Biometric technology attracts venture capital investment

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Biometric technology attracts venture capital investment

In response to a security-conscious world, venture capitalists are pumping investment dollars into new surveillance technologies, which are designed to help safeguard people and property.

The global demand for better security in cities, at airports, at shipping ports, and along border crossings is spurring additional research and development, new product development and upgrades to older technologies, all of which are attracting large pools of funds from both private investors and governments.

The US CIA, for example, established its own venture capital fund, In-Q-Tel, to leverage private investment into new technologies. Since its creation in 1999, In-Q-Tel has reviewed over 6,000 business plans and invested in more than 90 companies.

Last October, In-Q-Tel joined with DAG Ventures and Kleiner Perkins Caufield & Byers to invest US$15 million in 3VR Security, a pioneer in searchable surveillance. 3VR Security systems are in use by governments and also by major banks, corporations and hotels. Its technology combines traditional video recording with facial biometrics and analytics to bring search capabilities to surveillance data.

Venture capital firm 3i was the lead investor, along with Giza Venture Capital and Accel Partners, in a US$17 million infusion last year for Israeli-based Transtech Control Ltd., which provides surveillance systems to 140 airports worldwide.

Airports from JFK to Beijing use Transtech's advanced technologies to enhance traditional surveillance systems, allowing for intelligent control and monitoring of airfields by sensing and analyzing surface movement.

National security is only one of the drivers of increased investment in surveillance technologies. Surveillance video is being used in high-crime areas of cities, and high-accident areas on streets and highways. Local police departments are using the equipment as additional eyes and are getting results, which is likely to lead to increased use.

The city of Philadelphia, for example, saw a 96-percent drop in stop light violations after installing cameras at intersections that were considered among the most dangerous in the country in terms of accidents and fatalities. Businesses, especially retailers, use closed-circuit televisions to prevent fraud, and theft.

According to research by Frost & Sullivan, the global market for video surveillance equipment reached US$5 billion in 2005. In the US, an estimated 26 million video cameras generate 4 billion hours of video footage each week.

Frost & Sullivan also projects that the market for the software needed to run the equipment is growing rapidly and will reach US$650 million by 2011. Other analysts estimate the entire video management market will reach US$7.2 billion by 2008.

Biometrics technology, which includes facial recognition and voice verification, is also gaining market share as the result of both government programs and private initiatives. Global biometric revenues are projected to grow to US$5.7 billion by 2010. In Europe, where biometric passports and national ID programs are under consideration, the market earned US$370 million in 2005 and is expected to reach US$948.8 million by 2008.

The opportunities for start-ups are significant. Venture capital firms are putting their dollars into new technologies that will increase the value of the data captured by surveillance cameras. Consider that many businesses opt to discard surveillance cameras data unseen after 30 days, rather than analyse or keep volumes of data.

This is not the optimal way to protect a business against theft or fraud. Governments and law enforcement need better ways to store and search the data - for example, to isolate an individual face amid massive amounts of digital data.

Today's hot investment areas include technologies that: combine video and audio data; improve the ability to search and analyze multi-media data; use high-definition video, even in 3D, which will help improve pattern recognition; provide storage options that are affordable; and make surveillance information available exactly when and where it is needed.

Mavix, for example, funded by Infinity Venture Capital Fund in Israel, can stream surveillance data over IP networks to deliver information to wireless portable devices.

The Defense Venture Capital Initiative recently announced that 11 investors representing top venture capital firms, such as NEA, Sequoia, Kleiner Perkins, and Mayfield, will volunteer their time and expertise to help the US Department of Defense identify innovative companies with relevant emerging technologies.

New surveillance products, which can create greater video clarity, improve search capabilities and analytics, and offer some degree of privacy protections will be in increasing demand in the coming years, giving both start-ups and venture capital firms fertile ground for innovation.

- Deborah Magid is director of software strategy for IBM's Venture Capital Group.
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