Optalysys, Leeds encryption firm, in Series A funding

Leeds-based Optalysys, a developer of a revolutionary photonic processing technology, announced a £21 million Series A funding round led by Italian investment firm Lingotto, Belgian early stage and growth venture capital fund imec.xpand, and Manchester-based investor Northern Gritstone.

Additional investors will follow.

Lingotto is owned by Exor, the investment company owned by Italy’s wealthy Agnelli family.

The investment will allow the Leeds company to advance its Enable photonic computing technology to unlock a new form of secure processing known as Fully Homomorphic Encryption (FHE).

Optalysys said: “FHE is a form of quantum-secure cryptography that closes the last vulnerability in cloud systems: unlike other encryption methods, FHE does not require the data to be decrypted before it can be processed, allowing confidential or sensitive data to be sent along untrusted networks, or to be worked on by multiple parties without ever exposing the data itself.

“However, the computational burden attached to this poses significant challenges, with a single process on encrypted data taking around one million times longer than on unencrypted data, making it near impossible to deploy at scale with conventional computer processors.

“Optalysys’ approach addresses this bottleneck. The company has created an advanced photonic semiconductor which accelerates the FHE process, allowing encrypted data to be processed at similar speeds to its unencrypted form.

“This brings hope of deploying FHE at the scale demanded by the largest secure data applications.

“With potential use cases across most major industries, including finance and banking, manufacturing, healthcare and machine analytics, research firm Global Market Insights estimates that the global FHE market is set to grow to $53 billion by 2030.

“The goal is for Optalysys to become the world’s leading provider of confidential and private computing leading to the Encrypted Data Centre, where today’s trust and security issues of sending data to the cloud become consigned to history.

“The company’s technology has already attracted the attention of financial institutions and has applications across a wide range of industries, from financial fraud detection to advanced processing of medical data.

“The investment will allow the company to launch its technology on a cloud-based service model, in partnership with system integrators and service providers.

“Initial photonic systems developed by Optalysys will also be made available to end-users via an Accelerator program – ahead of the first high-speed Enable chips being produced within 24 months.

“The funding will also be used to expand its team in England, Europe and the US.

“For co-founders Dr Nick New and Robert Todd, this marks the culmination of over 20 years’ development in optical computing, during which they have relocated from Cambridge to Leeds to draw on the city’s resources and the University’s strong expertise in the field.”

Nick New, Co-Founder and CEO of Optalysys, said: “Fully Homomorphic Encryption has the power to unlock the full value of data – but despite its advantages, it is currently unviable for anything beyond basic processes – this is where Optalysys comes in.

“Our Enable technology allows us to turbo boost the workflows and address the underlying bottlenecks that hold FHE back.

“It is a very exciting moment for Optalysys and it’s fantastic to have the backing of such prestigious deep tech investors to help us reach our goals.

“We have turned optical computing on its head. What’s more, FHE is just the starting point for where our technology can go.”

Ashish Kaushik, partner at Lingotto, said: “Optalysys presents a groundbreaking semiconductor technology to reduce energy consumption, boost processing power, and enhance data security.

“The capability to unlock the power of FHE with their photonic computing technology will enable new markets with advances in encrypted AI. We look forward to working with Nick, Rob, and the team to bring a new level of trust and security to how we use our data.”

Cyril Vančura, partner at imec.xpand said: “We are at the cusp of a new era of data sharing, and in the future the biggest opportunities will lie in enabling data sharing across institutions and efficient data processing across industries without compromising data security, confidentiality, and privacy.

“Optalysys is developing the key hardware component which will enable this new paradigm of secure data sharing. We are thrilled to support the company in developing this novel technology.”

Northern Gritstone CEO Duncan Johnson said: “Optalysys has the Holy Grail of privacy technologies, providing a solution that will close the last major vulnerability in cloud and remote processing.

“Nick and Rob’s decision to move the company to Leeds validates Northern Gritstone’s belief that the thriving innovation hub in the North of England will attract fast-growing technology companies to the region.

“We are thrilled to support them in their journey as they seek to transform the data protection market and create another Northern success story.”

The company was supported by Mills and Reeve and advised by KPMG. The investors were advised by Taylor Wessing.