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Twilio buys two factor authentication company Authy

Authy will be embedded into Twilio applications, but also remain its own independent company

Financial trends and news by Steven Loeb
February 24, 2015
Short URL: http://vator.tv/n/3c2c

As we've all witnessed over the last few years, cyber security has gone from existential threat to something very, very real. Every week, it seems, either a retail giant or a tech company or even a major movie studio was being breached. Even our own government systems were exposed as vulnerable. 

Now cloud communications company Twilio, which gives companies the ability to integrate voice, messaging and/or VoIP capabilities into a Web or mobile app, is doing something about it, stepping up its game by announcing that it has made its first ever acquisition in Authy, a company that specializes in two-factor authentication. No financial terms of the deal were disclosed.

The two companies have actually been working together for years, with a relationship going back to 2012, Daniel Palacio, Founder and CEO of Authy, revealed in a blog post

"Back then I had this big vision of making strong authentication widely available to everyone - including those without a smartphone. The telecom network (cellphones and landlines) is ubiquitous, so I chose to build our service on top of it," he wrote. "With this in mind, we chose to work with Twilio. Since then Twilio has been powering the delivery of our authentication codes via text-messages and phone calls worldwide."

While Twilio will use the purchase in order to embed Authy's two-factor authentication and phone verification into its applications, Authy will also remain available as a standalone service. In fact, Palacio actually said the company would be accelerating its initatives in the coming months.

That includes expanding its research and development team, as well as providing 24/7 support around the world, and giving customers better pricing by allowing customers to "benefit from Twilio’s volume pricing."

By becoming part of Twilio, Authy will be able to accelerate its development and reach far beyond what it would have been able to as a stand-alone company.

"However some things won’t change. Our mission and need to make strong authentication more human is stronger than ever. Expect the same level of commitment and quality of service from us as you’ve had in the past," he said. "Authy is here to stay - same name, same brand -- only now backed by a major organization with tremendous expertise in building large scale, easy to use but still powerful developer friendly platforms."

For Twilio, being able to incorporate Authy gives customers a much-needed extra layer of security.

"It’s 2015, and every week there’s another security breach. We’ve learned that retailers aren’t safe from their HVAC vendors, Seth Rogen can stir an international cybersecurity incident, and not even the venerable OpenSSL can be trusted," Twilio co-founder and CEO Jeff Lawson wrote in his own blog postabout the deal. 

"The only strategy is multiple layers of security, and so every login box on the Internet needs to be secured and secured again."

Authy, he said, has built "great solution for developers seeking easy to implement strong identity verification," one that will allow developers to not have to develop their own two-fact authentication while using the Twilio API.

With this purchase, Lawson said, he hope to see Authy grow even stronger.

"We love the Authy product and are investing massively in expanding its footprint with developers of all kinds. For strong identity verification use-cases, Authy is a more complete solution than Twilio is today – and we’re excited to get it in your hands."

Founded in 2012, Authy currently protects over 7,000 Web and mobile applications and 1.2 million users.

The company had raised $3.8 million in funding, including a $2.3 million seed round from a variety of angel investors including Aaron Levie Sam Yagan, CrunchFund, Winklevoss Capital, Digital Garage, Data Collective, Salesforce.com and AngelList in September. 

Twilio has raised over $100 million in funding, from investors that include Redpoint Ventures, Draper Fisher Jurvetson, K9 Ventures, 500 Startups, Bessemer Venture Partners, Union Square Ventures and SV Angel.

It reached an annual run rate of $100 million in 2014, and is now positioning itself as a potential IPO candidate this year.

(Image source: authy.com/twilio)


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