In April 2005, Cleartext was re-established by managing director David Banes and his partners with a broad focus on messaging security. The company was originally formed in 1999 to develop secure instant messaging systems, but things dried up when Microsoft announced a future product in that space.
- Introduction
- SecureWrap
- Webit
- Cleartext
- QMSoftware
- SpamMatters
Market validation in different sectors is important for feedback from potential customers, according to Banes. Market validation revealed that two aspects of Cleartext's proposed offering would be better sold as one because prospects didn't expect to be able to buy one without the other. In their minds, it was like offering a car and an engine separately, Banes says.
This time the company has avoided the need for major startup investment and will avoid "'traipsing around the whole [investor] community"', according to Banes. It will instead offer investors an opportunity rather than go out and asking for funding. "'We know we can produce something nobody else is doing at the moment,"' Banes says.
David Banes, Cleartext
Banes argues that while there are hundreds of millions of Australian investment dollars looking for somewhere to go, local investors tend to have a conservative view of startups. Furthermore, an investment of AU$500,000 in a US company has a greater potential return because it is operating in a much larger market. The only way round this Banes sees, is to make sure that you have an international product, so Cleartext is planning a Web-based service. While it was difficult to get funding after the dot-com bubble burst, Banes says he has seen the re-emergence of seed capital this year. But then again, a business that brings in revenue before outside capital is needed can often provide investors with a safer option. "'Prove you've got a real business first,"' Banes counsels, conceding that may not be possible with capital-intensive activities.
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