Eliminating online piracy and counterfeiting: Our most recent investment in Smart Protection

We are excited to announce our recent investment in the EUR 10 million Series B of Smart Protection, together with Nauta Capital, Swanlaab and existing investors Telefonica (Wayra) and Bankinter. Smart Protection’s mission is to combat online piracy and counterfeiting. By focusing on prevention rather than resolution, Smart Protection does essentially for companies what virus scanners do for computers. Smart Protection is founded by Javier Perea, Manual Moreno and Javier Capilla, employs 90 people and serves customers across Europe, North America and South America.

Music and movie piracy have been well-known phenomena since the explosion of the internet in the ’00s, when P2P file sharing sites facilitated a rapid exchange of illegal content. LimeWire was perhaps one of the best known sites, estimated to be installed on every third PC in the world. The company was sued by several record labels in 2006 and eventually shut down in 2010 after an extensive — and likely costly — legal procedure.[1] With the rise of e-commerce, more and more companies are exposed to online counterfeiting and piracy. Obvious examples are fake designer products from the likes of Louis Vuitton or Gucci, but also medication, car parts, cosmetics, baby products and even climbing gear are counterfeited on a massive scale. It is estimated that the global counterfeiting market has exceeded $1 trillion and is growing 18% annually.

Smart Protection’s software solution is easy to use and cost-effective, which also provides SMEs with a level of brand protection previously only affordable for large enterprises. The technology platform uses big data processes to gather and store vast quantities of information. Potential infringements are subsequently analyzed and classified automatically. In case of an infringements, agreements with search engines and social networks allow Smart Protection to remove the infringement within a few minutes, eliminating the need for identifying individual counterfeiters and legal procedures.

Investment Thesis

Given the rise of e-commerce and the ability to serve both large and small companies, we see a large, fast-growing market for Smart Protection to conquer. We are convinced that Smart Protection, through its high-performing technology, is uniquely positioned to democratize brand protection. Our investment thesis was driven by:

• The great background and spirit of the founders. Javier has successfully built and sold a company in the cybersecurity space and has a longstanding track record of senior positions at McAfee, Intel, and Vodafone. Other team members have an outstanding engineering or entrepreneurial track record. The diverse backgrounds, the experience, and expertise the team brings to the table and the hunger to democratize brand protection make it an all-star­ team for us.
• Counterfeiting and digital piracy will only grow further as the adoption of e-commerce is accelerating from both the consumer and business side. This pressing problem needs an adequate tool, meant to prevent infringements and accessible to companies of all sizes.
• The advanced approach to sales and marketing and the low-touch acquisition model excite us and are in line with our investment philosophy.
• Smart Protection has a unique positioning as a hyper scalable tech-first player in the brand protection market and has demonstrated clear product ownership.

We are excited to joining the ride with Smart Protection alongside Nauta Capital, Swanlaab, and existing investors Telefonica (Wayra) and Bankinter!

More information about Smart Protection can be found on their website: https://smartprotection.com/en/. If you want to share your experiences about the cybersecurity market or any other B2B SaaS market, feel free to reach out to arthur@knight.vc.

[1] Although many people found various ways to justify their pirating in the early 2000s, it’s obvious that it didn’t serve the artists behind our favorite records and movies.