$4m to help IP security firm grow

By RICHARD PAMATATAU

Technology investors No 8 Ventures and TMT Ventures have injected $4 million into Auckland software house Esphion which is chasing business in the lucrative IP network security arena.

Esphion works in the network security market which analysts estimate will be worth more than $1 billion in the next few years as organisations spend more to stave off attacks.

Chief executive Greg Cross said that with a growing customer base in the Asia Pacific region the new capital would be used to expand the company's operations in Asia and establish an initial presence in North America where discussions were under way with several potential customers and business partners.

He said that as more companies created networks and become dependent on them growth would continue for smart security systems.

Esphion is a relative minnow with 15 staff although Cross said that with the extra cash it would add workers as well.

During the past 12 months, Esphion has focused on security customers in Hong Kong, Australia and New Zealand. It works closely with some of the region's largest broadband providers, managed service providers and enterprises including Hong Kong-based PCCW, Asia Pacific Alcatel, Telecom NZ, WebCentral and Sony.

"Industry demand for a proactive security layer that can respond in real time as traffic traverses the network is growing quickly and the completion of this capital round means we are in a strong position to ensure we take full advantage of this emerging market opportunity," Cross said.

The investment was led by No 8 Ventures and included follow-on investment by TMT Ventures which first stumped up cash in 2002.

No 8 Ventures and TMT are also managers of the Government's Venture Investment Fund and the investment in Esphion brings the number of investments made by VIF managers since 2003 to 15 and is the fourth in which VIF managers have co-invested.

Mark Edwards, a No 8 Ventures partner who will join Esphion's board, said it was exciting to work with the company on this expansion phase.

Gavin Lonergan, TMT investment director, said the venture capital investment was essential for growth overseas.