PixelPin
Replacing passwords with pictures for an easy and secure login for mobile devices and tablets.
- Location
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London,
United Kingdom
Categories: Programming & Security Digital B2B
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Investment
sought: - £250,000
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Equity
offered: - 7.69%
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Investment
amount: - £508,330
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Valuation
(pre-money): - £3,000,000
Idea
Introduction
PixelPin is designed for today’s always-on, mobile-first and multi-device generation. It replaces passwords and PINs with a secure, user friendly and private method of logging into web sites. The cloud based solution allows mobile and web users to use a personal picture to login using 4 points providing a global solution that is language independent and perfect for mobile. All authentication data is fully encrypted using TLS for communications and AES256 in the cloud.
Intended impact
The cost of password breaches last year was estimated at $200B according to Forrester Research. Being able to successfully complete transactions on the web is important for all types of communities. At the moment 45% of transactions fail due to authentication problems. PixelPin provides a cost effective solution that encourages engagement on all types of devices, is language independent and accessible. Most importantly we provide a personal secure experience that does not require users to form a difficult mathematical task like create a good password, and keeps their personal data private.
The 2 main concerns we see today from companies talking to us are mobile engagement and a drop off in Social Logins, often at 15% or less of users.
Businesses will benefit from implementing PixelPin in 2 main ways:
1. Increased security and cost reductions from reduced fraud, phishing and account hijacking – typically 2% of turnover for eCommerce, and much higher for a bank or FinTech business. Companies such as BT tell us that password resets are high cost overhead requiring dedicated call centres.
2. Increased revenues from customer engagement - especially through mobile – driven by a smoother, more secure customer experience that leverages the “visual web” trend of popularity of photos and results in fewer failed transactions.
PixelPin charges a monthly subscription fee to businesses. PixelPin is always free to end-users.
Substantial accomplishments to date
PixelPin has been working with customers and users over the last 2 years to develop the product into exactly what the market requires. The updated product is launching in July and is fully mobile responsive. The product has also developed to include business metrics and branding. PixelPin has been gaining credibility and attention evidenced by:
• Being chosen by 12 Tier-1 Banks to enter the FinTech Innovation Lab run by Accenture.
• Achieving our first paying customers.
• Going live on a Government platform in Sept 2014.
• A pipeline of customer brands at varying stages of engagement.
• A Government grant was won in July 2014 to implement FIDO standards into PixelPin and successfully completed in Dec.
• Entered the BT Infinity Lab in Jan 15.
• Won a grant with the EU project 'trusted cloud' in April 15.
• Pre-selected by the World Economic Forum Technical Pioneers.
We have been working with BT since Jan are focused on PoCs with BT and their customers. The first BT PoC starts in July.
Monetisation strategy
PixelPin charges a monthly subscription, giving businesses increased engagement with its users, in a more secure way.
PixelPin is sold in 3 price bands dependent upon the number of users, with add-ons for a login metrics package and with the new design a branding package. Part of the market validation has been to verify the price bands. The medium and small companies are be able to self sign up and integrate PixelPin without any PixelPin supplied support. The enterprise companies sometimes request professional services to help contextualise PixelPin within their own on line presence. There are also a freemium band for small companies, who are then able to buy the additional packages.
There are also native mobile plugs (iOS and Android) available for mobile authentication.
We are also working with BT to develop an on-premise version that can also be delivered through a virtual private cloud. By the end of the year PixelPin will be in BT Cloud Store as an App. These versions will be sold on a licence basis. We have a customer that is ready to start a Proof of Concept Trial with a stand alone appliance once ready.
Use of proceeds
The current PixelPin challenge is having the resources to turn the Proof of Concept Trials planned over the next few months into paying customers. This raise is focused on:
• Supporting 5 Proofs of Concepts in 2015 in partnership with BT and banks.
• Generate recurring revenues from 10 small, 2 medium and 1 large customer.
• Generate 1M PixelPin users.
• Hire a dedicated salesperson with proven track record of successfully selling security solutions into FinTech and E-Commerce customers.
• Add additional developers to work on virtualisation, payment, APIs, and mobile.
• Build an analytics and billing capability.
PixelPin would then scale, having all the key business case information available and confidence in the technical solution proven through high value customer adoption.
In addition we will be appointing 3 Non -Exec Chairman who will be transformative for PixelPin as they are well known in the industry and are able to lead PixelPin into the growth phase.
PixelPin received a loan from Trant Holdings Ltd, the outstanding value of the loan is £92,180, which will convert to equity on this round at a 15% discount on the current offered share price.
PixelPin has also granted a warrant to Momentum Accelerator over 3% of the fully diluted share capital of PixelPin which can be exercised at a pre-money valuation of US$1,000,000.
Market
Target market
According to Gartner, in 2014 worldwide information security market growth will accelerate to 8.6% and exceed $73 billion. We believe this growth will continue due to:
1. Cyber security threats continue to rise.
2. The internet of things will exacerbate the problem, with millions of new devices coming on line.
3. Cyber security is now a problem for everyone as more people use online services.
The authentication market that is addressable by PixelPin is set to be worth over $10B according to Gartner.
Although PixelPin is able to provide its services to all online vertical markets across the globe we are focused on FinTech and banking, which have the biggest problem in this area. This evidenced by our section into the FinTech Innovation Lab run by Accenture last year. The selection process was carried out by the banks them selves (12 major banks). This has been followed up by continued dialogue with UK banks, challenger banks, and banks from overseas.
Over the next year we are concentrating on medium sized FinTech Companies, Opportunities brought to us from BT and Telefonica, and we have some more social sites that we are working with mainly in the areas of photography. We are also continuing the conversations and opportunities with Banks, though we are no expecting to close these this year. We have developed our first Fast Identity Online (FIDO) alliance version of the Android App and this App needs to go through the certification processes which has recently been offered to companies.
We have found the strength of PixelPin's simple user interface continues to make it stand out, and any company that requires a cross platform 'what you know' solution is a target for PixelPin. We have in bound interest from companies across the EU, South Korea and the US.
There are over 500 million sites with password logins at the moment, so the market size for PixelPin is immense.
Characteristics of target market
In the past 2 years there has been an increasing amount of media publicity on businesses that have been hacked and several famous brands have recently disclosed breaches which placed their customers at risk and damaged the businesses reputation. There has been a large surge of users conducting their affairs on mobile. Tablets and Mobile are becoming the predominant source of eCommerce revenue for businesses and there is a lot of interest in usable secure mobile solutions. The eCommerce and financial markets are very competitive, and are keen to adopt new technologies that will give them a competitive advantage.
The mobile authentication market alone is valued at $760M in 2014 by Goode Intelligence. We have found that businesses currently tend to purchase authentication products such as tokens which are expensive and are looking at alternative solutions to passwords and PINS.The penetration of tokens is largely confined to the banks, and they know that users do not like them.
Marketing strategy
PixelPin has so far developed an impressive pipeline with only a very small team, using primarily networking as the main way of reaching out to potential customers. Having spent 2 years listening and understanding the market we now have a practical go to market strategy.
The work we did with the banks in the FinTech Innovation Lab last year showed us that we needed to work with well known partners in order to gain trust and credibility. We have seen that since we have started working with BT this has helped a lot, and they are now introducing us to to their own customers. We are now reaching out to new partners, in the UK and overseas to replicate that success.
We are focusing on the markets where social logins do not go have a presence, i.e. FinTech and large brands. By targeting this group it is allowing us to make good penetration and to get known. We continue to use L39 in One Canada Sq as a meeting point for these companies. Juhi, our business developer was recognised as one of the 100 women in FinTech and is now well respect in this space. The PixelPin founders have continued to speak and also be recognised in the security space.
As PixelPin's name becomes more recognised over the next year we will also use social media campaigns and thought leadership events (one planned for Sept) to reach out to a wider customer base.
PixelPin will recruit a sales person this year to further accelerate the pipeline and deal flow. We will also appointed Non Exec Directors in August who have many contacts and reach into our target markets.
Looking further ahead there are a number of initiatives such as the Government Open Identity Exchange that we have already registered interest in that would give PixelPin reach. We will also start to concentrate on sites with large numbers of users such as photography sites so that we reach a threshold of users that will allow us to generate firm Return on Investment metrics.
Competition strategy
Authentication uses at least one of the following: 'something you know' e.g. passwords, 'something you are' e.g. fingerprints and 'something you have' e.g. a hardware dongle. PixelPin replaces passwords and PINs as a 'something you know' solution. PixelPin delivers a cross device, private, and secure solution that keeps the business in control of its authentication. New authenticators are arriving in the 'something you are' domain, and they suffer from the same problems. Registration is the biggest problem of biometrics, if someone registers a device as you, using their biometrics you are locked out of your accounts. This is a big problem for banks. Biometrics on phones are not that secure, not always reliable, cost money, and are not liked by everyone because of the doubts about privacy. Device authentication is generally considered to be a second factor, as using your device you login with as the the login is a weak solution. Despite these new solutions, PixelPin is the only viable 'something you know' alternative to passwords. In the FinTech/Banking industry we find that social logins are generally not used, and when tried have limited adoption. Users do not trust social logins for financial transactions. The feedback we are getting from our customers is that FinTech and banks value a 'something you know' authentication, and PixelPin can reach all their customers very quickly.
This is a quote from the CEO of DashLane Emmanuel Schalit made on the 7th July to Computer Weekly: Schalit predicts that whoever solves the problem of identity in future, it will not be one of the technology giants.
“Consumers are fundamentally platform-agnostic and those that live only in the Apple world or only in the Google world represent a very small minority. Identity is a cross-platform problem, and I predict it will be solved by an emerging player that is not constrained by a single environment or platform,” he said.