Datacastle, with Aussie Connections, Moves Into Corporate Data Management

Managing data on desktop and laptop computers is a perennial problem for businesses. That’s because IT managers and administrators don’t have control over individual machines the way they do the servers inside their own data center. So dealing with issues around each laptop’s security, privacy, and data backup and recovery tends to be costly and inefficient.

Enter Datacastle, a Seattle company that has been running quietly for almost five years. Originally focused on small-scale data backup and recovery, Datacastle is branching out into the broader business and enterprise market for all sorts of data management applications—encryption, automatic backup, recovery, read-write access, device tracing, and information shredding—all wrapped up in a single product it released last week, called RED.

Datacastle’s customers include companies in finance, retail, healthcare and insurance, says CEO Ron Faith. Its products are available as a Web service, or to be installed on company computers, through its partners in North America, Europe, and Australia. Currently the software works with Windows operating systems—XP, Vista, and Windows 7—but Faith hinted that the company is interested in exploring Windows Azure, Microsoft’s cloud-based operating system, as well as other platforms like Apple.

The enterprise market seems like the most likely way for a small company like Datacastle to get enough revenue to succeed. Faith says that it costs companies an average of $6.75 million each time they lose data. And last year was the worst on record, with some 220 million data records breached (some high-profile credit card company snafus come to mind).

Datacastle says it competes mainly against individual services for things like online backup (Iron Mountain, Symantec), encryption software (PGP), and remote data and device tracking (Absolute Software’s LoJack). Some other notable companies in the data backup space, like Mozy, aim to serve consumers more than businesses.

The key to Datacastle’s success will be the ability to put it all together in one package that minimizes the headache involved in installing all these separate data-related features. Faith has valuable perspective on this point, having worked at Apple and Qpass, the Seattle-based mobile commerce firm, where he had to worry about security with software-as-a-service. “If you put friction in place trying to implement security, end users will try to get around it or block it,” he says.

The company’s founder and chief technology officer, former Microsoftie Gary Sumner, is from Australia, as are some of the company’s developers. So it’s no surprise that Datacastle is backed by Aussie venture firm CM Capital Investments, which most recently put in $3 million in November (on the heels of a $5.3 million Series A round in 2008). Faith says he has gotten interest from Seattle and Bay Area investors as well, but the fit with CM Capital has been “fabulous.” He originally had some concerns about having board members and investors on the other side of the world, but says he now makes the trek Down Under twice a year.

Since he’s a former Apple guy, I also had to ask him about the iPad. “I like the product,” Faith says. “People had such high expectations. I think it has high potential. I’m a heavy Kindle user, but I think there’s room for [another]. I see it as a casual device. It has potential [as an e-book platform].”

More broadly, Faith has some inspiring words for companies in Seattle and beyond. “Startups that make it through periods like this end up being very nice wins for all concerned,” he says. “It’s times like this when members of the entrepreneurial community win their stripes. The companies that do well through this period, they’re well poised to succeed on the other side.”

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