More funding for European end-to-end encrypted messaging app, Wire: The enterprise-focused messaging platform told londonbusinessblog.com it has closed a €24 million Series C funding round led by Cipio Partners and Iconical, the investment vehicle of Skype co-founder Janus Friis. Existing investor UVC Partners is also participating, including recurring donors.
Launched nearly a decade ago, the messaging tool was originally conceived as a new take on secure communication with consumers, using select connections to Skype (including early support from Friis).
But with increasingly fierce competition in the consumer space, from the likes of WhatsApp and Signal (and other E2EE messaging apps), the team shifted its focus to the B2B market — a move that caused a bit of consternation among certain privacy advocates when it turned to In 2019, Wire had secured its first-ever tranche of VC funding and moved its holding company from Europe to the US (although the team defended the changes as just a practical reflection of its refocused B2B mission.)
Wire hasn’t completely shut down its app to consumer users and still offers a free version for download, but today the tool is fully focused on the enterprise market – with a comprehensive suite of collaboration, compliance and user management features, as well as the ability for customers to store the encrypted user data on-premise (it says the majority of its customers choose this) rather than in Wire’s (Europe-based) cloud.
So while Wire may have flown under the radar of many consumers, its usage has continued to grow and has touted a doubling of its annual recurring revenue (ARR) in the past 12 months — not counting what it calls “significant” customer wins in private and public. sectors.
It sells to heavy duty customers where security is paramount – including governments, militaries and regulated companies with high compliance requirements around information (such as the financial and health sectors).
This explains why it’s unable to cite those “significant” recent customer gains — although it may indicate that five of the world’s G7 governments are on board, including the German federal government and the federal parliament (aka. the Bundestag). And Wire’s approval by the German federal authorities has paid off attention from the local press related to use by politicians after the app was recommended by the federal agency for digital safety.
“The last German government was formed on Wire… and what’s interesting is we had no idea about it!” says co-MD and co-founder Alan Duric, chatting with londonbusinessblog.com via video call. He confirms that the team only gleaned that one high-level detail when they read about it in the German press — which, of course, is a great advertisement for the robust provider-user privacy that E2EE offers.
Duric, who has held a number of positions at Wire over the decade – and currently shares the position of top executive with a new employee, Andre Kiehne, following a decision by previous CEO, Morten Brogger, to step down to his next challenge — says that in addition to robust security, “data sovereignty” is a key motivator for customer adoption.
“Microsoft has completely left that space – they are completely cloud-based,” he emphasizes. “We are enabling a number of clients to run secure collaboration and communication on site and in a number of cases… there are some large networks under construction that are not even connected to the public internet.
“For example, the German government – and we’ve also seen it with some of the other prospects – they have a network that is not connected to the public internet [for security reasons]. And you will, I think, see more and more of those cases.”
So adapting the product so that the software can still function in an ‘airgapped’ network scenario, with no internet connection available, is something that sets Wire apart from more mainstream business communication tools.
He also points out that Wire is built on MLSa security standard for E2EE, as another reason it’s gaining government habit in Europe – support for MLS, he suggests, will be seen as important for enabling the secure messaging interoperability envisioned by the EU’s Digital Markets Act (DMA), a regulation targeting the ability of Big Tech ‘gatekeepers’ to exploit network effects to trap users in ‘walled garden’ services.
“I hope… [in a couple of years we] will see that MLS is a driving force to open up all those big monopolies – from Microsoft, from Google, from WhatsApp, from Facebook, so that all those systems can work together,” he adds. “This is … one of the most important principles behind the DMA, and this was also something that was very important to the German government – that the solution they buy is based on open standards.”
In all, Wire says it has more than 1,800 customers at this stage — a sales figure that hasn’t changed since it was last raised, a $21 million Series B round in April 2021 — but that’s because of the weight of a number of the customers, according to Duric, with a lot of focus on chasing “very large” customers, such as governments, who can, of course, be notoriously slow at sourcing. (But he confirms that the number of customers has grown by double digits since last year.)
While the relatively modest size of the Series C relative to last year’s B appears to reflect Wire’s rising earnings brokering its need for outside capital – with sales up 2x since last year and co- MD says it aims to double revenue again over time next year.
Duric says the plan for the Series C is to accelerate Wire’s penetration and scale-up in markets “where we’ve had a pretty good start” — such as in sectors like government and military — as well as expand its focus on regulated markets. expanding, such as financial services.
With regard to the latter, he points out a few: hefty fines recently hit US banks for failing to monitor employees using unauthorized messaging apps illustrating the opportunity Wire is spying on.
It has created a compliance tool for customers who need to control employee communications, trying to walk a tightrope between having E2EE and disclosing access to communications data to meet specific legal requirements. (The short version of how Wire does this is by allowing customers to provide a regulated employee account with a server-side virtual appliance that works with the same user credentials and copies all their content to auditable storage – but with the individual user is responsible for authorizing the facility, so in effect there is no silent copying going on; the user should be aware that their data is being cloned for possible verification.)
“I hope we’ve built a solution that doesn’t compromise security at all—or as little as possible—and that delivers full compliance to those who need it,” says Duric. “This is one of the segments where we’re gaining traction.”
He also suggests that his approach could serve him well given (possibly) new regulations in the EU, regarding the fight against CSAM, which could put pressure on E2EE platforms to be able to scan content. “[It’s] a very, very difficult area and a question ahead of us, but I think there [on the b2b market side] with this Wire compliance module, we made it happen,” he replies to a question on that topic, predicting that E2EE messaging apps for consumers will face a tougher challenge if lawmakers push through.
Elsewhere, the war in Ukraine is also generating leads for Wire in the energy sector, according to Duric — who says incoming messages have come in from nuclear power plant operators interested in using the tool to be a conduit for all their confidential communications. and for “crisis collaboration” — that is, in the event that there is an outage affecting their day-to-day cloud-based business communications platform. “Anything that is confidential should not go on Microsoft Teams,” he says.
In terms of competition, another European startup, Element, which builds on the Matrix protocol, is a bigger competitor to Wire than Microsoft. praise in the same way its “business messaging and collaboration solution” as a solution to the ‘WhatsApp at work’ compliance problem.
Duric agrees that Matrix/Element is a major competitor. “Some of the key differences are that we’re now completely based on MLS — they’re jumping on that train a little later,” he suggests. “The other thing is that Wire is visibly stronger when it comes to real-time communication: group video calls, group audio calls, screen sharing, all these real-time communication aspects because they already rely on Jitsi quite a bit there… So on that side we have [a lead].”
Looking ahead, Duric says the team is “completely focused on execution.”
“We’re now aligning some things for this next chapter where we’re going to accelerate – and also where we expect some of our major customers, like the German government did with the digitization project and some other bigger projects they’re going to work on that.” will be used as fuel for another inflection point,” he tells londonbusinessblog.com. or a number of other sectors, so there it is really, from a number of perspectives, a completely new chapter for us in the coming years.”
The next chapter of Wire means Duric will be with the startup for more than a decade, but he remains excited about what’s to come.
“It’s a bit like my baby and it has a lot to do before it grows up. And now with MLS I’m super excited because I have a lot of the same feeling with my previous startups when we were working on a webRTC technology that we started at Global IP Solutions… and then it was deployed to billions of people and now the big vision the same goes for MLS – that MLS is being used for billions of people.
“Just before we had a vehicle – Skype – which was the first to be used to deploy [webRTC, a billion-scale technology] and then a number of others deployed it. After [that]now the vehicle in a first phase [is] Wire — I hope it will enable the DMA to start and some of these big monopolies will reshape and that in the next ten years we will have communication solutions that will not be proprietary, that will not be closed and they will be very secure. and respect users’ privacy,” he adds. “That’s the mission.”
Friis, co-founder of Skype and investor in Wire, also clearly remains involved. “The need for secure communication is constantly growing. With its end-to-end encryption that has been independently verified and its code that is open source, Wire enables any organization to implement a communications product they can trust,” he said in a supporting statement to the Series C.