DeNexus is a leading provider of cyber risk modeling for industrial organizations, global (re)insurers, and insurance-linked securities (ILS) investors. The company’s flagship platform, DeRISK, empowers industrial enterprises and risk underwriters to quantify and manage cyber risk exposure on a continuous basis. Pulse 2.0 interviewed DeNexus founder and CEO Jose Seara to learn more about the company.
Jose Seara’s Background
Seara considers himself a passionate entrepreneur at heart. And Seara said:
“I initially ventured into the corporate world before fully embracing the challenge of building new companies. Through a journey marked by struggles, hard work, setbacks, and continuous learning, I discovered my true calling. Originally from Spain, I moved to San Francisco, California, in 2006 for what was supposed to be a two-year project but ended up staying for 17 years. Currently, I find myself experiencing my first winter in Boston.”
“Educated as an engineer, I quickly realized that my true passion lay in the dynamic realm of building and growing businesses. My motivation is deeply rooted in my love for family, serving as a driving force to demonstrate to my kids that nothing is guaranteed and one has the power to shape their own destiny. I believe in the philosophy of perseverance and never giving up on the journey towards personal and professional fulfillment.”
Formation Of DeNexus
How did the idea for DeNexus come together? Seara shared:
“When I moved to California, I built an Independent Power Producer company with renewable resources. We did amazing things, like being the first generation-only Balancing Authority in North America. Balancing Authorities are entities in the US electric system that are responsible for grid balancing: resource planning and unit commitment ahead of time, maintenance of the load-interchange-generation balance within a balancing authority area and support for real-time load-frequency control. In essence, keeping the electricity system reliable and up and running.”
“Quite an unusual responsibility for a green energy Independent Producer. That resulted in a complex operating model that gave us exposure to many things, and one of them was an above-average exposure to cyber risk. So, we needed to be clever in understanding and managing that exposure, especially in our OT (Operational Technology) systems, and we learned that nobody knew what that exposure was. The risks they encountered lacked visibility. Essential tools and analytics were absent, and the insurance policy, a crucial solution for risk management, was notably suboptimal. I exited that project years ago and then decided to build DeNexus to turn this problem into a terrific business opportunity.”
“At DeNexus we have built the technology that I wished I had available to me more than ten years ago. I understand the pain of my customers because I have been one of them. Our mission is building the global standard of industrial cyber risk quantification for insurance agencies, shareholders, investors, boards and the risk transfer market.”
Core Products
What are the company’s core products and features? Seara explained:
“Our core product is our Cyber Risk Quantification and Management (what we call CRQM) platform DeRISK, which is a first of its kind. DeRISK is powered by AI, ML and Probabilistic Inference to produce best in class data for cyber risk management. We use evidence-based inside & outside data to identify threats, vulnerabilities and cyber controls implemented to mitigate the risk, in what is the best dataset of OT cyber risk in the world, our DeNexus Knowledge Center.”
“That data is highly sensitive, especially coming from physical critical infrastructures that are the backbone of our economy, so we treat it with extreme care in our DeNexus Trusted Ecosystem, a combination of data integrity, encryption and anonymization tools, security standards and certifications, trusted and certified infrastructure, policies and procedures that enables a strict and secure control over the storage and dissemination of Cyber Data.”
Favorite Memory
What has been your favorite memory working for the company so far? Seara reflected:
“I am going to borrow a quote from my admired Ben Horowitz: ‘One of the great things about building a tech company is the amazing people that you can hire.” That is my favorite memory. How many amazing people I have the opportunity to bring to the team, work with, and learn from.’”
Challenges Faced
What challenges has Seara faced in building the company? Seara acknowledged:
“All of them! We play a data game, and data is expensive. So you need capital, and capital is expensive. It is a circular reference and a delicate balance that you need to achieve every day.”
“Also, access to talent. In a global world, we compete with everyone for talent. And we need excellent professionals to build the best CRQM product in the world.”
Evolution Of DeNexus’ Technology
How has the company’s technology evolved since launching? Seara noted:
“It is easy to say what has not evolved. We are pioneers writing a book that didn’t exist. The fundamentals were correct. The initial execution was suboptimal. Wrong technology stack, inefficient code, etc. I guess that is the same for most technology startups. In my case, probably worse, being my first technology project. Now we are deploying generation 5 of our models, and next year we will release generation 6. More than one generation development per year. Cyber risk is a novel risk and a very dynamic one. At this point, I have accepted and embraced the reality that modeling it will be a never-ending project, which makes it truly exciting.”
Significant Milestones
What have been some of the company’s most significant milestones? Seara cited:
“There have been numerous milestones marking our journey—first friend and family funds, initial VC investment, technology deployment, valuable lessons from our first major setback, landing the first contract, and achieving a million ARR. Additionally, we’ve secured the license to operate as an Innovative Insurance Broker in Bermuda for our subsidiary, DNX Intermediaries. The best is yet to come!”
Customer Success Stories
After asking Seara about customer success stories, he cited:
“One recent one in particular stands out to me. A large US corporation told me in a meeting a couple of weeks ago, ‘now I understand that you do not offer a cybersecurity product. You offer a cyber risk management product and that puts you in a different category in my company. That is what the executives and decision-makers need to understand and manage the risk. I need to put you in front of them.’ That was the quote of a lifetime and something for which the team worked long hours for so many years. I couldn’t wait to share it with them, and I am so proud and grateful for their efforts. This solidified for me the work we are doing is so important.”
Funding
After asking Seara about the company’s funding information, he revealed:
“We closed our Seed equity round in December 2022, and recently closed a Late Seed round. We are also gearing up to share more about our risk transfer business in Bermuda, where we are working with some of the best capacity providers of cyber insurance on some innovative products. That will bump our metrics quite significantly.”
Total Addressable Market
What total addressable market (TAM) size is the company pursuing? Seara assessed:
“We are operating on a scale of several billions, and our focus is on major industrial corporations, including Global 1000 companies. Our primary markets span North America, Europe, the Middle East, Asia Pacific, and beyond. The issue we address is expanding in tandem with the rise of industrial digitization, expanding footprints, and the dynamic global landscape. Unfortunately, the increasing cyber risk poses a challenge to the security of critical physical infrastructures.”
Differentiation From The Competition
What differentiates the company from its competition? Seara affirmed:
“Our primary distinguishing factor lies in our unwavering commitment to industrial cyber risk. With exclusive access to critical internal data, we gain unparalleled visibility into targeted networks, devices, vulnerabilities, and more. This enables us to construct comprehensive bottom-up risk accumulation models, a game-changer in the risk management and insurance sector. Our innovative business model, set to introduce a 360° solution to cyber risk management in 2024, addresses two pivotal issues: data quality and the asymmetry in risk understanding between owners and insurers.”
Obstacles Facing Physical The Critical Industrial Space
What are the biggest weaknesses/obstacles the physical critical industrial space is facing? How is DeRisk helping these organizations solve for them? Seara replied:
“Physical facilities in the industrial sector face significant challenges, including legacy infrastructures, inherently weak cybersecurity for OT systems, and the ongoing digital transformation and cloud adoption, creating fluid risk drivers. DeRisk addresses these obstacles by offering a unique value proposition to the insurance industry. We specialize in critical infrastructure and heavy industry, a sector struggling to procure cyber insurance due to a lack of quality data for underwriters.”
“Our ‘Inside–out’ cyber risk telemetry and analytics serve as the “holy grail” for cyber underwriters. Positioned at the start of the value chain, DeRisk aims to revamp a broken system and plays a central role in rebuilding the cyber value chain. Equipped with the essential tools, we are positioned to meet the needs of the cyber insurance industry, which is projected to write $30-$50 billion in premiums over the next decade, marking a 3x – 4x increase from today’s market.”
Growth Plan
How do you see DeNexus’ suite of offerings growing in the next year and the next five years? Seara emphasized:
“We have been covering the Power Generation sector, and we have released solutions for the Manufacturing, Energy and Transmission and Distribution sectors in Q1 ‘24More sectors such as Transportation, Airports, and Data Centers, will be released in the coming months.”
“As mentioned before, we will be releasing generation 6 of our modeling system in ‘24, including the first Industrial Cyber CAT model in the world.”
“We will keep adding more sources of data, and more integrations with technology partners, especially in the inside data space. Intrusion Detection Systems, OT asset Management systems, Vulnerability Management Systems, etc. all to enrich our DeNexus Knowledge Center.”
“On the risk transfer front, we will make strategic announcements for DNX Intermediaries in 2024 towards our ultimate goal of offering better fit-for-purpose cyber insurance products for Industrial Corporations and promoting the development of new capacity attracting alternative capital into the ecosystem securitizing cyber risk, a market that has woken up in 2023.”
Future Company Goals
What are some of the company’s future company goals? Seara concluded:
“One of our primary future goals is to establish ourselves as the industry reference, shaping the global standard for industrial cyber risk quantification. We aim to be a trusted source for CISOs, executive teams, board of directors, and the risk transfer market.”
