Toronto-based Ethica Channel Enablement has closed $2.3 million CAD in seed funding to bring its software to more businesses around the world.
Founded in 2018, Ethica aims to offer “an accessible way to deliver enterprise-grade internet access for everybody” through its flagship CloudAccess software product.
“If you can trust your underlying internet connection, you can compete in a digital economy,” Ethica chief product and revenue officer Brad Lagasse told BetaKit in an exclusive interview.
“[In] cost-sensitive regions like India, like Africa, we can sell this, whereas the big guys go in and it’s too expensive, it’s too complicated.”
“If you are stuck with a small DSL [connection] or something that fails once a week or once a month, you’re in big trouble—restaurants, and enterprises, and banks, and everybody in between.”
According to Lagasse, Ethica’s CloudAccess offering helps organizations boost speeds through link aggregation and ensures continuous internet connectivity when a connection fails.
The company’s all-equity seed round, which closed in June, was led by Toronto-based GreenSky Ventures and marks Ethica’s first institutional funding to date. The round came at a $7-million post-money valuation. It brings Ethica’s total funding to approximately $5.3 million, a figure that also includes nearly $3 million the company says it has secured from friends and family to date.
Ethica co-founder and CEO Alan Zimmermann told BetaKit that the startup plans to use this capital to fuel its global expansion plans, as the company sees room to grow in markets like Africa, India, Mexico, and South America.
The company does not sell directly to end users, but rather through internet service providers (ISPs) on a private-label basis. “We like to call ourselves the plumbing of the new internet,” Lagasse said. “We’re not the sexy guys. We’re not selling … cloud access or the Ethica product itself—[ISPs are] taking our licence and they’re building it into their product portfolio.”
According to Zimmermann, Ethica’s solution works with any access type, from wireless to wireline to satellite, from any ISP. “You could be a ship at sea, you could be a food truck, you could be in an office building in Nairobi, it doesn’t matter where you are or what you use, you will get a faster, more resilient, intelligent internet connection,” he said.
Ethica got its start by focusing on smaller regional players across Canada and the United States. But Lagasse and Zimmermann said the company realized focusing on North America and competing directly against networking giants like Cisco and Fortinet was not the best approach.
“Generally, most businesses [in North America] trust their internet, so they’re not necessarily going to jump on the opportunity to pay a premium to have multiple internet connections to insure against a network failure,” Lagasse added.
Last fall, Ethica made a “key pivot” to targeting other parts of the world with less reliable internet and began expanding internationally with larger ISPs. Its target markets now include Africa and India, where many businesses already pay for multiple internet connections from different providers because failures are more common.
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“We didn’t have to push water uphill and sell people on the idea [of] what happens when you lose your internet—we started focusing in a market where they already know that is a massive risk to their business,” said Lagasse. This shift, and the progress the startup has seen since then, is part of what drew GreenSky to invest in Ethica, he said.
“Ethica has done an excellent job validating the technological capabilities of their solution and building strong partnerships with large players to gain access to global markets,” GreenSky partner Neil Peet told BetaKit.
Peet noted that Ethica has rolled out pilots across Canada, including with the Canadian Navy, established partnerships with multi-billion-dollar network service organizations, and built out reseller agreements across Africa and the Middle East. “The Ethica platform is positioned for global growth and we are excited to partner with Ethica on this next stage,” he said.
Peet highlighted that GreenSky has deep expertise in network infrastructure, with partners that include the former CTOs of RIM and Virgin Mobile, and several experts in network security and system architecture with Cisco.
He argued that while the network connectivity space and the segment of the market Ethica serves have become “increasingly crowded, there are very few technology offerings which are approaching these network problems in the way Ethica has.”
Zimmermann noted that Ethica’s software is hardware-agnostic, unlike competing solutions, many of which also require ISPs to purchase particular hardware. He also claimed that CloudAccess is also cheaper and easier to deploy and administer than other available offerings.
“[In] cost-sensitive regions like India, like Africa, we can sell this, whereas the big guys go in and it’s too expensive, it’s too complicated,” Zimmermann added.
While established networking players “have done a great job extracting money out of that top-tier [enterprise] segment,” Lagasse claimed that the vast majority of the market has been left underserved. He expects the giants to catch up at some point, but also anticipates it will be difficult for them to adjust their business models and pricing to compete with Ethica.
Feature image courtesy Vecteezy.