Vaultive Raises $10M, Emerges from Stealth in Cloud Data Security

2/27/12Follow @jpruth

New York-based Vaultive, a provider of encryption technology for Internet data, announced today it raised $10 million in a Series A round led by .406 Ventures, Harmony Partners, and New Science Ventures. Vaultive’s technology is designed to help big companies comply with increasingly stringent regulations on information security. The company, founded in late 2008, previously raised nearly $2 million in a seed round with angel investors.

Vaultive’s technology makes it possible for cloud-based software to process encrypted data, for example, in e-mails handled by hosted messaging services, but without decrypting the data. This keeps the third party from being able to see what is in the encrypted data. That helps maintain information security and comply with requirements under such laws as the Health Insurance Portability and Accountability Act (HIPAA) and the Sarbanes-Oxley Act.

Elad Yoran, one of Vaultive’s early backers and general partner of Security Growth Partners, became CEO and chairman with the close of the latest funding round. With more cash on hand, Yoran says, Vaultive plans to grow its New York team of five with hires in sales, marketing, and technical areas. “We’ll double or triple that before the end of the year,” he says. Vaultive also has more than 20 engineers in Tel Aviv, Israel, working on research and development.

Yoran says Vaultive had been operating in stealth mode until now, while it developed its technology. The company’s first product is expected to be released in April. The technology encrypts data before it enters the cloud to limit access to the intended recipient. Yoran says his company’s technology is aimed at giving security-conscious businesses ways to use the cloud while maintaining compliance with regulations. “Cloud applications hold data that belongs to other companies,” he says. “Companies are concerned that these applications can access their data or doesn’t encrypt the data [when stored].”

Software-as-a-service companies may have their own data security, but Yoran says his company’s technology alleviates some of that burden. “Cloud providers don’t want to see the data unencrypted,” he says. “They don’t want to be liable if they get hacked.”

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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