EU View: "Technology alone cannot guarantee security, but security without technology is impossible”

The GSC team just came back from a trip to Brussels where we met with leaders of the European Commission, The European Council and European Defence Agency. We will report on a few insights about how the EU has positioned itself in terms of security and anti-terrorism. Today’s blog is about how the EU Parliament is structured to deal with security and defence issues and where any technology aspects lie within:

European Security Defence Policy (ESDP)
The idea of a common European security and defence policy mirrors the development of the Union itself as it evolved from a purely economic union to a more political union. In the Maastricht treaty of 1993, the EU incorporated the objective of a "common foreign policy", which expanded to the Common Foreign and Security Policy (CFSP) of the European Union. In 2003, the EU adopted a common European Security Strategy (ESS) that identified five key threats to the future security and stability of the EU: terrorism, the proliferation of weapons of mass destruction, regional conflict, state failure and organised crime.

Subcommittee on Security and Defence (SEDE)
The European Security Defence Policy falls under the responsibilities of the EU Parliament’s Committee on Foreign Affairs. Specifically, a Subcommittee on Security and Defence (SEDE) deals with the areas of defence and security matters, which is currently chaired by Karl von Wogau. He argues the reason why 69% of the European public is largely supporting a common European security policy “is because they are aware that they all face the same threats, such as terrorism, organised crime or regional conflicts, and they feel that the answer can only be a European one.“ (click here for his full remarks)

However, Mr. von Wogau is unhappy how the ESDP is administered and controlled. Currently all military operations are exluded from EU budgetary control and thus limit the classic parliamentary control over the executive branch. He said in the ESDP Newsletter: “this situation is not satisfactory as one should bear in mind that it is becoming increasingly difficult to distinguish between civilian and military expenditures when the EU carries out crisis management operations which make use of both civilian and military instruments. Furthermore, the principle of “costs lie where they fall” is not fair, because the EU countries are not put on an equal footing as far as military operations are concerned: some countries are willing to participate but cannot really deliver, while others are not willing at all.“ (quote)

The Role of Technology in the EU’s Security Policy?
There is a great quote by the former European Research Commissioner Philippe Busquin about how security policy and technology has to interact in order to work. In 2004, he summaried that relationship succinctly by saying: “Technology alone cannot guarantee security, but security without technology is impossible.”

Office Expansion for start-ups: a look at the office market through Porter´s Five Forces

As some of you may know, the GSC is growing and therefore needs new office space. I have had the luxury of experiencing something that most entrepreneurs must face– the dreaded office search. I am now convinced the way to make money in London is to rent offices, which the following – slightly humorous – analysis of that office-real estate market shows.

Supplier Power: High, Buyer Power: Low
Firstly, and most importantly, there is no clarity of search in London. Here there is no central location you can turn to in order to see everything that is available in the market…so they have created a high “buyer´s burden”. I´ve spoken with at least fifteen letting/leasing agents and have no good indication that I have seen most of the options that are available to us.

Competition: High, Substitution: Low
Unfortunately we´ve been told that we are looking for space at the wrong time. Because the forecast for the economy is poor a lot of companies are breaking their long term leases and renting short term “plug and play” offices. These ready to move in offices are serviced so the hassle factor is low…but as we all know, when services are involved the flexibility is increased but the prices skyrocket. As we grow we need the flexibility and can no longer work from London Business School (or out of our garages!)…so substitution options are low.

Barrier to Entry: High
If we had the money we would enter this market

I know this post is a bit unusual but we just wanted to say to all of you out there who have been through this stage of office expansion—we feel your pain.
We´d be interested to hear from any of you. How much of a burden/time spent is office expansion for a start up?

Emerging Technology Outlook: 2nd generation biometrics

As organizers of the largest innovation competition in the security world, one of the Global Security Challenge’s tasks is to map emerging innovations, such as 2nd generation biometrics. Below is a quick overview of where we stand with 2-gen biometrics such as typing behavior, gait analysis and odor sensing.

TYPING
I would describe typing biometrics as the 21st century version of the good ‘ole signature analysis. Today’s typing algorithms have been developed by converting a person’s typing attributes such as speed, rhythm, agility, corrective behavior and use of shift keys into a unique identifier. These systems are pretty advanced with heir inventors claiming their software to be keyboard-independent and continuously adapting to slightly changing typing habits. There are a couple weaknesses that remain including for example the time difference it takes to type a sentence instead of a short 6-letter password onto your PC’s log-in screen. In addition, its accuracy levels are still disputed by some government experts with whom we discussed this technology. Nevertheless, this technology is on a fast track to maturity and could have tremendous impact on commercial and intelligence sectors.

GAIT ANALYSIS
The University of Southampton has positioned itself as one of the front runners on gait-biometrics. Their prototype identified people by the way they walk with a success rate of over 90%, under perfect lab conditions. According to Computing.co.uk, the university recently built a tunnel-like system that consists of eight digital cameras, which register persons’ movements and generates 3D-models of their walking behavior. See below for a graphic representation of such a modeling, based on Professor Nixon’s research
Having reached high accuracy rates in their lab, the university is currently planning to take its system from the lab into the real world to test it under real-life conditions. Such real-life tests will be helpful to stress-test popular challenges against gait-biometrics, such as whether our walking style is affected by illness, injury or even just stress. For instance, will the system accurately recognize me while running to catch my plane as well as casually strolling through the airport lounge?

ODOR SENSING
The idea of identifying people by their smell is nothing new as we humans apply it daily (subconsciously) and even use it to find criminals taking advantage of dogs’ advanced noses. The attempt to create an electronic nose, dubbed in the industry as ENose is by creating a chemical sensor that detects the small quantities of molecules that evaporate from our body. The limitations of the current systems is that the human nose has over 10.000 sensors to detect these molecules that are processed by about 10 million sensory neurons in our brain, while ENoses in contrast operate with only 10-20 sensors and proportionally smaller number of artificial neurons. (perhaps we ask Steven Jobs to create an iNose?)

The current state of odor-sensing technology is nicely summarized by Daniel Lee, a bioengineering scientist at the University of Pennsylvania, who said in 2003: "We have cameras that can see outside the spectrum of the human eye and microphones that can detect a vibration a mile away, but in terms of chemical sensing, we are far away from what biology can do." Below is a picture of a prototype of electronic nose, by the University of Pennsylvania.
2nd Generation Biometrics – An Endangered Species
It has taken some of these technologies over a decade to get from research to a working technology, so it is crucial for disruptive technologies, such as 2nd generation biometrics, to have enough time to improve accuracy and reliability. Thus, funding is crucial now for them to overcome this first valley of dearth on the road of commercialization. An alternative to external funding is to first target commercial clients with not-so sensitive data to protect, which in addition to bootstrapping the company would act as a real-life testing bed for their beta technologies.

About the UK’s Counter-Terrorism Strategy

Laws alone will not stop terrorism, but since we must be prepared to deal with terrorism, the United Kingdom devised a strategy in 2003 (known within Government as CONTEST) for countering terrorism. With it, the UK aims to reduce the risk from international terrorism, so that people can go about their daily lives freely and with confidence. The strategy affects multiple branches of the UK government.

They base their strategy on four pillars: Prevent, Pursue, Protect and Prepare.

Prevent is meant to show people that Brits are not that bad. They plan to win heart by:

• tackling disadvantage and supporting reform by addressing structural problems in the UK and overseas that may contribute to radicalization, such as inequalities and discrimination
• deterring those who facilitate terrorism and those who encourage others to become terrorists by changing the environment in which the extremists and those radicalising others can operate
• engaging in the battle of ideas by challenging the ideologies that extremists believe can justify the use of violence, primarily by helping Muslims who wish to dispute these ideas to do so

Pursue is meant to take away the option to harm the UK and its interests by:

• gathering intelligence and improving our ability to identify and understand the terrorist threat
• disrupting terrorist activity and taking action to frustrate terrorist attacks and to bring terrorists to justice through prosecution and other means, including strengthening the legal framework against terrorism
• international co-operation by working with partners and allies overseas to strengthen our intelligence effort and achieve disruption of terrorists outside the UK

Protect is meant to reduce the vulnerability within the UK and of its assets by:

• strengthening border security, so that terrorists and those who inspire them can be prevented from traveling here and we can get better intelligence about suspects who travel, including improving our identity management
• protecting key utilities by working with the private sector
• transport; reducing the risk and impact of attacks through security and technological advances
• crowded places; protecting people going about their daily lives
  

Prepare is meant to ensure that the UK can mitigate the effects of an attack and can find the perpetrators:

• identifying the potential risks the UK faces from terrorism and assessing their impact
  building the necessary capabilities to respond to and attacks
• continually evaluating and testing our preparedness, including through identifying lessons from exercises and real-life events

Next week we will report on how innovation and technology fits into this strategy for combating terrorism. To read the full version of the official strategy document, please click here: Countering International Terrorism

An Innovative Way of Funding Startups: Israel's Chief Scientist

The Office of the Chief Scientist (OCS) is part of the Ministry of Industry, Trade & Labor of the State of Israel. Several other ministries also have a Chief Scientist - such as the Ministry of Defence and the Ministry of Public Security (MOPS) – who might be of the interest to security start-ups. However, it is really the Chief Scientist of the Trade Ministry who is the main player for startup funds as he holds a significant budget of ca. $300 Million and runs several programs to support entrepreneurs in Israel. Israel’s current Chief Scientist is Dr. Eli Opper, who combines a career in venture capital (Tel Aviv’s Giza Ventures) with long experiences in industry at RAFAEL, a quasi government company that develops military technology.

"Through grants and loans, the OCS has been delivering critical seed funds to select Israeli R&D companies; allocating more than NIS 1.2 billion [$300m] in 2006 alone", as reported by JPost.com. However, the budget has been under pressure in the last few years and lowered to $279 million in 2006 from its highest level of $440 million in 2000. (see graph below)


As pointed out by David Anthony, a member of Israel’s VC community, the OCS grants to not only provide financial help to the entrepreneurs, they act also as “a source of validation for new technologies. Governments conduct rigorous due diligence and other criteria tests prior to handing over any money. Investors understand this fact and naturally prefer a technology that a local government body has committed to financially.“

A novelty in the area of governmental funding of innovation is that the OCS can actually make profits with its grants (of “The R&D Fund”) as they receive royalties on sales if a startup becomes a commercial success. These royalties received are then used to fund future grants. In other words, the OCS uses the proceeds of its investments to fund its own programs, not just relying on governmental finances.

Overview of The Main OCS Programs

1. The R&D Fund:

• open to all Israeli registered firms wishing to engage in technological research and development
• annual budget of $250 million is spent on about 800 projects being undertaken by 500 companies
• grants are provided as a percentage (up to 50%) of the total approved R&D expenditures
• grants are a 'conditional loan' – in case of a technological and commercial success, it is subject to royalties (3% – 5% of the sales); in case of non-commercialization no repayment is required.

2. Technological Incubators:

• to enable novice entrepreneurs with innovative concepts to translate those ideas into commercial products and to establish their own company
• there are 24 technological incubators in Israel with approximately 200 R&D projects being carried out at any given moment
• program has an annual budget of $30 million
• grants provide 85% of the approved R&D expenditures (budget of $350,000 to $600,000 for two years), with the remainder to be invested by the incubator itself.
• grants are soft loans to be given back by the incubators, in case of commercial success only.

3. Pre-seed Fund – the TNUFA Program:

• encourages and supports technological entrepreneurship and innovation by assisting individual inventors and start-up companies during the pre-seed stage.
• support includes assistance in evaluating the concept's technological and economic potential, patent proposal preparation, prototype construction, business plan preparation, establishing contact with the appropriate industry representative, and attracting investors
• Grants are up to 85% of approved expenses are available to a maximum of $50,000 for each project.

Additional Programs for Generic R&D
The OCS also runs several programs that support basic and applied research in generic technologies. These programs, such as MAGNET, MAGNETON and NOFAR, are normally conducted together with academia and research institutes and industrial players.

The above information is taken from the 2007 report “The Intellectual Capital of the State of Israel“

NaCTSO’s November 2007 Statistics on Business CT Needs

A Closer Look at the UK Home Office’s NaCTSO

NaCTSO, which is funded and operated by the Association of Chief Police Officers, is the National Counter Terrorism Security Office. These brave souls are charged with partnering with the Security Service to reduce the impact of terrorism in the UK.

The UK’s Counter Terrorism Strategy (or CONTEST) focuses CT efforts around four pillars – those of Prevent, Pursue, Protect and Prepare. NaCTSO apparently focuses on the latter two pillars. According to the Home Office website, NaCTSO aims to:

• Raise awareness of the terrorist threat and the measures that can be taken to reduce risks and mitigate the effects of an attack,
• Co-ordinate national service delivery of protective security advice through the Counter Terrorism Security Adviser (CTSA) network and monitor its effectiveness,
• Build and extend partnerships with communities, police and government stakeholders,
• Contribute to the development of national and international Counter Terrorism policy and advice.

NaCTSO Statistics Imply Good Business Interaction
NaCTSO released statistics taken from a questionnaire sent to MLEs . Of those surveyed some very interesting data for security entrepreneurs arose regarding opportunities in the UK. They asked:

• Is your business currently undertaking any counter-terrorism protection measures in relation to areas with high concentrations of people?
  29% of the respondents said No and an overwhelming majority of 71% replied Yes
• Are you undertaking these measures in consultation with parties outside of your businesses?
  71% Yes
  5% No
  24% Don’t know
• Please specify the general nature of these measures:
  Building protection 57%
  Personnel protection 43%
  Business continuity 65%
  Security perimeter 47%
  Vehicle Barriers 31%
  Staff training 56%
  Glazing protection 34%
  Protected space 21%
  CCTV 59%
  Other 13%
  

Help for (security) SMEs by European Commission

Financial Support for Security Research

Last year the European Union recognized the need and importance of helping innovators in the security sector, by announcing that as part of its EU Framework 7, €1.4 billion would be set aside to fund security research. The specific areas of technology solutions to be highlighted include civil protection, bio-security, protection against crime and terrorism.

Goal to Encourage Security Entrepreneurs
Also, under the EU's current Competitiveness and Innovation Framework Programme (CIP) that runs until 2013, the need to support innovations AFTER they leave the research lab and enter the start-up phase was rightly recognized. “With regard to technological innovation, SMEs should be encouraged to become involved in high-technology sectors such as space and security“ (full programme online here) Unfortunately it is not clear how exactly the EU (in particular the Commission) plans to assist SMEs in the security sector.


General EU/EC Support for SMEs
On the positive side though, the European Commission’s Directorate General for Enterprise and Industry has already done a lot of work to support entrepreneurs in general - sector independent. In addition to creating an online portal with information for entrepreneurs (click here for the SME Portal at EC), it created a specific investment fund and offers grants and advice. The current CIP allocated a budget of over one billion Euros for SMEs, "...which should leverage around 30 billion euros of new finance for SMEs.” (more info on CIP)

Analysis of Existing Programs and Gaps
So, there are many effective EU-supported programs that help entrepreneurs. However when you look at an analysis we conducted last year (see chart below), it becomes apparent that there is a gap in support for pre-VC entrepreneurs in the security sector. Security innovators operate in a market that has its own specific barriers and they need access to sector specific advice and financial support.

GSC Conference Trailer (2007)

We opened the GSC 2007 with a short "James Bond" spoof to acquaint the audience with our project in a short and hopefully humerus way. In our short clip, M. and 007 discuss the Global Security Challenge. Enjoy! Click here to watch the clip

GSC in the News Roundup

The Global Security Challenge received great press coverage in the past few weeks. Here is a quick summary with a few soundbites:

Mission for James Bond's Q: seek venture capital ´

"...MBA students at London Business School staged the inaugural security challenge last year, when British start-up Ingenia Technology took the $10,000 first prize for an anti-counterfeit laser-scanning device. Such was interest in the competition that the U.S. government's Technical Support Working Group raised this year's prize to $500,000"

(by Mark Trevelyan, Reuters, 26.11.2007) Click here for full story

Business Competitions - Where Big Ideas Bring Big Bucks

"Specifically designed to help start-ups in the booming post-September 11 security field, the second annual competition increased the prize money from $10,000 to $500,000 (thanks to the Technical Support Working Group at the U.S. Defense Dept.) making it "the biggest business plan competition in the world ..."

(by Alina Dizik, November 2007) Click here for full story

The Global Security Challenge

"The Technical Support Working Group, a technology coordinating organization co-chaired by the U.S. Departments of State and Defense, is a co-sponsor of the Global Security Challenge (GSC), a competition managed by MBA students at London Business School..."

(Office of the Spokesman, November 6, 2007) Click here for full story

Some of the GSC Startups Mentioned in the Press Recently:

"iViz, recognized as one of the Asia's top 5 security startups in the Global Security Challenge held by London Business School in September 2007," (Red Herring, January 2008)

"NoblePeak Vision Win’s Grand Final of Global Security Challenge 2007" (Security Magazine, November 2007)