Automotive Infosec Startup Karamba Snags $12M for Hack-Blocking Tech

There are conflicting opinions, even within Xconomy’s newsroom, about whether autonomous vehicles will be the game-changing technology the automotive industry hopes for. Yet, connected-car cybersecurity startup Karamba is moving full steam ahead—and its investors just doubled down with a new round of funding.

Today, Karamba, which is based in Ann Arbor, MI, and Hod Hasharon, Israel, announced it has raised $12 million in a Series B round, bringing its total investment capital raised in the past year to $17 million. Existing investors YL Ventures and Fontinalis Partners led the round, with contributions from GlenRock Israel, Paladin Capital Group, Liberty Mutual Strategic Ventures, Presidio Ventures, and Asgent.

“It’s quite exciting—you always need to prove yourself” to investors, says David Barzilai, Karamba’s co-founder and executive chairman. The company didn’t seek out investors for a new round, he adds. “The initiative came from them because they kept hearing about us from our customers. Things are moving very fast, and we’re grateful for that.”

When we talked last December, Barzilai said Karamba had deals with four customers. Today, it has 16. The company, which launched in 2016, will use the new capital to increase its customer support and sales teams, as well as on product development, he says. The startup’s customers are automotive manufacturers and suppliers.

Karamba’s innovation involves blocking outside hacking attempts on connected cars. The company’s software “seals” off access to the electronic control units (ECUs) in autonomous and connected cars, where hackers are likely to invade, to prevent breaches. (Think of ECUs as ports around the car that interface with the outside world, such as a Wi-Fi or cellular phone connection.) If the car tries to run a piece of suspicious code that doesn’t conform to the manufacturer’s settings, Karamba’s technology aims to prevent it. The software can be installed before or after the car is sold.

“Our customers want hacking attempts prevented,” Barzilai explains. “Other companies have technology that is good at detecting hackers, but there’s the issue of false positives or blocking legitimate commands, which can cause the brakes not to engage” or other deadly consequences.

As for the legitimacy of autonomous vehicle technology and whether it will be the paradigm-shifter the automotive industry and others are hyping it to be, Barzilai says it’s already happening.

“Autonomous cars are being built, just not on a mass scale,” he says. “We see it coming very soon, maybe even 2018.”

It has often been said by automotive analysts that the technology powering self-driving cars is 95 percent there. One big nut yet to crack is teaching autonomous cars to respond to real-time traffic conditions as if they were human drivers. Barzilai says one way around that, in the short-term at least, is to have self-driving cars travel on designated routes, and only for a relatively short distance—on college and corporate campuses, perhaps. In terms of adoption, he predicts two main demographic groups will jump on early: the elderly and Generation Z.

As for when we might see the mass production of autonomous vehicles, Barzilai says the industry often tries to rush things when it’s geeked about a hot new innovation, but “in terms of artificial intelligence and visioning, the progress is profound.”

Last October, Mordor Intelligence estimated the global market for automotive cybersecurity will grow from $17 million in 2015 to $1.1 billion by the end of 2020. Barzilai says the industry analysts Karamba talks to believe we’ll see at least partly autonomous vehicles making up 14 percent of cars on the road by 2020, and 70 percent by 2025.

Sarah Schmid Stevenson is the editor of Xconomy Detroit/Ann Arbor. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET_AA

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