[THE INVESTOR] A Korean automotive startup Fescaro, launched a little over a year ago, has already lured global carmakers and investors for its security solutions that can be easily adopted in vehicles.
Fescaro differs by focusing on in-vehicle network, unlike other security solutions that emphasize more on vehicle-to-vehicle or vehicle-to-infrastructure.
The main software can be easily embedded in the Electronic Control Unit, a computer like device that controls and delivers signals and electronic systems inside a car, without the need to install separate hardware.
The technology was made possible thanks to the two young founders, CEO Hong Seok-min, a 33-year-old engineer from Hyundai Motor Group, and CTO Lee Hyun-jung, a 25-year-old white-hat hacker.
“It hasn’t been long since cybersecurity became an important issue in the auto industry,” Hong told The Investor in a recent interview in Seoul. “With the internet-connected car around the corner, global carmakers began adopting advanced secure solutions for their future products. With Fescaro’s already proven solutions, carmakers can easily adopt our safe software at a more affordable cost.”
Hong is confident the firm will be able to clinch more deals with global carmakers, once the firm rolls out the upgraded software Fescaro-HSM 2.0 by the year-end. It already secured a deal to supply version 1.0 to a global automaker last year.
So far, Fescaro has raised 145 million won (US$128,188) in seed money from two accelerators, SparkLabs and Sunbo Angel Partners, since it was established in July last year.
“We got a very good valuation, and plan to receive more investment once we launch the upgraded software,” he said.
The following are excerpts from the interview with the Fescaro CEO at the SparkLabs office in southern Seoul.
Q: Can you explain Fescaro in one sentence?
A: Fescaro is an automotive security firm that combines the expertise of an engine control unit security developer and a cybersecurity expert.
Q: How did you start the firm?
A: Previously, I had worked at Hyundai Motor Group for six years, focusing on developing security modules for cars. During that time, I didn’t have much understanding in the field of hacking and I was curious. So I participated in an one-year cybersecurity program called “Best of the Best” organized by the state-run Korea Information Technology Research Institute, where I gained knowledge and information on hacking mechanisms and security. After the program, I decided to establish a company with Lee Hyun-jung, whom I met through the program, to provide proactive security solutions for automobiles, to secure the cars faster and in a more effective way.
Q: Who are Fescaro’s core team members?
A: In total, there are five members in the team, including myself, and CTO Lee, who co-founded the firm with me. We have two researchers, who also participated in the “Best of the Best” program, and another person who is in charge of marketing. We are planning to hire more people as our business grows.
Q: What are the sales and profit figures?
A: We cannot disclose the exact sales and profit as the company is in its initial stage.
Q: How much investment has Fescaro raised so far?
A: We have raised 145 million won (US$128,188) in seed money from two investors, including 100 million won from Sunbo Angel Partners and another 45 million won from SparkLabs. We have many investors who are interested in investing in our firm. But for now, it is more important to successfully roll out version 2.0 of the security platform that is slated for December. After the successful launch, we will work on raising more investments.
Q: What are some key strategies of Fescaro that stand out against competitors?
A: Fescaro can input security elements from every step of the development cycle, from the design to development, integration, verification and testing phase. In the past, security systems came much later after the product development was completed. But nowadays, many countries require the (carmakers) to satisfy all the security requirements from the initial design phase. We focus on securing in-vehicle network of a car, which is still an uncontested field within automotive security. The product can be also easily installed inside the car’s Electronic Control Unit, making it convenient for the carmakers to apply in their vehicle platforms that have already been developed.
Q: What are some of the risk factors for Fescaro?
A: In the automobile industry, safety and credibility are extremely important. As a startup, gaining credibility from the partners and consumers takes time. Despite the high quality of our product, building reliability is difficult. Also if any troubles arises in the future, dealing with the problem as a company could also pose a hurdle. That is why we are preparing to secure a globally verified certificate for our product.
Q: How is Fescaro planning on expanding in the overseas market?
A: The overseas market is very important for Fescaro. Once we roll out our security solutions, we will seek partnerships with global platforms that connect startups with companies to launch advanced development projects (with the carmakers). We don’t have an exact timeline, but we are planning to enter Europe and the US. Global auto parts makers are our key clients. But in order for the auto parts makers to buy our product, carmakers who are our key target customers have to demand our solutions.
Q: What kind of partnership is Fescaro seeking in the future?
A: Besides traditional carmakers and parts suppliers, Fescaro can tie up with car-sharing services and aftermarket service providers, as they require high security protection as well.
We are not actively seeking partnerships at the moment, as the product development is more critical. Once we secure our own inherent platform, we will also focus on areas of consulting to provide solutions to the firms that need guidance in adding security aspects in their products and services. With the clients, we will lay out the security platform together and construct applications that fits each company’s needs.
Q: Where do you see Fescaro in five years?
A: The company is at the development stage. We would like to become a key security player in the automotive industry that establishes the next-generation security standard when many companies will widely apply our platform.
By Ahn Sung-mi (firstname.lastname@example.org)
The Investor Profile
Description: Fescaro is a comprehensive automotive security company that specializes in protection technology optimized for automotive electronic control system. Categories: Automotive, Security, Software
Founders: CEO Hong Seok-min and CTO Lee Hyun-jung
Total equity funding:
145 million won (US$128,188) in 2 rounds
►45 million won / Seed/SparkLabs
►100 million won/Seed/Sunbo Angel Partners