BOSTON, U.S. -- Sumitomo Corp. is looking to cash in on Japan's growing cybersecurity concerns with a roughly $7 million investment in U.S. software encryption startup PreVeil.
The investment was made through Sumitomo's investment arm Presidio Ventures and will help the Boston-based startup make its first foray into Japan, which is looking to boost its cybersecurity ahead of next year's Olympic Games.
Founded in 2015 by a group of researchers from MIT, PreVeil employs an end-to-end encryption approach that enables email and files to remain secure even when servers are breached, passwords are stolen, and IT administrators compromised.
Traditional cybersecurity methods rely on firewalls to keep hackers out of email systems or databases. End-to-end encryption, by contrast, encrypts the messages themselves so that only the sender and recipient can see the information. Even if a hacker breaks into a company's email server, for example, they will have no way of deciphering the data -- even PreVeil cannot read emails sent using its technology, according to the company.
PreVeil's approach was based on research by co-founder Raluca Ada Popa, an assistant professor at the University of California Berkeley and one of the "35 Under 35" chosen by the MIT Technology Review in 2019.
According to Popa, what set her company's product apart from rivals is convenience. "PreVeil makes encryption very easy to use for both enterprise and individual users," she said.
Messaging apps like WhatsApp and Signal already use end-to-end encryption, but applying the technology to enterprise software is more of a headache, as it normally requires specially installed software and using a separate interface.
PreVeil, however, simply adds a plug-in to popular email clients like Outlook or Gmail.
"You won't feel any difference when using it, but your emails will be encrypted. No hassle," Popa said when she demonstrated the technology to the Nikkei Asian Review in September.
PreVeil's software also works with applications such as Dropbox to add end-to-end encryption to files in the cloud.
And convenience is key for security, according to Ross Leav, senior director at Presidio Ventures who led the investment in PreVeil.
"I've looked at many technologies that are getting close to what PreVeil does today. One simple problem is that they are awkward to use," Leav said. "The other software usually requires you to go to some separate portal or use some separate email program that's not the one you usually use, like Outlook or Gmail. And the result is that nobody uses it."
The investment is a strategic play for both sides. PreVeil has been trying to break into the Japan market, while Sumitomo Corp. is betting on growing demand for cybersecurity.
"The wave of the fishing email attack is everywhere in the world and is not going to avoid Japan," Leav said.
The Japanese government has made cybersecurity a top priority as the country prepares for Tokyo Olympics and Paralympics next year, setting up the Cyber Security Council set up in October.
Japan Inc. is also looking to boost security following several high-profile cyberattack on major companies.
The most recent incident hit the e-commerce platform of Fast Retailing Co., Asia's largest retailer and the owner of the Uniqo and GU brands. Hackers broke into the system in May and accessed the details of at least 460,000 accounts, including such information as history and partial credit card numbers, according to the company.
"The Asia-Pacific is facing a greater need for this kind of cybersecurity technology at a quicker space compared to the Western world," according to Leav. As Asia races ahead of the rest of the world in adopting cloud technologies, security measures are struggling to keep up.
For PreVeil, having Sumitomo as its first customer in Japan could give the company a leg up -- the conglomerate is planning to deploy the encryption technology group-wide soon.
"We ourselves need this product and we are not a small company," Leav said. "Starting by just addressing the needs inside entities within Sumitomo Corp., we will build confidence in the Japanese market that PreVeil is usable in Japan."