company is successful... only selling products or services at a profit marks a true success. But Pindrop's Series A does mean the company has more resources to try to become successful, by focusing on customers and products, and not worrying about meeting payroll every two weeks. It's a great milestone for an impressive young company.
It's been three years since that first phone call between Vijay and VentureLab. And Pindrop has years yet to go. A successful startup reminds me of an interview with a singer who was being hailed as Nashville's next great overnight success. She replied that she'd played every barbeque joint, nursing home, grocery store opening and street corner in West Texas for a decade, and she didn't want to hear about being an "overnight success"!
Just like Apollo, behind the very visible founders, there are any number of others involved in the success of Pindrop.
Some are employees, 100% committed to the success of the company. Some are investors, financially committed as part of a portfolio strategy. Some are members of the larger Atlanta technology community, trying to maximize the success of the local innovation ecosystem.
And some are Georgia Tech employees -- many right here in EI2 -- who help identify the core value proposition, target initial customer segments, even recruit key employees and bring financial commitments to the table. Others negotiate license agreements, share research data, and help the growing company with connections, credibility, and customer acquisition. Eventually, yet others will be introducing Pindrop to our corporate clients across the state, in manufacturing and healthcare and other fields. These representatives of "One Georgia Tech" don't get paid extra if a startup is successful. Most could make more money in the private sector. But they see the value of a public research university as the linchpin of an innovation ecosystem. Those GT employees, whether in EI2 or GTRC or OIT or Legal, are just doing their jobs.
