SMB Security Provider My Digital Shield Nabs $500K Seed Funding

Security service provider My Digital Shield's strategy focuses on the little guy, a market segment the company said is underserved and it hopes the channel feels the same as it gears up for its product launch this month.

Wilmington, Del.-based My Digital Shield said Wednesday it secured $500,000 from an investment group led by Litera Investments of Canada. The capital's been used so far to build the product, a cloud-based security solution that's aimed at small businesses.

Its big push banks on marketing through the channel with a partner program that starts at bronze and offers partners 20 percent back on what My Digital Shield bills the customer. Diamond level partners receive 50 percent, and it's monthly, recurring revenue for the lifespan of the customer.

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"We definitely want to promote doing everything through the IT firms," said My Digital Shield Founder and CEO Andrew Bagrin. "You can buy it direct from us, but if you do you get it at list price…. All of our marketing leads are being funneled through the channel. The channel's very important, especially from where we sit."

The channel partner program provides a "very strong incentive to have people resell our product," said Litera Director Jacob Katz.

Katz and Bagrin met through family friends and My Digital Shield was pitched to Litera. The investment firm has historically invested heavily in real estate in Canada among other places for about the last 50 years and has a lot of experience working with small businesses, which made My Digital Shield's strategy easy to understand, Katz said.

"We were looking at high technology and agriculture technology companies and MDS is one of the first big leaps we've taken looking into IT technology," Katz said of Litera's investment.

My Digital Shield has been in beta since January and will be launched July 22. Its current beta customers, totaling nearly 50, include restaurant franchisees, real estate agents, catering companies and churches among others.

Bagrin launched the company in October, with the idea that he wanted to offer enterprise-level security that was affordable. It was a segment of the market he felt was underserved, especially after observing it while working in the IT security industry for more than 17 years.

Bagrin is the former director of service provider business development at Sunnyvale, Calif.-based network security provider Fortinet, where he worked with IBM, Verizon and other service providers, looking for additional security services the company could offer or gaps in the market.

He found one in small businesses.

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"Security is getting complex," Bagrin said. "Even larger organizations, they're outsourcing the security to these security providers. The problem was that we couldn't get it down to the proper price point and so everybody just kind of ignored it because there was plenty of business in the enterprise space."

That finding Bagrin said he observed over and over again was "a big driver, big motivation from my side to take that leap and cut that corporate umbilical cord."

My Digital Shield offers three solutions ranging in price from $69 to $89 monthly. That compares with a product such as Fortinet's Application Delivery Controller line, which has a list price of $2,000.

Bagrin said the cloud is what will keep his company's pricing down because the resources are shared.
"That's why we can give them the big $100,000 system. It's kind of like a gym membership," he said.

My Digital Shield operates in a business landscape where Bagrin sees little direct competition. Few managed service security providers compete in the small business space and even the lower-priced solutions on the market are still too costly to nab the pizza parlor owner, law firm or church that My Digital Shield is after.

The real competitor to My Digital Shield is antivirus software, a solution some see as a mere Band-Aid on a gaping wound in cybersecurity.

"The days of installing things on a laptop or desktop are over," Bagrin said. "Everything is moving to the cloud. It was great when everybody had Windows 98. Now, there's like 18 versions of it. There's Mac. There's Linux. You have Chromebooks. You have tablets. You have phones. There is no way any company could keep up there. You have to do it somewhere in the network."

PUBLISHED JULY 9, 2014