How can you be sure that an incoming phone call is really from a customer and not an overseas criminal intent on fraud? For major financial services companies, that’s a growing concern as the telephone system adopts Internet technologies – and the security issues that come with them.

A startup company based on technology developed at Georgia Tech offers a solution to that challenge, and is quickly gaining traction from investors, financial services companies and the security industry. Using “acoustic fingerprint” detection techniques developed in the Georgia Tech Information Security Center (GTISC), Pindrop Security says it can restore trust to the telephone network and help stem the tide of phone fraud.

Supported by a broad range of Georgia Tech initiatives, the company is currently raising a round of funding that includes California venture capital firm Andreessen Horowitz – which has also backed Facebook, Groupon and Twitter. It has also been chosen as a top ten “most innovative company” at one of the most prestigious information security events, the RSA Conference.

“We provide a way to detect, mitigate and stop phone fraud by identifying the characteristics of any phone call based on the device making it or the path the call takes,” said Vijay Balasubramaniyan, Pindrop’s CEO, who helped develop the technology as a Ph.D. student in the Georgia Tech College of Computing. “This information is useful in providing both forensic information about the call – whether it is from a landline, cell phone or voice-over-IP device – and the geography of the origin.”

Financial services companies depend on caller ID and other services to be sure callers making transactions such as activating credit cards are who they claim to be. But the advent of simple technologies for spoofing caller ID has raised major security concerns.

In the fall of 2010, Balasubramaniyan, GTISC director Mustaque Ahamad and School of Computer Science assistant professor Patrick Traynor raised the visibility of telephony security issues – and their proposed solutions – in a paper presented at a top security conference: the ACM Conference on Computer and Communication Security.

“The research project was to understand the security challenges of this new environment in which telephony, voice-over-IP, cellular and wireless technologies all come together,” explained Ahamad. “We all know about the security problems of the Internet. Telephony is increasingly going the way of the Internet and using many of the same protocols that we use for everything else.”

The paper sparked international media coverage, and after the conference, Balasubramaniyan, Ahamad and Traynor began getting phone calls from companies that were experiencing precisely the problems the researchers described. Because Pindrop’s solution doesn’t require changes to existing telephone networks, the technology was especially attractive.

“The fact that so many companies were asking about it suggested there was a definite need for this,” said Balasubramaniyan. “The banks reached out to us with their own specific issues. That showed us that they were already looking at various embodiments of the product.”

Convinced that they had something the commercial world needed, the researchers worked with the Georgia Tech Research Corporation (GTRC) to protect the intellectual property with patents.

In the spring of 2010, Keith McGreggor, director of the Georgia Tech VentureLab program, read the invention disclosures on the research, and reached out to Balasubramaniyan. VentureLab evaluates technology developed at Georgia Tech and helps faculty and research staff launch startups that are based on technology developed in the research program.

The researchers also had lunch with Stephen Fleming, a Georgia Tech vice president and executive director of the Enterprise Innovation Institute (EI2), which houses Georgia Tech services for startup companies – including VentureLab.  Fleming, a Georgia Tech graduate and former venture capitalist, began his career in the telecom industry and quickly understood both the technical issue and the potential startup opportunity.

With VentureLab staff connecting the fledgling company to relevant resources at Georgia Tech and elsewhere in the Atlanta community, Balasubramaniyan began what is often most the daunting challenge: raising money. Pindrop sought a grant from the National Science Foundation’s Small Business Innovation Research (SBIR) program, and received help in developing the application from the SBIR Assistance Program that is part of the Enterprise Innovation Institute. The company received $150,000, and was among approximately 10 percent of the submitted proposals to be funded by NSF.

VentureLab also connected Pindrop to additional early-stage funding from the Georgia Research Alliance (GRA), and supported it in winning the startup competition operated by the GRA and Technology Association of Georgia (TAG). Beyond the additional $50,000 in funding from the competition, the GRA/TAG competition introduced Pindrop to the Atlanta community and provided important visibility with investors.

The company also obtained office space in the Advanced Technology Development Center (ATDC) incubator in Technology Square. The space allowed it to hold down costs while expanding staff to six full-time and three part-time people.

In spring 2011, Pindrop was accepted into the inaugural class for Flashpoint, a new Georgia Tech accelerator that offers early-stage technology companies educational programs and mentoring from experienced entrepreneurs. That led to advice on a broad range issues that the founders were seeking to address.

“When we ran into an issue, such as how to create a marketing campaign with very little money, a person introduced to us by Flashpoint helped us with that,” recalled Balasubramaniyan, who has adeptly made the transition from researcher to entrepreneur.  “The collective wisdom of that group of entrepreneurs has been a significant help.”

The company was also connected to its new chairman, Paul Judge, a Georgia Tech alumnus and entrepreneur with experience in security companies. And the connections made during the startup process brought Pindrop to the attention of Andreessen Horowitz, leading to the California firm’s first investment in the Atlanta technology community.  To allow use of the acoustic fingerprint technology, Pindrop received a license from the Georgia Tech Research Corporation.

“Pindrop is a textbook example of how all the components of Georgia Tech’s commercialization infrastructure can work together to support researchers developing technology that has commercial applications,” said Fleming. “The founders of Pindrop have worked very hard to build the company. They took advantage of all of Georgia Tech’s entrepreneur services and used each one to build momentum.”

Pindrop’s accomplishments, including opening the door to Andreessen Horowitz, should provide encouragement to other Atlanta technology entrepreneurs, McGreggor said.

“Beyond helping Pindrop, this rare early investment from this prestigious Silicon Valley firm will offer others in the community a hopeful reminder that they could potentially also get this kind of investment,” he suggested. “Not every company has the potential to do that, but the community needs to see a local startup based on Georgia Tech research get this kind of a hit.”

Pindrop is the second company arising from the Georgia Tech Information Security Center to attract venture capital funding. The first, Damballa, is a network security company launched in 2006 by College of Computing professors Wenke Lee and Merrick Furst.

“We are in a space where the problems are real and the solutions we can produce offer a path to real impact, solving real problems,” said GTISC’s Ahamad. “We can produce innovations that go beyond writing papers for our peers.”

Atlanta has become a center for cyber-security companies, led by the success of Internet Security Systems, which was purchased by IBM for $1.3 billion.

“Pindrop is right in Atlanta’s sweet spot, building on the strengths of not only Georgia Tech, but also the city,” said Ahamad, who serves as the company’s chief scientist. “Atlanta is a great place to launch a security company.”

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Media Relations Contacts: John Toon (404-894-6986)(jtoon@gatech.edu) or Abby Robinson (404-385-3364)(abby@innovate.gatech.edu).

Writer: John Toon