Start-up your engines

Hundreds of security start-ups are bursting into the channel at a rapid pace. Samantha Wright weighs up the pros and cons of working with cutting-edge companies

The security market is constantly changing as new technology develops, with innovations in cloud computing and IoT presenting new security challenges which have opened the door for hundreds of start-ups in the past few years. But while start-ups often bring fresh ideas and innovative products to the market, they can also present a risk to partners choosing to take their wares to market.

According to Statistic Brain, just 37 per cent of information start-ups will still be operating after four years in business. This means resellers that invest in the other 63 per cent could stand to lose hefty amounts of cash invested in the new companies, as well as invaluable time and resources.

One recent security start-up is Cato Networks, set up by Shlomo Kramer, the founder of Check Point and Imperva, and the first investor in Palo Alto Networks. The firm, which specialises in network security as a cloud service, has already begun looking for partners in the UK, despite starting trading only last year.

Kramer claims that setting up a channel right away is essential to the company's success.

"Our first extension into Europe is through partners, because they are extremely important for building up the Cato name," he said. "We want to pick strategic partnerships where we can invest in them and be successful with them."

While start-up vendors are desperate to get a channel in place to secure vital distribution and customer awareness, some resellers can be wary about getting too close with new vendors.

Bob Tarzey (pictured right), analyst at Quocirca, said the main risks of working with new vendors are that the category in which the vendor sits doesn't take off, or that the start-up is pushed out of the market by other new vendors.

"There are hundreds of security start-ups at the minute. Any start-up has to establish some creditability and have some success stories before channel firms will have the confidence to think that the company is going somewhere. Most resellers want to see that a product has some mileage in it - and a vendor needs to prove that," he said.

"The threat landscape is always changing and the sophistication of the attackers is always changing. If the start-ups prove they have an effective new defence for customers then the big companies will take them over. It's a constantly moving front."

Start-up success

Despite the potential risk associated with start-ups, Stephen Donovan, marketing manager at AVR, said that the VAR enjoys working with new vendors because they bring a lot of enthusiasm and a new perspective on the market.

"We have our own technical people in-house so we are quite structured in the way we assess all the new solutions that come to market," he added. "It would be very easy for an independent reseller like us to take everything that comes to you. But our technical guys stay close to the market and our customers, to really understand what the key issues are. Then we find solutions that will solve or deal with those issues. A start-up has to work really hard for us to take them on.

"They bring huge enthusiasm and fresh approach to the market. There are a lot of legacy vendors in the marketplace. They have been there for some time, but the market has evolved dramatically over the past four or five years. The start-ups are coming in with new tech and have a really flexible, dynamic approach that some of the traditional vendors probably had when they started but they have become larger, less flexible organisations. Legacy vendors don't have that dynamism that you get from a start-up."

Cautious cats

MTI's security business was historically focused on new vendors, but Andrew Tang (pictured left), service director for security at the company, said that the focus has changed as the market has moved to demand solutions that are more established.

"We made a move away from taking on start-ups. Now we only deal with players who have been around for a number of years," he said. "We have had some interactions with start-ups but they always seem to be at the wrong point. If they are at that development point it is hard to tell whether it is just a pipe dream. Historically the security business was all about new technology, but that management team has been and gone. I think the marketplace is demanding something more prudent."