Company Interview / The tech start-up on track to become a $100M company

Trent Telford, CEO and founder of Cocoon Data, conveys his excitement over Cocoon Data becoming the first Australian company in the cybersecurity field to achieve US government's FedRAMP ready status. Trent acknowledges this is quite an accomplishment as the process was more difficult than Australian government standards. He explains that FedRAMP status indicates that their software or technology can now be used by any US government entity given it has already passed all essential standards.

Trent delves into their technology, stating that Cocoon Data initially developed a file sharing product, similar to a drop box. Later, in partnership with Google Public Sector, they developed an Application Programming Interface (API) service offering quantum-level encryption of data as a service. This Google collaboration, he explains, addresses security challenges and allows multi-level classifications in Google docs, a feature not available before. This tactic lets a lot of collaborators work on the same doc, with different levels of access to encrypted texts based on their authorisation level.

The partnership with Google, Trent further explains, is hugely beneficial for Cocoon Data and affirms their esteemed position in the US market. Despite initial reluctance from the Australian government, Cocoon Data plans to continue its growth in the US, focusing on US government and defence. According to Trent, by capturing less than 2.5% of the US government marketplace, Cocoon Data estimates they could have a $100 to $200 million revenue business. Additionally, he hints that Google might have an interest in acquiring Cocoon Data, given their current ambition for API based security companies and their prestigious FedRAMP certification.

Full unedited transcript below:

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That's though. Go to the startup scene and Aussie tech cocoon data has become the first Aussie company in the cybersecurity field to achieve FedRAMP ready status. Companies set to become a 100 million US dollar business after inking a partnership deal with Google. So let's break all that down. What it means with Cocoon Data. CEO and founder Trent Telford, who's joining me here in studio. Hi. Congratulations. I believe is warranted, but I do think that some of that deserves an explanation. Right. So what is FedRAMP status? So FedRAMP status is a US government certification. So cybersecurity data security big problem. We all know it. The US government looks at it and says if you can meet all these hurdles which can take up to three years, that means anyone in the US government can come by the software or the technology to protect data, because you've passed all those standards. That's pretty big. I mean,

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these are awesome customers to have. Yeah, it's the US government. It runs across potentially the intelligence community's Department of Defense. It's probably 3 to 4 times higher in order of magnitude more difficult than the Australian government standards, really. So what is this technology then and how did it come about? Sure. Originally, our first product that we put through the FedRAMP was a bit of a it was a file sharing product, you know, like a drop box. But recently about a year and a half ago with Google Public Sector, which is Google's division, all focused on public sector and defense and the intelligence communities. We built what's called an API service. So APIs are what connect applications in the internet and make everything work. So we built the first one to do data encryption. So quantum level encryption of data as a service. So you can embed it within existing applications or, you know, endpoint or IoT landscape or any of that world out there. You can now and go and embed it as a service rather than a standalone

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application, if that makes sense. It does. So what is this relationship with Google? So Google public. So Google if you break it down into their cloud business and they've got their workspace product, you know like the Microsoft Office suite, everybody loves their workspace product. Great for collaboration. But security wise has been a challenge for them. Um, great for collaboration in docs. Well, we're the first ones to build, uh, through our API service, a way you can have multi-level classifications in the same Google doc. So what does that mean? We could have a thousand people all collaborating in a Google doc, and now you can have encryption of different words, paragraphs, texts that unless you've got the right level of authorisation or clearance in government, you won't be able to see those redacted. If you like versions of Google Doc. And we've built that in partnership with our support of Google Public Sector in the US. And how, you know, how embedded in the US are you already and why and how did this Google partnership come about? Right. Yeah.

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We look I think a lot of Australian tech companies would like to, you know, make it in the US. There's probably the whole gamut, right. Um, we've probably invested nearly three years. Majority of our team is US based. I started the business here in Australia, but the majority of it's in the US now. Um, and that will continue to be the growth phase of all the businesses is in the US. So our view was if you can make it with US, government and defense as a cyber company, particularly out of Australia, um, you can kind of make it anywhere, right? And you can translate that across other sectors as well. Beyond government and defence, it's kind of the Rolls-Royce standard, right? You can rebadged a Rolls-Royce as a Mercedes or a Chevrolet in the US. You can't do the opposite. Yeah. All right. Um, so how big. And we talk about Tam total addressable market? I mean, like, how much do you have to capture of that government business in the United States to really, you know, to really hit the big time? You really don't have to capture a lot. Um, you know, if you look at the US government

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marketplace and then defense and the Pentagon's separate and then the intelligence agency. So the the three letter agencies, we think of, um, if we look at a less than 2.5% capture in the data security space, less than 2.5% of that Tam, that's a 1 to $200 million revenue business for us just in that government and defense space. Just letting that sink in for a moment. It's a big number. It is. It's a big number. Have you had Aussie government support to get traction? It's interesting. So the Australian government um, the short answer is it's been very difficult to get any traction in the Australian government. We spend a lot of time investing in Canberra. I think there is the genuine intent to want to do things in Canberra, but there is a cultural, um, almost rash towards what's born here. It's almost you've got to be successful in America and bring it back here with big partners like Google. We don't have that same appetite to want to take risk per se. On smaller

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companies. It's easy to buy the big companies, right? So for us, for every dollar of invested capital we take in, you look at the market in the US, ironically, we've been able to succeed with the US government and Google, where we haven't been able to get traction in Australia.

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Everybody should take note of that, right? If we want to. Yeah, grow into our ambitions. So what's to stop Google from just buying cocoon? Nothing.

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Um, you know, I think for from our perspective, we start with Google. It's important to be cloud agnostic so we can run on AWS or Azure. If you look at Google's ambitions, obviously it was the talk of the markets a couple of weeks ago, their potential acquisition of Wiz for 24, call it billion US would have been their biggest ever acquisition. Um and they are an API security company Um, in a similar parallel to us. So it shows you Google's got appetite for API based security companies. The FedRAMP certifications are a big process. So with the new technology we're rolling out now, we're going through a new FedRAMP certification on that will be the only API data security service across all of us. Government and defense. The only one certified FedRAMP is a big deal. You know, I noticed that Lassen pointed out two weeks ago that it's a key or one of their key areas of growth is their recently announced in getting on board the FedRAMP program. So it's hard to get, but once you get it, it's a big moat and it makes you highly attractive

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to to others. So it's been a good story. Yeah. Good one. Now, um, when you think about cybersecurity, we're continually told that even in turn downs, you know, enterprise doesn't stop spending on cybersecurity. Presumably the US government will not either. But for you, what is the biggest challenge right now? Because this sounds like a real Goldilocks story right now. Um, look, I think our challenge has been largely to, uh,

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firstly to make sure that the product was validated in the US and having a partnership with Google Public Sector, which is now probably 18 months old, has, has, has validated that. Secondly, um, I think capital in Australia would like to think that this is where the big results are because it's where the big takeouts are on the multiples, right? Um, so the biggest challenge in Australia historically has been getting capital to support that. But we've been very fortunate to be backed by, um, typically private high net wealth through private advisory firms here. Um, so our biggest challenge now is, um, we're looking at a large series, a venture round in the US. We've got interest from a lot of us venture firms, so we need to we need to get that capital in, in the US because it's a real flywheel thing in the US. You must grow it, you know, triple digit type numbers to to accelerate. But if you do that you build very valuable businesses. So the biggest challenge in front of us, big capital A in the next three months and series A, sorry. And uh, let's see where it ends

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up in the next 12 months.