Cape Privacy, which provides machine learning solutions for encrypted data, has raised US$20 million (C$25 million) to help develop its platform and find more clients in financial services and other markets.
The broadly subscribed funding round was led by Evolution Equity Partners, which is headquartered in New York and Palo Alto.
Cape Privacy, which booked a US$5 million seed round last year, was founded three years ago by a nucleus of tech entrepreneurs who had worked at or orbited around GoInstant, a Halifax startup bought by Salesforce.com in 2013. GoInstant Co-Founder Gavin Uhma is Cape Privacy’s Chief Technology Officer.
Cape Privacy is now gaining traction with financial institutions because its platform allows them to apply machine learning capabilities to data owned by other parties, such as retailers, without violating privacy rules. The platform can apply analytics while the data is still encrypted, ensuring consumers' privacy while giving the user all the important benefits of the data.
“Over the past year, we have seen growing demand from financial institutions who want to enrich their machine learning models through external data sources including retail and credit card companies,” said Cape Privacy CEO Ché Wijesinghe in a statement. “Thanks to Cape’s encrypted learning platform, data scientists within and across multiple organizations can now securely collaborate on model development. Better data means better business outcomes.”
In an interview, Wijesinghe and Uhma said the company is now working with a major Canadian financial institution on an alpha test. The success of the trial is attracting attention and Cape Privacy is currently in talks with about a dozen other financial groups.
The company believes the application could be used in other sectors with strong concerns about data privacy, and has been talking to pharmaceutical and genomics ventures.
“Essentially, we’re allowing these companies to rent the data, rather than own it,” said Wijesinghe. “It’s a unique value proposition that scales massively.”
Cape Privacy is based in New York and Halifax, but its team of 20 is distributed over 10 time zones. Halifax is a key base where it has five employees, a few investors and where its story began.
In 2018, Uhma and a few collaborators like GoInstant alum Ben DeCoste had abandoned a startup called Side Story and were planning their next venture. They chose to focus on applying machine learning to encrypted data and the idea gained momentum.
They gathered a group of co-founders based far and wide, and the company’s board chose New York as a headquarters. They brought on Wijesinghe as CEO because of his expertise in bringing deep tech products to market.
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One interesting aspect of the Cape Privacy story is that it involves many of the people who made GoInstant a success – not the least of them Uhma himself.
Jevon MacDonald, who was GoInstant’s CEO, invested in both the 2020 and 2021 rounds. Dave Kim, a GoInstant Co-Founder and now the CEO of Halifax-based Harbr, was an angel investor in Cape Privacy. His Harbr Co-Founder Jeff Kielbratowski was also an early Cape Privacy investor.
Ian Livingstone, who had worked with MacDonald at his most recent venture Manifold, was a Co-Founder at Cape Privacy, though he left the company last summer. Matthew MacLellan, now the Atlantic Region President for Rogers Communications, was previously Cape Privacy’s COO.
As well as Evolution and MacDonald, the funding syndicate of the US$20 million Series A round comprises: Boldstart Ventures; Downing Lane; Fred Ehrsam; Haystack; Radical Ventures; Ridgeline Partners; SandHillEast Partners; Tiger Global Management, TokyoBlack Fund, and Version One Ventures. (Vancouver-based Version One is headed by Boris Wertz, who was an investor in GoInstant.)
“Cape Privacy’s mission to realize the full potential of data science and machine learning through encrypted learning will have far-reaching impact,” said Evolution Managing Partner Richard Seewald. “We anticipate wide adoption of Cape’s technology across many use cases and industries.”
Wijesinghe said the company plans to spend the next year building out its engineering capabilities. Given that the team is so widely dispersed, Cape Privacy aims to attract the best talent regardless of where they are based, and can implement diversity and inclusion in its hiring.
“We plan to make the $20 million last for a number of years as we scale the business,” said Wijesinghe. “The expectation is that we have at least two or three years of runway before we . . . get to eight figures in recurring revenue and then have to think about financing again.”