WALL STREET JOURNAL
São Paulo-based company provides custom-encrypted smartphones and software designed to protect communication from hackers.
By Luis Garcia
Brazilian private-equity firm DXA Investments is backing cybersecurity company Sikur, betting on rising demand for tools to protect business and government communication from hackers.
Sikur’s encryption software secures communication over computer and mobile networks against intruders and eavesdroppers. The São Paulo-based company sells encrypted Sony Corp. smartphones, secure digital-banking apps as well as encryption apps for chatting, document sharing, phone and video calls that run on top of major mobile operating systems.
Sikur plans to unveil a new version of its app suite, called Sikur Messenger, at the Web Summit technology conference in Lisbon next week, according to Fábio Fischer, the chief executive of Sikur Consultoria e Gestão Empresarial Ltda., the company’s official name. The latest version can be kept in the customer’s own cloud storage area and carry the customer’s brand, Mr. Fischer said.
The minority stake acquired by DXA, a Rio de Janeiro-based growth-equity firm, enables it to participate in company management decisions, said Oscar Decotelli, DXA’s chief executive. DXA and Sikur each control two seats on the company’s five-member board, and its fifth member is independent.
DXA invested in Sikur from its latest fund, DXA Excelsior II, which is still collecting commitments. DXA is seeking $75 million for the fund and another $75 million for a co- investment pool. The firm hasn’t held a first close of the vehicle yet, but some investors in the fund have agreed to provide capital in advance for the Sikur deal, Mr. Decotelli said.
He declined to disclose how much DXA invested in Sikur. The firm typically invests $5 million to $10 million when it first backs a business, with the possibility of increasing its investment over time.
DXA was attracted to the sector by the rise in demand for products that make commercial and government communications safer and more secure, Mr. Decotelli said. He cited a recent scandal in Brazil triggered by leaked messages from Sergio Moro, the country’s justice minister, that police said were obtained by hackers who broke into a chat app.
Spending on information security by end users world-wide is expected to reach $124.1 billion in 2019, an 8.7% increase from last year, according to researcher Gartner Inc. It estimates the market will grow to $170.4 billion by 2022.
“The market is entering a stage where it will be common to have cybersecurity through paid solutions provided by specialized companies,” Mr. Decotelli said.
Sikur plans to use DXA’s investment to develop new products and to expand its marketing efforts as it shifts to focus on sales, Mr. Fischer said. He cited Brazil, the U.S., United Arab Emirates and Japan as some of the markets the company is targeting.
Founded in 2011, the company initially focused on product development to ensure the quality of its offerings, and was less concerned about bringing its wares to a broader market quickly, he said. Now with product quality at a level the company was seeking, Sikur’s managers are accelerating their global marketing plans, Mr. Fischer said.
In addition to selling software and apps, Sikur customizes two Sony mobile phone models by equipping them with its Android-based SikurOS operating system, a cryptocurrency wallet, and a secure chat app and web browser. Next year, the company plans to begin selling a kit that enables developers to make apps compatible with SikurOS, Mr. Fischer said.
Mr. Fischer leads Sikur alongside Chief Operating Officer Alexandre Vasconcelos and Chief Product Officer Cristiano Iop. The company, which also has offices in Lisbon and Miami, plans to open another in France’s Sophia Antipolis technology hub in January and eventually move its headquarters there, Mr. Fischer said.
Write to Luis Garcia at firstname.lastname@example.org
Source: Wall Street Journal