Privacy tech is having its smart-nerdy-girl-removes-her-glasses-and-is-suddenly-sexy moment.
Whereas data privacy used to be an afterthought for many marketers, the rise of regulation and changing consumer expectations have transformed it into a strategy priority.
The privacy tech startup scene is growing like mad to meet that need.
In April, there were 207 privacy and security startups listed on Crunchbase, which together raised more than $3.5 billion in funding. As of December, that number was up to 230.
Two such startups are Qonsent, a data privacy platform that helps consumers manage and control their personal information, and Optable, a clean room and data collaboration platform that lets brands and publishers share their audience data securely.
On Wednesday, Qonsent closed a $5 million seed round backed by Zekavat Investment Group, CrossCut Ventures, Brand New Matter, Lunch Partners and assorted angels, including Gary Vaynerchuck, Tom Chavez and Michael Kassan.
And earlier this week, Optable released a differential privacy feature that allows brands and publishers to add statistical noise to their aggregated datasets before sharing them. Differential privacy is a mechanism for obfuscating a data set so that you’re still able to discern patterns but can’t infer anything about individual people.
Optable raised its $3.6 million seed round in May.
Although companies need privacy tech to help them with legal compliance, many investors are attracted to the sector by something a bit more personal, said Stephano Kim, Qonsent’s president and co-founder and the former chief strategy officer at Turner.
“Folks may not understand how privacy tech works, but they can relate to the mission and the problem we’re trying to solve,” Kim said. “There needs to be a fundamental shift in how data is being gathered and used and this goes beyond legislation and regulation.”
An actually valuable value exchange
The idea behind Qonsent is to help solve the problem of getting informed consent directly from users transparently so they know what data is being collected, how it’s being used and over what time horizon.
The best way to do that, said Jesse Redniss, CEO and co-founder of Qonsent and a former WarnerMedia and Turner exec, is to focus on the consumer experience.
“A huge component of solving this revolves around communication and consumer engagement,” Redniss said.
Qonsent plans to use a portion of its funding to finish developing a consumer-facing wallet app that people can use to store rewards and manage their permissions on a brand-by-brand basis.
A typical experience might involve a consumer scanning a QR code to claim an offer. After scanning the code, a mobile webpage opens so the person can share their name, email and ZIP. Qonsent would then quickly validate the user’s identity information through a partnership with TransUnion, and the brand would follow up with an email or text with info on how to redeem the offer.
From there, users would be prompted to download the Qonsent app, which they can use to store their offers by brand, manage their permissions and see exactly how their data is being used.
“A big part of why GDPR and cookie pop-ups are not working well is because people don’t understand the value exchange and they’re asked to make a choice even before they’ve built a relationship with the brand,” Redniss said.
On top of hiring engineers, product people and biz dev folks – the current headcount stands at 12 – Qonsent is also earmarking some of its funding to build what it’s calling the Qonsent Graph, which Redniss described as “an insights engine” that will use behavioral science to try and figure out what drives people to give consent.
Caring about sharing
But having collected personal data, brands and publishers need to protect it as they use it.
And just because data is aggregated doesn’t mean it’s “de facto private,” said Bosko Milekic, Optable’s co-founder and CTO. “It’s a common misconception.”
Clean room technology allows advertisers, media owners and their partners to share first-party data and find overlapping audiences without revealing individual-level information. But if, for example, one of the parties involved repeats the data matching operation with the same audience multiple times, it’s possible to make inferences about individuals in the data set.
Differential privacy protects against this kind of attack by automatically adding the right amount of noise to the data, Milekic said.
“Even if a brand is working with a publisher they trust or vice versa, if one of the partners is compromised, anyone with access to the data can make inferences about individuals in the data set,” he said.
Brands and publishers can also use a privacy budget tracking module within Optable’s platform to see the privacy risks of sharing data with a given partner. As partners collaborate and share data through the system over the course of a campaign, Optable continues to monitor the risk and alerts users when they’re in danger of leaking data.
“The landscape is changing, and brands won’t just have access to identifiers willy nilly anymore,” Milekic said. “That’s why we’re investing heavily in differential privacy and why we see it as a foundational capability in our platform.”
