SA email protection startup Sendmarc nets investment from Kalon Venture Partners

Sendmarc, a Johannesburg-based startup that offers email protection from phishing attacks and email spoofing, has landed an undisclosed amount in investment from SA venture capital (VC) company Kalon Venture Partners.

The deal was concluded in December last year, Kalon Venture Partners CEO Clive Butkow revealed to Ventureburn last week.

It comes after Butkow revealed that the VC had also made several top up investments in its existing portfolio companies (see this story).

Sendmarc was founded in 2018 by Keith Thompson (pictured above, middle with co-founders Sam Hutchinson, left and Sacha Matulovich, right), with Sam Hutchinson joining in October last year. Earlier this month the two were joined by a third partner, serial entrepreneur and founder of Re:public Media Group, Sacha Matulovich.

Hutchinson founded cloud communications service Everlytic in 2010, before he sold it to Vox Telecom in 2016 for an undisclosed amount (see this story).

Sendmarc has netted an undisclosed amount in investment from Kalon Venture Partners

Hutchinson told Ventureburn last week that he and Thompson initially funded Sendmarc themselves and had together put in about R1-million since the startup’s inception. Hutchinson said he left Everlytic at the end of September to join the startup full time.

When he and Thompson went out to speak to venture capital (VC) companies, within two months the two had already received a number of offers from VCs, he said.

In the end, the duo went with Kalon Venture Partners, who Hutchinson says offered “good money for fair terms”. “Clive has put in enough money for us to get a good way,” he added.

DMarc reporting

The startup helps corporates and small businesses to implement the Domain Message Authentication, Reporting and Conformance (DMarc) industry standard for email protection.

Implementing the standard helps protect one’s domain name from scamsters stealing the domain name to send hoax emails to companies’ clients, suppliers or network.

Each year such scams cost businesses millions of rands — in things such as payments being made to scamsters who, using a business’s domain name, send out emails pretending to be someone from that business and then direct this business’s clients to pay any invoices owing to their bank account.

Hutchinson points to the example of one client the startup assisted, a small two-man travel agency that lost R1-million when scamsters used their domain name to get clients to pay invoices into their own bank account.

Another example, he singled out, was that of a large vehicle retailer where scamsters had struck as well, getting customers who bought cars, to direct payments to their bank account.

While the process that Sendmarc uses to protect clients can be carried out by domain name owners themselves, the startup makes it easier for those that are not so technically-minded, by handling the entire process on behalf of clients. The startup charges clients between R450 and R50,000 a month.

Simply put, the process involves configuring the domain name’s DNS on the server and then enabling reporting — which then allows the domain name owner to see who is using the domain name to send emails legitimately or not, and in so doing spot scamsters.

By doing so, the domain name owner is then able to enable full protection and in so doing prevent others from illicitly using their domain name to send emails.

‘We’ve put in R1m’

Hutchinson told Ventureburn last week that the startup launched operations in July last year and is currently working with 100 companies, covering over 200 domains.

Not all are paying customers, as Sendmarc offers to first analyse the security of the domain names of potential clients before charging them. Hutchinson declined to reveal how many paying clients the startup currently has.

He said the startup has seven employees and is now looking to hire about 10 new employees in the next two to three months. The new hires include sales people and software developers, he added.

Competition hotting up

Looking ahead, Hutchinson is thinking big. “We’re going to make the internet a safe place,” he says, pointing out that the aim is to extend Sendmarc’s service to 200 000 small and medium-sized firms in South Africa.

But he better be on the lookout. The startup can expect tough competition from UK based Mimecast (founded by another South African, Peter Bauer).

In November last year the company acquired Netherlands-based DMarc Analyser which has 17 employees and was founded in 2012, for an undisclosed amount.

Expect investors’ money to chase after email protection in South Africa — as fast as scammers are fleecing it from unknowing domain name owners.

Read more: Kalon Venture Partners tops up three portfolio investments, makes new deal
Read more: Vox buys out SA cloud marketing outfit Everlytic
Read more: Interview: Sam Hutchinson, CTO of unified messaging juggernaut Everlytic

*Correction: We incorrectly referred to the email protection startup that Mimecast recently acquired as Hiversum, when it is in fact called DMarc Analyser.

Featured image: Sendmarc founders Sam Hutchinson, Keith Thompson and Sacha Matulovich (Supplied)