Prominent SA startup FireID hits the skids

FireID, a Stellenbosch-based startup specialising in mobile authentication, will probably be forced to close its doors or dramatically downscale after news that its main investor has pulled its funding.

The main source of funding was via the Luxembourg-based Reinet Fund S.C.A., run by billionaire Johann Rupert, who invested in the company through Cape Town VC 4DiCapital. The company employs just under 40 people.

Justin Stanford, who runs 4DiCapital, told Memeburn on Wednesday night that Reinet’s refusal to renew the funding “came as a surprise”.

“It’s been an emotional day… We were confident of a renewal due to FireID’s revenue,” he said.

Stanford was still hopeful, however: “We hope all is not lost and we are talking to more investors and customers. It’s a great product and the customers love it.”

Messages of support for the startup poured through on Twitter, with Stanford tweeting: “Thanks everyone. It’s been a big shock. We fought very hard for FireID’s survival but in the end we weren’t able to persevere.”

Stanford later tweeted that the company “…more than deserves to be saved”.

The Financial Mail reported that FireID, the brainchild of highly-regarded developer Malan Joubert, had raised around R48-million in funding. This is on top of the seed capital that Stanford had initially invested in the company in 2008.

The new round of investment was to fund the company’s international expansion, primarily in the US and UK markets.

FireID’s primary service lies in a mobile application that “secures sensitive information and transactions for leading international financial institutions and large enterprises”.

The company was awarded several international awards, including the Frost & Sullivan Global Excellence Award in 2010 and the African Mobile Two Factor Authentications Solutions New Product innovation Award.

Another Cape Town entrepreneur, Vinny Lingham, also received an injection from Rupert’s Reinet Fund in Series B funding to the tune of $25-million in 2009 for his Silicon Valley-based start-up, Yola. Yola, previously known as Synthasite, is a website creation tool.

Reinet Fund is a wholly-owned subsidiary of Reinet Investments S.C.A.. It is a long-term capital growth fund, managed by the Rupert family of South Africa. Reinet was created out of the restructuring of Richemont, the Swiss luxury-goods group.