Hideez: Ukraine’s Pivoting Start-Up

The Ukrainian tech startup Hideez Group is not entirely a newcomer in the market for cybersecurity and authentication devices and services. It was founded in Kyiv in August 2015 by Oleg Naumenko, Andriy Konkov and Denis Zaliznyak and received 325,000 US dollars in seed funding from angel investor Volodymyr Shchupak, business incubator UUI Ventures and the investment firm Concorde Capital in December 2016. In January 2017, the Kyiv-based Ukrainian Venture Capital and Private Equity Association (UVCA) invited eight technology start-ups from Ukraine to exhibit their products in a special area called UaTech Expo Zone at the Consumer Electronics Show in Las Vegas, Nevada. Hideeez was one of the eight invitees.

The company initially focused on the B2C market. Its first product, Hideez Key, is a device that can be attached to a key ring and safely store up to 1000 user passwords and lock and unlock your electronic gear. It is available for multiple platforms, including Android, Windows and Mac. Hideez Key first appeared commercially online in both the US and the EU through the Amazon Launchpad programme for startups. Since the autumn of 2017, 3000 units have been sold at a price of 49 US dollars through a combination of Amazon and Hideez’s own web site.

CEO Oleg Naumenko and Chief Marketing Officer Yurii Mykolyshyn point out that in 2017 Hideez participated in two key tech programs that helped the company network more widely and revise its go-to-market strategy. The company was one of eight Ukrainian tech startups (with a total of 16 companies altogether from the countries of the former Soviet Union) at the April-May 2017 US Department of Commerce SABIT IT internship programme in the US. In the autumn of 2017 as a result of connections made through the SABIT programme, Hideez applied for and was accepted into the highly competitive 90-day Mach37 cybersecurity seed accelerator in Virginia. Mach37 is a division of the Virginia-based Center for Innovative Technology (CIT), which receives funding from local state government. CIT now provides Hideez office space in Reston, Virginia.

Mr Mykoloshyn said that although Hideez continues to sell its B2C product online, after being in the Mach37 accelerator program they realised it was possible to reposition their cybersecurity and authentication products and services for the B2B and enterprise markets. In the B2B market, they are in active discussions with companies in the hospitality industry, including the Hilton Hotels group. In the enterprise market, Hideez currently has two ongoing pilot programs that started last autumn with a US law firm and a call center. If these programmes are successful, they will offer cybersecurity and authentication services for multiple users at each company, enabling a faster route to revenue growth.

Hideez currently has 16 staff members with 14 in Kyiv (mostly in R&D) and two in the US (in business development). They are hoping to add between two and six US-based field sales representatives for their products. Oleg Naumenko says that the company intends to launch a new investment round in July to raise an additional 1 million US dollars. He said that two Ukrainian investors have already committed 500,000 US dollars and that he hopes to close the new round of financing by the end of summer.

The Hideez Wallet is a new product for the company. It is the first Ukrainian wallet for cryptocurrency developed on the platform of the Hideez Key within the framework of Kyiv’s Blockchain Hub. Mr Naumenko points out that it differs from competitive products in that it operates wirelessly and functions on both mobile phones and desktop computers.

Both Oleg Naumenko and Yurii Mykolyshyn consider the next year a critical period for the growth of the company as it gains greater market awareness of their products and additional financing is secured. Although there are at least 20 companies that compete with them in the cybersecurity/authentication space, they want to offer back-end, value-added solutions to these firms to harness their extensive client base.

To get more background on Hideez, you can hear a 2017 podcast interview here