Sumitomo invests $7 million encryption startup PreVeil
Sumitomo and US startup PreVeil see huge market for end-to-end encryption
With an investment of around $7 million in U.S. data encryption start-up PreVeil, Sumitomo Corp. is hoping to cash in on Japan’s cybersecurity issues.
The investment was made through the Presidio Ventures investment arm of Sumitomo. It will help the startup based in Boston make its first venture into Japan, which aims to boost its cybersecurity ahead of the Olympic Games next year.
PreVeil was founded in 2015 by a group of MIT researchers and uses an end-to-end encryption approach that allows email and files to remain secure even when servers are breached, passwords are stolen and IT administrators are compromised.
Traditional methods for protection depend on firewalls to prevent users out of email or server networks. End-to-end authentication, on the other side, encrypts the communications themselves so that the data can only be accessed by the sender and receiver. Of example, even if an attacker hacks into a company’s email server, they won’t be able to decode the information— only PreVeil won’t be able to read emails received using its software, the company says.
PreVeil’s approach was based on research by co-founder Raluca Ada Popa, an assistant professor at Berkeley University of California and one of the MIT Technology Review’s “35 Under 35” selected in 2019.
What separates the brand of her business from competitors is simplicity, according to Popa. “PreVeil makes encryption very easy to use for both enterprise and individual users,” she said.
Messaging programs such as WhatsApp and Signal already use end-to-end authentication, but adapting the system to business software is more of a hassle, as it usually requires specifically installed software and a different GUI.
Nevertheless, PreVeil brings to common email clients such as Outlook or Gmail a plug-in.
“You won’t feel any change when using it, however, your messages will be protected. No inconvenience,” Popa said when she explained the software in September to the Nikkei Asian Review.
PreVeil’s technology also functions to provide end-to-end authentication to cloud storage for programs like Dropbox.
According to Ross Leav, senior director at Presidio Ventures who led the investment in PreVeil, simplicity is key to safety.
“I’ve looked at many technologies that are getting close to what PreVeil does today. One simple problem is that they are awkward to use,” Leav said. “The other technology usually requires you to go to some different website or use some separate email system that’s not the one you normally have, like Outlook or Gmail. And the effect is that nobody uses it.” The move is a strategic play for both sides. PreVeil has tried to break into the Japanese market, while Sumitomo Corp. is betting on increasing cybersecurity demand.
“The surge of the fishing email assault is everywhere in the world and is not going to avoid Japan,” Leav said.
As the nation plans for next year’s Tokyo Olympics and Paralympics, setting up the Cyber Security Council in October, the Japanese government has made safety a top priority.
After several high-profile cyber attacks on major companies, Japan Inc. is also looking to boost security.
The latest incident hit Fast Retailing Co., Asia’s largest retailer and Uniqlo and GU brand owner, e-commerce platform. According to the firm, Hackers hacked into the network in May and obtained at least 460,000 account details, including data such as past and partial credit card numbers.
“The Asia-Pacific is experiencing a stronger need for this kind of cybersecurity innovation at a quicker space compared to the Western world,” Leav said. In adopting cloud technologies, as Asia races ahead of the rest of the world, security measures are struggling to keep up.
For PreVeil, Sumitomo could give the company a leg up as its first customer in Japan— the conglomerate is planning to deploy the group-wide encryption technology in the near future.
“We need this product, and we are not a small company,” said Leav. “Beginning by just addressing the needs within organizations inside Sumitomo Corp., we can build confidence in the Japanese market that PreVeil is accessible in Japan.”