IDG Ventures India, a $150 Million early-stage technology venture capital fund, has invested $ 2.5 million in iViZ, a network security startup in the security and vulnerability management market with an automated and on demand penetration testing product.

Kolkata based iViZ, recognized among Asia’s top 5 security startups in the Global Security Challenge held by London Business School in September 2007, is addressing a global market which is currently over $10 billion in size and growing annually at over 18%.  It plans to utilize the investment to build its sales team in North America, Europe, Middle East/APAC and India and to significantly enhance its product development initiatives.

“This investment is based on our thrust of investing in disruptive software product firms out of India with a potential to scale globally. Security is a key market for us. iViZ has built a highly committed and innovative team whose first product has already generated significant market traction,” said Sudhir Sethi, Chairman and Managing Director, IDG Ventures India.

“We have used Artificial Intelligence techniques and simulation of next generation hacking techniques to build the product” said  Nilanjan De, co-founder and CTO of iViZ, “Unlike current Penetration Testing process which is manual and non comprehensive our product can detect vulnerabilities and also its corresponding remedies in a completely automated way.”

Sethi said that IDG is scouting investment opportunities in four areas:

• Software products and services with a focus on business intelligence, security and 3D technology
• Engineering, electronics and life sciences with a focus on aero space, automotive
• Medical electronics and renewable energy,
• Digital consumer with a focus on Internet, mobile VAS and games and Telecom, semi conductor and wireless

According to him the potential for value building and returns is significantly higher in a product than in services. “We are early stage investors and understand the risks involved. Services are being commoditized today. Whereas there are niche areas in which products can serve the domestic market and have the ability to scale to the needs of an international clientele,” said he.

On the reason the company chose to invest in iViZ, he said, the fact that iViZ provides on demand simulation of human hackers for proactive security risk management through automated penetration testing interested us. “Built around the SaaS model, the solution uses artificial intelligence based tool which simulates/emulates intelligent human hackers. This automated mechanism can determine security threats in any network/system, in similar yet more efficient ways than top ‘human’ hackers and suggests the corresponding remedies.”

Bikash Barai, Founder of iViZ, said that his company would use the funds to increase its reach in the global market as well as ease pain points, essentially in the penetration testing market. “A lot of inputs are manual. This makes the process tedious, time consuming and costly. On top of that, if a new vulnerability is discovered, one has to repeat the entire process  further hiking cost of the project. Automation enables penetration testing on a regular and continuous basis and gives a better ROI.”

The funds will also be used to build infrastructure for product development and deployments, he said.

IDG, on the other hand, that has already committed capital in eight companies in 2007, will invest in about seven or eight more companies in the IT sector in 2008. Said Sethi, “Typically, we want to invest about Rs three to three and a half million per company. We have Rs 150 million for investments till 2010. We will then consider the option for fund raising. At present, we have an office in Bangalore, and will open one more in Mumbai in January.:

The parameters, IDG would consider for investing in companies: Sethi said that the technical and business model must be disruptive, products should allow dominance in domestic market and should be able to scale to the needs of international requirements and the company should be among the top three of four in the industry.

Barai added that iViZ will tap the BFSI, telecom, enterprise and defense sectors as a part of its expansion plans. Besides, it will increase customer traction as also focus on its go-to-market and marketing strategies for its niche product.