More funding for Europe’s end-to-end encrypted messaging app The enterprise-focused messaging platform has announced to TechCrush a €24 million Series C funding round led by growth equity firm Scipio Partners and the investment vehicle of Skype Company – founder Janus Friis. Existing investor UVC Partners will also participate, among other returning supporters.
The messaging tool — which debuted a decade ago — was originally conceived as a new take on secure consumer comms, drawing some connections to Skype (including early support from Freeze).
But with competition from WhatsApp and Signal (and other E2EE messaging apps) intensifying in the consumer space, the group shifted its focus to the B2B market — a move that caused some consternation among some privacy advocates. In the year In 2019, Wire moved its first VC funding venture from Europe to the US (although the team defended the changes as a realistic reflection of its refocused B2B mission).
Wire hasn’t completely closed the app to consumer users and still offers a free version for download, but these days the tool is focused entirely on the enterprise market – offering a wide set of collaboration, compliance and user management features, as well as encrypted clients rather than in Wire’s (Europe-based) cloud. Ability to store user data on the front end (he says most of his customers have opted for this).
So while Wire may be flying under the radar for many consumers, its usage continues to grow, doubling annual recurring revenue (ARR) in the past twelve months. and public sectors.
It sells to heavyweight customers with security top of mind – including governments, militaries and regulated businesses with high data compliance requirements (such as the financial and healthcare sectors).
This explains why he couldn’t name those “significant” recent customer wins – even though five of the world’s G7 governments are on board, including Germany’s federal government and the federal parliament (called the Bundestag). And the adoption of Wire by German federal authorities has garnered some local press attention for its use by politicians after the app was suggested by the Federal Office for Digital Security.
“The last German government was based on a wire… and the amazing thing is we had no clue about it!” Co-MD and Co-Founder Alan Durich talks to TechCrunch via video call. The team makes sure to collect that special gem of a list when you read it in the German press – which is a great advertisement for the strong privacy that E2EE offers, between provider and user.
Durich, who has held several roles at the Wire during his decade-long tenure — and is currently splitting the top executive role with new hire Andre Kiehne — has stepped down from former CEO Morton Broeger to seek his next challenge. – Like strong security, he says “data sovereignty” is a big driving force for customer adoption.
“Microsoft has completely abandoned that space — they’re completely cloud-based,” he pointed out. “We’re enabling many customers to do secure collaboration and communication on-premise and in multiple instances… Many large networks are being built that aren’t even connected to the public Internet.
For example, the German government – and we have seen with some expectations – are working on a network that is not connected to the public Internet [for security reasons]. And I think you’re going to see more and more of those issues.
Adapting the product so that the software can still run in an ‘air-conditioned’ network environment, without affecting the internet connection, is therefore what sets Wire apart from mainstream commercial comms devices.
Wire also points out that building on MLS, the security standard for E2EE, is another reason it’s winning over government culture in Europe – suggesting that MLS support is necessary to enable the secure messaging envisioned by the EU’s digital markets. Act (DMA), which targets the ability of Big Tech ‘gatekeepers’ to lock users into ‘walled garden’ services of network effects.
“I hope… [in a couple of years we] MLS sees it as a driving force to unlock all these big monopolies – from Microsoft, from Google, from WhatsApp, from Facebook, all those systems to cooperate with each other,” he added. “This… is one of the main motivations behind the DMA, and this was something that was very important to the German government – that the solution they’re buying is based on open standards.
Overall Wire says it has more than 1,800 customers at this stage — an unchanged top-line figure since it last raised, in a $21 million Series B in April 2021 — but that’s up to a few highs. Customers, at Duric, can be very slow in the buying process, with a strong focus on chasing “very large” customers such as governments. (However, it has confirmed double-digit growth in customer numbers since last year.)
Compared to last year’s Series C and last year’s B, it seems to reflect the relatively modest increase in Wire’s revenue, but also to reconcile the need for external capital – up 2x from last year, and the associate MD. next year.
Durick said Series C’s plan is to accelerate Wire’s penetration and scale “in sectors where we’ve had a good start” — sectors like government and military — as well as expanding its focus on regulated markets, such as financial services.
In the latter, he pointed to some of the major fines recently levied against US banks for failing to track employees using unauthorized messaging apps to signal the possibility of wiretapping.
It has created a compliance tool for clients who want to audit comms for employees who want to walk the tightrope between achieving E2EE and transparently enabling access to comms data to meet specific legal requirements. (The short version of Wire does this is by allowing customers to provide a controlled worker account to include a virtual device, running on the server side, which acts with the same user credentials and copies all of their content to an audit repository – but the individual user is responsible for provisioning it, so, basically, (There is no silent copying process, the user must be aware that their information is being audited.)
“I hope we’ve built a solution that doesn’t compromise security — or as little as possible — and is fully accessible to the people who need it,” Durick said.
He also suggests that the approach could stand up well to (potential) new regulations in the EU, related to combating CSAM, which will put pressure on E2EE platforms to check content. “[It’s] I think it’s a very, very difficult area and the question before us is there [on the b2b market side] We hit the nail on the head with this Wire compliance module,” he said in response to a question, predicting that consumer E2E messaging apps will face a tough challenge if lawmakers push through.
Elsewhere, the war in Ukraine is creating a wire in the energy sector, Durick said — from nuclear plant operators interested in using the equipment as a conduit for all their secret comms and “crisis” transmissions. Collaboration” — that is, when there is a problem with an everyday cloud-based business comms platform. “Anything confidential cannot go in Microsoft Teams,” he argued.
In the face of the competition, another European startup that rivals Wire more than Microsoft is Element – which builds on the Matrix protocol – and similarly touts an “enterprise-class messaging and collaboration solution” for WhatsApp in the works. Compliance problem.
Durick agrees that Matrix/Element is a key competitor. “Some of the main differences are we’re now completely based on MLS – they’re jumping on that train a little later,” he points out. “The other thing is that Wire is very strong when it comes to real-time communications: group video calls, group audio calls, screen sharing, all these real-time comss aspects because they rely a little bit on GTC there… so we have that side. [a lead]He said.
Looking ahead, Durick says the team is “totally focused on performance.”
Now we are adjusting some things in this next phase – and we are also looking after some of our big customers, the German government digitization project and many other big projects. “We’re working on something that can be used as fuel for another touchpoint,” he told TechCrunch. “Also, one of the areas we’re looking into is with SDKs, whether it’s in the banking sector or the healthcare sector or many other sectors. Indeed, from many points of view, the next two years are a completely new chapter ahead of us.
Wire’s next chapter means Durich will enter his second decade at the start – but he’s excited for what’s to come.
“He’s like my son and he still has a long way to go before he grows up. And now I’m very excited with MLS because it feels very much like my early days when we were working on the WebRTC technology that we started at Global IP Solutions… and then it’s deployed to billions of people and now it’s the big vision. It’s the same with MLS – MLS is deployed to billions of people.
Before we had a vehicle – Skype – first used to deploy [webRTC, a billion-scale technology] And then several other people deployed. Later [that]Now the vehicle in the first place [is] Wire — I hope that DMA will start to happen and some of these big monopolies will be fixed and for the next ten years we will have communication solutions that are patent-free, non-blocking and blocking, very secure and respect users’ privacy,” he added. This is the mission.
Skype co-founder and Wire investor Fries is apparently still on the buying spree. With end-to-end encryption independently audited and open source, Wire allows any organization to deploy a trusted communications product.