Flare Systems has raised $9.5 million CAD in Series A funding to propel what the digital footprint monitoring startup describes as rapid expansion into the United States.
“The company has enjoyed good success in the Canadian market,” Flare CEO Norman Menz told BetaKit. “Our focus for the next two years is really expanding awareness of Flare in the rest of the North American market, principally in the US.”
“At the root of it is a flare you use to light things up that are dark.”
– Norman Menz
Menz said the new funds will enable Flare to build out its sales and marketing team. Currently the startup has some 45 employees. Menz expects that to grow to just under 100 employees in the next year, and another 50 in the year after.
Inovia Capital led the round with participation from White Star Capital and Luge Capital.
Flare claims that its digital footprint monitoring software enables organizations to monitor the internet, including the dark web for data leaks, credential theft, and cybercrime. The SaaS platform enables cyber risk monitoring across billions of data points.
“Mid-sized organizations are struggling to effectively manage their external risk posture due to a rise in accidental data leakage and targeted cyberattacks,’’ said Mathieu Lavoie, Flare’s CTO and co-founder.
Flare’s software is used by companies around the world to quickly identify external risks, and cut down incident response from weeks to minutes, the startup claimed.
‘’We’re excited to invest in a top of mind and dynamic cybersecurity market alongside a top-notch management team with extensive domain expertise,” said Taha Mubashir, a principal at Inovia.
With the raise, Mubashir joins Flare’s board. Menz cited Mubashir’s strong financial background , and said that given the current economic situation in the market there might be opportunities to expand Flare through acquisitions. “We’re working closely with our investors to figure out the right strategy,” Menz said.
Flare’s customers are largely in financial services, high tech, health, and pharmaceuticals. According to Menz, the verticals the startup focuses on are security conscious and typically regulated, and in which data leaks could impact such things as intellectual property or personal records.
While hackers often make the headlines when companies are breached, Menz said roughly 80 percent of data leakage takes place through human error. “That human error is a lot of times inadvertent human behaviour,” he said. “Lessor so it is malicious actors.”
Currently, the startup is targeting mid-sized companies with its software. “We do enjoy the fact that we have some of the largest financial institutions and organizations in the world as customers, but we think the biggest opportunity is to serve the mid-market customers with enterprise grade tools,” Menz said.
He pointed out that because of the cost and complexity of the tools used to monitor the dark web and provide digital risk protection, they are typically available only to large entreprise businesses. He said the mid-size enterprises have the same risks and threats, but lack the tools to combat them.
Flare describes its customers as global in nature but often headquartered in the US. The startup said it derives roughly 70 percent of its revenue from North America, and around 20 percent from Europe, with the remaining 10 percent comes from the Asia-Pacific region
In Canada, cybersecurity is a burgeoning tech sector with a multitude of startups. They range from LimaCharlie, which closed a $7 million seed round in May to provide custom cybersecurity strategies to security professionals; to HYAS, which raised a $20 million CAD Series B round of funding. The latter is developing its cyber attack infrastructure identification and blocking technology. Flare’s closest Canadian competitor may well be Liferaft, a Halifax-based firm that alerts enterprises of security threats and business risks using online threat intelligence.
The Canadian government announced in 2021 the creation of a pan-Canadian cybersecurity program with $80 million in funding over four years. The Cyber Security Innovation Network is designed to support cybersecurity research and development, commercialization, and skills and talent training, and aid the growth of the country’s cybersecurity ecosystem.
Flare was co-founded in 2017 by former CEO and current CTO Lavoie, chief architect Israël Hallé, CPO Yohan Trépanier Montpetit, and former CRO David Hétu. The startup closed a $1 million seed round in 2019.
The founders decided to call their startup Flare with the idea of bringing light to the dark web.
“At the root of it is a flare you use to light things up that are dark,” Menz said.