SA Startup, Custos Raises US$265,000 From Local and US Investors

Custos Media Technologies, a South African startup that combats media piracy by using the bitcoin blockchain, has announced it has raised about US$265,000 from local and US investors in a seed investment round.

The funds will allow the company reach the high ­risk media producers, for whom piracy can literally cut tens of millions of dollars from their production budget when a title is leaked.

CEO of Custos, G­J van Rooyen said, “We’re thrilled to partner with investors who can really take an active role in helping us reach our target market.”

Custos combats media privacy by embedding a bitcoin wallet containing a bounty into each copy of a media item (e.g. a movie, e­book, or song) that is sent to a client. This wallet is associated with the individual customer who bought the item.

If a bad actor uploads the media to a pirate site, any downloader can claim the bounty. Custos can rapidly detect whose copy was infringed, and can report the event to the media owner for further action.

By effectively using pirates to incriminate other pirates, the company creates an environment where media recipients are strongly discouraged from distributing content, and where artists can be duly rewarded for their efforts.

Custos raised the funds from a South African private investor, and Digital Currency Group (DCG), a New York City-based company that has been an active seed investor in the digital currency industry with 60 investments in 20 countries.

“We are excited to see the Custos team developing an innovative application of bitcoin technology to solve a problem that is very costly to content producers,” said Barry Silbert, founder and CEO of Digital Currency Group.

Custos will also use the funds to expand its product offering amongst independent movie producers, and take the concept to the larger players in Hollywood. Custos is also testing a solution for protecting ebooks.

This isn’t the first time Custos would be raising funds. Last year, it raised US$140,000 from Innovus, the Technology Transfer Office of Stellenbosch University.

Founded in 2014 by Prof Gert-Jan van Rooyen, Dr Herman Engelbrecht and Frederic Lutz (all from Stellenbosch University), Custos Media Technologies is based at the Nedbank Stellenbosch University LaunchLab business incubator.

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