Agency commits R5.9m to anti-piracy start-up

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The funding agreement will allow Custos to accelerate product development, says G-J van Rooyen, CEO of Custos.
The funding agreement will allow Custos to accelerate product development, says G-J van Rooyen, CEO of Custos.

The Technology Innovation Agency (TIA) has committed R5.9 million to Stellenbosch-based anti-piracy start-up company Custos Media Technologies. The TIA will provide the funding over the next two years.

Custos uses Bitcoin and its blockchain to prevent and detect digital media piracy.

The latest investment follows news earlier this year that Custos had concluded a round of financing with investors that include Innovus Technology Transfer (owned by Stellenbosch University), the New York-based Digital Currency Group, and a South African angel investor.

The TIA is an initiative of the Department of Science and Technology mandated to enable and support technological innovation across all sectors of the economy, in order to deliver socio-economic benefits for SA and enhance its global competitiveness.

Custos is a spin-out from Stellenbosch University. Its core technology was invented at the MIH Media Lab in 2013, and patented and commercialised with the assistance of Innovus, the Technology Transfer Office of the university.

The founding team received a seed funding grant from the TIA in 2014, which was used to develop the original prototype into a product, perform market research, and get the first two pilot customers using the technology.

"The TIA has again shown their commitment to support early stage technology businesses in South Africa," says G-J van Rooyen, CEO of Custos. "The funding agreement will allow Custos to accelerate product development, while simultaneously freeing up resources to spend on bringing the product to the widest possible market."

"Custos is a good example of the kind of innovation ventures for which the TIA was established to provide support, where science and technology advancements are the basis for creating new products, services and global enterprises," says Segopotso Moshapo, head of ICT Strategic Technology Area at TIA.

The start-up company is targeting the global content protection market, and provides a way for media owners to keep recipients from redistributing copyrighted content - and to rapidly discover when recipients do infringe on their licences.

SA is a hotbed of digital piracy, says Van Rooyen. "Custos is the only company that actively uses Bitcoin to fight digital piracy. The company achieves this by embedding a unique Bitcoin wallet inside each copy of a media file that is sent to a recipient."

He explains this wallet uniquely identifies the recipient, and also provides an incentive for anyone who finds the media "out in the wild" to pocket the digital cash. "Through the way the Bitcoin blockchain works, this immediately alerts Custos to the fact that a media file has been leaked, and who the original recipient (the original infringer) was."

According to Van Rooyen, currently, Custos has two products in the market, and is generating early revenue. The company now needs to increase its client base and offering, and will grow its development team over the next few months to be able to do this, he adds.

"We are fortunate to have raised close to R12 million for Custos to date, most of it from local investors. The founding shareholders still own more than 73% of the business, which allows us to apply our available capital to the original vision - keeping creative industries sustainable in an era where almost all distribution channels are becoming digital."

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