Boyd Multerer played a key role in creating Xbox Live for Microsoft.
Boyd Multerer played a key role in creating Xbox Live for Microsoft.
Wellington start-up Kry10 has raised $6 million for its push to make connected devices - from manufacturing plants to wind turbines to tech-packed cars - secure from cyberattacks, more resilient and easier to manage.
News of the raise came as founder Boyd Multerer told the Herald customers engaged included “a large automotive player based in Germany”.
Tech firms often draw an interesting coalition of backers, but this one is more intriguing than most.
The pre-Series A round, pulled together by Kry10 chief operating officer Lovina McMurchy (a former Movac general partner, who has also held senior roles with Amazon and Microsoft in Seattle) was led by Folklore, which took a 10 per cent stake. The Sydney-based venture capital (VC) firm backed two of New Zealand’s most successful tech plays of the past few years: Auror and Vend.
The raise was supported by local VCs Movac (which also chipped into an earlier seed round, along with Sir Stephen Tindall’s K1W1),
Rotomā tumu whakarae (chief executive) Michael Hancock: 'This is our first foray into venture capital or technology.'
Nuance Connected Capital (a “deep tech” fund supported by Crown agency New Zealand Growth Capital Partners) and Rotomā No 1 Inc (a Rotorua-based iwi investment and asset management vehicle created by a 1908 Māori Land Court ruling), plus the Virginia-based In-Q-Tel, which counts intelligence agencies among its backers.
Diversifying
Rotomā tumu whakarae (chief executive) Michael Hancock told the Herald: “This is our first foray into venture capital or technology, although we’re not taking on more risk than we can wear.”
Previously, Rotomā has stuck to primary industries and property. Forestry and horticulture are the largest assets in its $100m portfolio.
The make-up of Kry10′s senior team includes head of partnerships Jason Fox, a chief executive of three post-settlement iwi entities (including the Ngāti Whātua o Kaipara Settlement Trust) and head of engineering Kent McLeod (Ngāti Porou; a World Schools Robotics Championship runner-up and son of Māori business leader, former EY NZ CEO, current Sandford chair and longtime Business Roundtable head Sir Rob McLeod) and the aforementioned McMurchy (Ngāti Rongomai)
Hancock said Rotomā had done its due diligence and hoped for a commercial return. But he also saw opportunities for non-financial gain, including internships, and said Kry10′s work in areas like renewable energy “has a lot of crossover with our values”.
Kry10 chief operating officer Lovina McMurchy has moved between roles in big tech, venture capital and now a startup.
Fortifying
The Arlington, Virginia-based In-Q-Tel came to Kry10 from a different angle. Its mission statement says it “identifies and analyses technologies in all stages of development... in the US and select other countries... that are critical to national security”.
There’s a lot of mythology around In-Q-Tel, including that the “Q” in its name is a reference to the fictional gadget-maker in a James Bond film.
What’s the official line?
“IQT was founded in 1999 as the global technological evolution is under way,” In-Q-Tel explains on its website. “The CIA and government agencies, once innovation leaders, recognised they were missing out on the cutting-edge, innovative and impactful technologies coming out of Silicon Valley and beyond. Combining the security savvy of government with the can-do curiosity of Silicon Valley, IQT is born.”
Today, its mission and funding are broader. “IQT is a global strategic investor focused on national security across allied countries. IQT is funded by a broad set of intelligence and defence agencies in Australia, the UK, and the US,” said Nat Puffer, the Sydney-based managing director of IQT International.
This isn’t IQT’s first punt on a New Zealand firm. The VC was also one of Rocket Lab’s earlier backers (and it remains a shareholder in the Kiwi-American firm).
In-Q-Tel, funded by intelligence agencies in Five Eyes countries, earlier helped to backroll Rocket Lab.
What attracted IQT to Kry10?
“We look for companies who can have an impact not only in New Zealand but across allied nations in the Pacific,” Puffer said.
“This was very much a multinational story, with a technologist from the US partnering with academics from a top Australian university supported by commercial talent and venture capital from the New Zealand funding ecosystem.”
What are the key applications that IQT sees for Kry10′s technology?
“Kry10 is developing two important features on top of a highly trusted foundation - the ability to safely push applications to safety-critical systems, and the ability to manage and update those applications securely from the cloud,” Puffer said.
“We believe Kry10 is special in providing a level of trust that mitigates a lot of common security vulnerabilities and anticipate broad applications for the technology across automotive, industrial control systems, telecommunications, and spacecraft.”
Image / 123rf
Could other local investments follow?
“IQT has been following the New Zealand startup ecosystem since our 2015 investment in Rocket Lab and is continually impressed by the founders we’ve engaged,” Puffer said.
“We opened our Oceania office in 2019 and almost immediately had to deal with pandemic-related travel restrictions, so we’re excited to be engaging the region again.
“The Kry10 story is clearly part of that, and we’re looking forward to finding more New Zealand start-ups of the same calibre.”
Washington to Wellington
Multerer - whom Microsoft called “Xbox’s father of invention” for his role in creating Xbox Live - relocated from Washington to Wellington in 2018, ready to make the life change from corporate life to the world of startups.
New Zealand first appeared on Multerer’s radar through LookSee - a council-backed 2017 promotion that offered to fly 100 applicants to Wellington, for free, to interview for tech jobs. 48,000 applied.
“The phone rings while I’m putting my kids to bed and a voice said, ‘This is Nick from LookSee. You’re overqualified and we have no jobs for you, but we want to bring you to Wellington anyway’,” Multerer remembered.
He liked what he saw - even though he ultimately gained entry and relocated his family under an Edmund Hillary Fellowship entrepreneurial visa scheme.
Staff are currently split between Auckland and Sydney. Although he has very much global ambitions, Multerer said Kry10 (pronounced “Kryten” after the character in the cult sci-fi series Red Dwarf) would keep its core development down under.
That’s because he sees Australasia as a hotbed of talent for an extremely mathematically intense branch of computer science called “formal methods” - which can be used to predict and avoid thousands of scenarios where things will go wrong.
Formal methods have long been used by chip makers. With Kry10, Multerer brings the practice to the operating system software layer. His focus was on utilising “seL4″ - a standard that grew out of the US military for verified, secure and “self-healing” software to wrangle connected devices. The American already knew his way around this sort of technology. Before Xbox Live could ship, it had to be certified by the US Department of Defence that it would not be a vector of a Russian attack.
Kry10 engineering lead McLeod - raised on Auckland’s North Shore - graduated with a degree from the University of New South Wales, which Multerer regards as the epicentre of formal methods. “There are a lot of great Kiwi engineers. I couldn’t do this anywhere else,” Multerer said.
75 billion connected devices
“I founded the company to protect the world’s utilities and protect people’s homes,” Multerer told the Herald.
But he saw issues across many sectors. “Many of the industrial controllers that run our factories are 40 years old. You can’t hook them up to the internet to monitor emissions or they would get hacked immediately,” he said.
Folklore managing partner Alister Coleman noted there had been two demonstrations of how a car’s digital systems would be hijacked remotely (one involving a Jeep in 2015, one a Mercedes vehicle in 2020 - both vulnerabilities have since been patched). “More worryingly, when one device is compromised it is often the case that the whole device network is exposed, leaving a host of connection points for hackers to gain entry into IoT ecosystems to access customer information,” he said.
By 2025, there will be an estimated 35 billion devices connected to the internet, from smart toys to power meters to vehicles and key pieces of infrastructure. Over the next five years, some 75 billion devices will be connected to the internet - but as things stand today, the “internet of things” is notoriously open to hackers. Multerer says the Kry10 Operating System (KOS) will offer a way to securely wrangle it.
While he sees broad application for KOS, the automotive industry is a special point of focus. The transition away from internal combustion engines has created rare moments where car makers are fundamentally reassessing how they put a vehicle together. The next few years will see if Kry10 can press home its advantage. If it does, it could become the largest tech firm founded on our shores.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
