Rectify Takes Its Lengthy History to San Antonio Security Incubator

San Antonio—Rectify, a business developing software to automate the process of removing private or sensitive information from documents when they’re shared, has had a busy start to the winter.

The Austin, TX-based company won $100,000 during a pitch contest in October at the Women in Tech Summit hosted by Capital Factory. A month later, it graduated from the Capital Factory Accelerator in its home city. And just this month, it joined a San Antonio incubator, Build Sec Foundry, that specializes in security startups. Its founders, Lisa McComb and Melissa Unsell-Smith, say it’s the first women-led company to join the incubator.

Rectify was incorporated in January and launched in May. Getting picked for an an accelerator or incubator and wining a pitch competition in year one could be seen as a signal the startup is off to a good start. But classifying Rectify as a startup doesn’t feel quite right, considering its roots date back to 2000. That year, its founders left jobs in the legal department of AT&T to create another business called Elumicor in San Antonio, TX.

More on that in a bit, but first, about Rectify: It offers clients a service that uses machine learning algorithms to remove proprietary information from records and documents that are going to be shared or sold—anything from facts about intellectual property to details about consumer identity or other sensitive data. The company is targeting large businesses in the financial services and higher education sectors. These organizations sometimes share documents with trade secrets and other private data and are often regulated by privacy rules that govern how companies handle private data, such as the European General Data Protection Regulation.

Other businesses offer similar redaction services, including software as common as Adobe and other private businesses like Madison, WI-based Extract Systems. Rectify believes that its focus on the financial and education sectors helps differentiate it from the competition. The founders also play up their prior experience in another business that developed software to remove information from legal documents during the discovery process in litigation.

McComb and Unsell-Smith have run that other business, Elumicor, since 2000. Elumicor has focused on the legal field, handling and automating the redaction process for law firms. (The software is used during the discovery process in a legal case, when opposing sides request and share evidence that can be referenced as the case proceeds.) Unsell-Smith and McComb became interested in applying their software and methods for redacting sensitive data from documents—on which they have patents pending—to other industries. They were invited to join the Capital Factory accelerator in 2017, and chose to create a new entity, Rectify, to comply with certain requirements of the accelerator, Unsell-Smith says.

Elumicor and Rectify are separate business entities, and Unsell-Smith and McComb’s long-term vision is for the newer company to replace Elumicor. The two founders say they’re working to convert Elumicor clients to start using Rectify’s software-as-a-service product. The techniques and automation methods both companies use are similar, but Rectify’s user interface is updated and the way the technology is deployed differs from Elumicor, Unsell-Smith says.

Before running their own business, Unsell-Smith and McCombs both worked in the legal department for AT&T, which then became a customer at Elumicor. AT&T and Elumicor got into a legal dispute in 2010, however, according to The San Antonio Express-News. Elumicor stored troves of AT&T’s legal documents, which accounted for much of Elimicor’s $5 million in revenue, according to the report. After AT&T said it planned to end its deal, Elumicor eventually sued AT&T to have a court determine how much AT&T should have to pay Elumicor to regain access to documents it was storing, according to the newspaper.

AT&T threatened further legal action, and Elumicor eventually filed for bankruptcy, putting everything else on pause, the report says. Elumicor exited bankruptcy after a reorganization in 2012. AT&T did not remain a customer.

Asked about the lawsuit, Unsell-Smith describes it as an unusual situation that sprung from a misunderstanding about how much time it takes to transfer data. The two companies didn’t have an agreement (an exit clause) about how to handle things if the business relationship changed, she says. Filing for bankruptcy was a legal strategy, not a financial matter, Unsell-Smith says. (The bankruptcy paused all other legal matters, according to the Express-News.) Elumicor and AT&T eventually patched things up, with AT&T getting its documents back and the companies maintaining an “amicable relationship,” Unsell-Smith says.

The ordeal hasn’t affected Elumicor’s ability to do business going forward. The issue was primarily about how long it would take Elumicor to transfer “terabytes and terabytes of data,” and technology has improved so much that transfer speeds are no longer an issue, Unsell-Smith contends. Plus, Elumicor was able to earn other new clients after its exit from bankruptcy, which are now becoming Rectify clients, she says. She declined to disclose financial details, such as about how many clients the companies have.

Now, Rectify is a company in a unique situation. Many businesses entering an incubator likely don’t have years of industry experience, let alone paying customers. Rectify has both.

Unsell-Smith says that with both Capital Factory and Build Sec Foundry, she and McCombs saw an opportunity too good to pass up. Both organizations provide various perks, such as office space, mentoring, and other marketing and legal resources. Build Sec Foundry was founded in 2016 in San Antonio to help entrepreneurs in the cybersecurity space—in particular, ex-military members with a startup idea. Founders come to the incubator to get advice on bringing their product to market, and other forms of mentoring from experts who have worked in the industry previously.

“You continually want to grow and flourish with your business,” Unsell-Smith says.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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