Crowdsourcing growth helps Bugcrowd secure $1.6m in VC funding, US office

Australian crowdsourcing startup Bugcrowd is popping the champagne after securing $1.6 million in seed funding that will support the company’s significant growth and the opening of an office in the US.

Bugcrowd moved early to establish itself in the rapidly expanding field of bug-bounty programs, in which application vendors and private organisations offer prizes to white-hat hackers that identify bugs or vulnerabilities in their code.

Bugcrowd maintains links with a growing roster of more than 3000 security testers and manages their interactions with the client’s systems to ensure security is preserved and any discovered vulnerabilities are kept private. It recently negotiated for security professionals to receive continuing professional education (CPE) points for participating in its bug-bounty programs.

The concept has taken off through the year as a flood of vulnerabilities leave large Web properties feeling exposed: Facebook, Google, Microsoft, Mozilla and others have recently introduced their own programs.

Originally founded by security researchers Casey Ellis and Sergei Belakomen through Australia’s Startmate startup incubator program, the company has gone from strength to strength. Its client based now includes the likes of Coles, Rabobank and Big Commerce, with word-of-mouth and repeat business helping secure its growth.

Three months in the US culminated in crowdsourcing arrangements with a range of US firms, with operations soon to expand with the support of US venture capital firms including Icon Venture Partners, Paladin Capital Group, and Australian-linked Square Peg Capital.

"The company's technology shows considerable potential as a solution to the growing asymmetry between security threats and security testing resources,” Paladin managing director Lieutenant General (Ret.) Ken Minihan said in a statement. “It allows corporates and governments to access a global, 24x7 resource of trusted security testers.”

Icon Venture Partners general partner Charles Beeler was also enthusiastic about Bugcrowd’s future “highly compelling” prospects. “This is a strong team with a big vision, and I’m thoroughly enjoying working with them,” he said.

“Many industries are leveraging the scale of crowdsourcing business models and it makes sense to apply those same market mechanisms to the growing challenges of securing user and financial data online.”

Copyright © 2013 IDG Communications, Inc.

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