A security layer for the physical world
Why we invested in DUST Identity
Last week, the news of Angular’s investment in DUST Identity became public. I wanted to share the story of our investment and the investment thesis. We’re thrilled to be backing the company together with Kleiner Perkins, New Science Ventures, and Castle Island Ventures.
Sourcing. VCs often say that their best sources of deal flow are founders in their network — and for Angular, this is true as well. Of the first seven investments made by Angular, five came from founders in our network sharing early access to interesting companies they had come across. DUST Identity is one of these. In this case, there were two sets of emails — both from the same entrepreneur — Assaf Melochna of Aquant (also an Angular portfolio company). The first email intro was in late 2017. Assaf wrote: “Ophir’s company is building a new platform for identity management for physical objects. They are using diamonds to create a trusted physical identity. This is a groundbreaking technology.” I read the deck and replied back to Ophir: “Holy $%&#. This is crazy interesting.”
Soon afterward, I met Ophir for a coffee in Boston, and he shared the company’s vision, and I was blown away. I knew DUST Identity would need a broad syndicate of investors, and –from my perspective — Angular Ventures didn’t exist yet. I’d need to wait a few months before I could take anything forward. Over the next few months, I focused on bringing Angular I to a first close, processing the backlog of investments that had accumulated, and setting up the infrastructure to operate Angular.
Suddenly, on a Friday this past October, Assaf emailed me again: DUST Identity, he said, “has amazing momentum at the moment.” I’ll be forever grateful to Assaf for drawing my attention back to Ophir and what he is doing at DUST Identity (and the commercial progress they had made). I was in NY that Friday, about to head up to Boston to see my parents before continuing on to the West Coast. Ophir agreed to meet me that Sunday at his office at 9 in the morning. That hour meeting turned into three and a half hours — and that turned into an investment.
The lab. If you are lucky enough to meet Ophir in his office, he’ll probably start with a walk through the lab and will show you the outlines of the process used by DUST Identity to take synthetic nano-diamond dust and create a liquid suspension of that material. The process itself is unique and proprietary — and results in a very low-cost material that can be applied to virtually any physical object — and virtually any point in any manufacturing process. Intriguingly, Ophir stumbled across the DUST Identity opportunity while working on something else entirely. He was originally trying to build a quantum computer, but when he started exploring the properties of nano-diamonds (which are also a building block of quantum computers), he realized the potential they had in helping to establish physical identity. That realization (back in 2014) led to the formation of the company. The process DUST Identity has developed, which is ready to scale, is the result of years of research in an MIT lab and millions of DARPA funding.
The application. Next, Ophir describes the use case. Let’s take a real-world example: Suppose you are a bank, and you are installing a new circuit board on an electronic access control system that controls who enters your building at night. How do you know that the circuit board you are installing is exactly the same one that left the manufacturing facility? How do you know it hasn’t been tampered with to allow criminals, competitors, or foreign government access to your facility? The same applies to routers, servers, and personal computers. We saw this, in fact, to dramatic effect in the recent reports that a state intelligence service might have installed chips into the motherboards of Apple laptops — effectively injecting malicious hardware components into the manufacturing supply chain. DUST Identity was developed to address situations exactly like this. DUST Identity can apply an invisible, non-replicable, and unique identity to any surface, thereby giving any object (of any size, cost, or form factor) a tamper-proof entirely unique physical identity that can be read by anyone with the right scanner. For the card trick itself — you’ll have to ask the company for that one.
The core technology. DUST Identity’s core technology consists of a proprietary synthetic diamond resin which can be applied to any surface. This resin contains microscopic crystals of synthetic diamond which have a specific orientation. While invisible to the naked eye, these crystals (their location and their orientation) can be detected by a specialized sensor. Because the application of the resin results in a unique and random distribution of the crystals, every object treated with the resin has a unique identity which is defined by the specific distribution of crystals on that object. The company is combining quantum processing, nanoengineering, and atomic sensing to provide a unique identity layer for physical objects. This can be thought of as a physical fingerprint (or serial number) that can be applied to any object.
The product. DUST Identity’s product consists of three parts. The first is, obviously, the resin itself. The second is that scanners that are used to perform the identity check. Interestingly, the “resolution” of the identity is determined by the scanner’s resolution, not by the resin. The resin is a physical object with fixed characteristics that determine a unique identity. But users can dial up or down the “resolution” (and, thus, the uniqueness) of the physical fingerprint created by the resin depending on the resolution of the scanner used. Finally, the third element of DUST’s solution is the software cloud platform that issues digital fingerprints, manages them, secures them in the cloud, and allows them to be accessed to confirm or disconfirm the identity or provenance of a secured object.
In an era dominated by the excitement surrounding blockchain, the area of physical identity is often overlooked — but this is an area that researchers (particularly in the defense establishment) have been trying to crack for some time. Solutions today are very imperfect and very expensive. For any solution in this category to be broadly effective, it must meet four design goals — goals that DUST Identity believes it can achieve in a relatively short time frame:
- Uniqueness. DUST Identity’s technology creates a truly unique physical “fingerprint” for each object. The uniqueness comes from natural randomness which is a part of the application of the resin itself. DUST Identity’s technology will randomly create one of 10^230 unique digital fingerprints. By comparison, there are estimated to be “only” 10^80 atoms in the known universe.
- Not duplicatable. These fingerprints cannot be duplicated or faked in any way — no matter how many resources are applied to the problem. This is because of the chemical structure of the resin itself. While it would be possible to manipulate a single diamond crystal into a specific position, it’s physically impossible to manipulate more than one crystal at a time. Any attempt to manipulate one crystal would affect all other crystals in the resin. Because there are so many crystals in each fingerprint, it is effectively impossible to duplicate or falsify a fingerprint. When I asked Ophir if the technology was as unique and non-replicable as a human fingerprint, he smiled with confidence in his response. The technology already exists to replicate a human fingerprint, but DUST simply cannot be replicated by any known technology.
- Low cost. There are other technologies in existence (that are highly classified) that provide unique fingerprints that cannot be copied, but they are very expensive. DUST Identity’s solution is so low cost that it can be applied to any object, even low-priced components. The low cost comes from the low cost of the resin itself and the low-cost (off-the-shelf) nature of the scanner. (Ophir’s demo, for example, is based on a simple visible spectrum optical scanner.)
- Any form factor. Because of the nature of the resin, the DUST Identity fingerprint can be applied to any object or any size or shape. This means DUST Identity should be able to sell its solution to semiconductor manufacturers, motherboard assemblers, aircraft parts makers, and anything in between.
The investment thesis.
With the above in mind, Angular’s investment thesis in DUST is pretty clear:
- A unique team, well-matched to the opportunity. Angular is focused on backing exceptional entrepreneurs — and the DUST team is just outstanding. Ophir also brings an extremely rare set of technical skills to the table alongside his cofounders Dirk Englund and Jonathan Hodges
- A tidal wave of opportunity. DUST Identity has an important role to play in securing the emerging “Internet of Things.” As electronics proliferate through our physical world, technology becomes increasingly critical to the safety, security, and well-being of people in many situations. DUST Identity can provide a quick and low-cost way of validating supply chains to make sure no tampering has occurred. This is a critical element of securing the internet of things. As the “internet of things” expands, the need for security and authentication of objects will only increase.
- Defensibility. DUST Identity is leveraging a proprietary technology to develop a deeply differentiated (and entirely unique) solution to a massive problem. This technology is working and customers are starting to express concrete interest in engaging with DUST Identity to solve specific problems. This is no longer a science project. It is rare to find such an entirely novel application of a technology that is ready for prime time — but DUST appears to be such a case.
- System complexity. DUST Identity is building a very complex software platform that integrates with other systems and enterprise workflows. That complexity creates additional barriers to entry and stickiness which can help DUST maintain its market leadership and pricing power.
- Ease of integration. Because of the ease of application of the resin, DUST Identity can be easily added to any industrial or manufacturing process — either in-line or after the fact. As a result, it’s also easy to test before a full-scale rollout, which should help accelerate the sales process.
- The potential for network effects. A final aspect of DUST Identity’s solution is the potential to create a unified “single source of truth” for object identity. If DUST builds and maintains a lead in the market, it may emerge as a central hub for cross-company or cross-industry object identity validation. If that happens, a network effect may emerge.
Angular ventures is absolutely thrilled to be a small part of DUST Identity’s journey — and we look forward to seeing how far they can go!
Angular Ventures is a specialist early-stage VC fund backing enterprise technology founders from Europe and Israel. If are you building technology for the enterprise, please let us know.
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