- Alcatraz AI, the US-Bulgarian company for autonomous access control that uses 3D facial authentication and AI to create safe spaces, raises a $25M Series A round.
- The round was led by Almaz Capital and included EBRD (The European Bank for Reconstruction and Development), Endeavor Catalyst, Silverline Capital, and Golden Seeds, along with participation from existing investors JCI Ventures (the corporate venture arm of Johnson Controls), Ray Stata, LDV Partners, and Bulgarian angel investors.
- The company will use the investment to accelerate international growth. Alcatraz AI will expand its software engineering team in Sofia by about 20-30%, hire more sales and marketing talent, and focus on optimizing its product for new use cases.
The news follows the growth in sales of Alcatraz AI as the company started selling to customers at the beginning of 2021, after almost five years of continuous R&D. Today, the company has one of the largest telecoms, government-owned banks, financial institutions in the US and more among its clients. In addition, Alcatraz has done and is currently doing pilots in 25+ Fortune 500 companies.
“After raising our last $6M round in April 2021, we were highly determined to make our customers happy and bring many more into the future of access control. Now, a year and a half later, we are proud to say that we owe the latest round to our amazing Alcatraz team, to our successful pilot projects, and overall traction,” Vince Gaydarzhiev, Founder and President of Alcatraz AI, shares with The Recursive.
The investment round of Alcatraz from Bulgarian investors amounts to €5.8M. Silverline Capital invests €4M and attracted renowned Bulgarian entrepreneurs and investors with an additional €1.8M.
“Alcatraz AI is a company, developing a highly innovative Autonomous AI product with global impact from Bulgaria. We, as well as our co-investors, invested with the vision that we are supporting proven entrepreneurs in their endeavor to design and scale globally products, developed in Bulgaria. Currently, the company has already achieved a number of significant milestones in terms of product IP, sales, and corporate governance. Our investment will provide the means to excel further their competitive advantages and expand the operations in Bulgaria, delivering world-class product innovation,” Diana Aladzhova, Partner of Silverline Capital and Board Member of Alcatraz AI, highlights.
How does AI solve biometric authentication in enterprises?
In essence, Alcatraz AI replaces the need for badges and security guards as an identification method in office buildings and enterprises with high-security needs. The company has developed a facial authentication solution by leveraging facial biometrics, 3D sensing, and AI.
Founded in 2016, by Vince Gaydarzhiev, Alcatraz AI is a high-tech “hardware-as-a-service” startup that aims to provide more secure access control without the added friction or high personnel cost. The facial authentication technology and intelligent tailgating detection enable businesses to innovate and future-proof their physical and cyber security strategy.
Gaydarzhiev is a hardware engineer who was born in Ruse, Bulgaria. In his teenage years, he moved to the US to pursue his passion for computer engineering. Gaydarzhiev has studied at Stanford and the University of Southern California and has a bachelor’s in electrical engineering from the University of Central Florida. After graduating, he continued his tech journey at Apple, where he led the prototyping of FaceID into iPhone X.
An increased need for cybersecurity solutions
As investor Diana Aladzhova explains, Alcatraz operates in a market, expected to outpace the general access control industry with a forecasted CAGR of 27%. Their solution has a continuously growing pipeline. However, the key growth potential comes from the capabilities, persistence, and vision of the team.
“When there are geopolitical problems, countries such as the US tend to become more closed and concerned with their security. What this means is that government structures and critical private companies tend to search for security products with the highest bar and certifications. They want to know what happens with their data, where it goes, and is there even a slight chance of cyber attacks,” Gaydarzhiev explains.
As Gaydarzhiev shares, Alcatraz works with many international high-rank companies, but cannot share their names due to security reasons. “We create a high-security product that integrates into their local security networks. Many of our clients are Fortune 500, government agencies, and banks that do not want others to know what security products they use,” he adds.
On a journey to replace badging with AI
The story of Alcatraz started in 2015 when Gaydarzhiev was working at Apple, developing its Face ID solution and exploring the nits and grits of biometrics.
“The magic of Apple is that people don’t know what stays behind the interface, they don’t have to understand it, or learn how to use it. In the physical world, however, even in the Apple office, there is no such high-tech Face ID-like security and identification solution. Instead, there are badges and security guards at every door. Even though this does ensure high security, small companies can hardly afford it,” Gaydarzhiev explains. He believed facial authentication would be perfect in the physical security world to provide a more secure and touchless access control solution that allowed people to move more efficiently and effectively while giving the security team greater confidence.
One year later, in 2016, the company was officially launched and quickly took off, attracting the interest of both investors and pilot clients alike.
It took him and his team around 4 years and a half to develop their product and bring it officially to market. Before the latest round, Alcatraz AI had raised $20M from a number of angel and venture capital investors, including JCI Ventures, the corporate venture arm of one of the biggest security companies Johnson Controls.
All of the financing up to now was aimed at R&D and allowing the company to go to market. These initial investments allowed Gaydarzhiev to focus on pure product development and set up the Sofia team, first, and later the US team. Now, the company is ready to invest heavily in marketing and sales in order to make its functioning product available to more companies worldwide.
What comes next for Alcatraz AI?
As of now, the Alcatraz team has 30 people in Bulgaria and 30 in the USA. Around 90% of the Sofia team consists of AI, computer vision, and AI engineers. Bulgaria is also the main R&D hub of Alcatraz, while the US team is responsible for hardware, sales, customer support, marketing, and logistics.
After the latest round, Alcatraz AI plans to expand its Sofia team. Due to their stage of development, and the industry they operate in, they would focus on more senior people. However, Vince says that he hopes they would be able to hire more junior people with the time.
When it comes to their product roadmap, the latest round would be invested in the development of their new product, which will allow Alcatraz to enter new markets. “Following the natural development of every technology, we will aim to make our new product smaller, faster, and more affordable by using new types of chips and sensors,” Gaydarzhiev shares.