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Hot Trends to Explore

Security Businesses

Shredding
With identity theft on the rise, shredding personal information is de rigueur if companies are serious about protecting clients. And since the Fair and Accurate Credit Transaction Act went into effect in July--requiring businesses that possess records with consumer information to properly store and dispose of them--companies small and large have increasingly been outsourcing shredding.

There's so much interest, the National Association for Information Destruction has grown from 170 to 700 members in less than four years. And the need for quality shredding services will likely increase in the near future, according to Robert Johnson, executive director of NAID--especially if Senate bill S.1408 passes in 2006. That's the Identity Theft Protection Act, which would mandate document destruction for even more businesses. "With detection, apprehension and prosecution [of thieves] being so difficult, prevention is one of the only ways to fight [identity theft]," says Johnson.

Setting her company apart from the crowd is Michele Moody, 47, founder of DocuGuides Secure Shredding in San Antonio. Moody, who launched her business in 2002, focuses on security with high-quality shredding equipment that essentially pulverizes materials, which she then recycles. She's built yearly revenues to $400,000 by promoting not only the security she offers, but also her environmental commitment--she plants a tree for every client who shreds and recycles 100,000 pounds of paper.--Nichole L. Torres

ID-Theft Prevention and Recovery
Identity theft has become a clear and present danger to consumers, and now they're looking for ways to fight back. A June survey by Privacy & American Business and Deloitte & Touche estimates that 44 million American adults have been victims of identity fraud or theft, up from 33 million victims in 2003.

One of the first companies to take a proactive approach to identity theft is Identity Cops Inc. in Westbrook, Maine. The startup offers automated recovery services as well as proprietary web-based software that alerts subscribers to any suspicious activity. "This is not only a market that is ripe, but there are [also] a lot of people that need our help," says co-founder and vice president of technology Justin Page, 38. The company just launched its initial offering, a subscription service starting at $10 per month.

This market is still very young, but the demand is there, so expect it to grow quickly. Rebecca Weinstein, 38, president and co-founder of Identity Cops, says of the company's reception, "People are anxious to get their hands on a subscription because there has been so much publicity around the issue." Now's the time to get in on this untapped market.--Amanda C. Kooser

Hosted Security Provider
Businesses are outsourcing their websites, building security and power lunches, so why not outsource their IT security, too? Not many owners have time to monitor their networks for hackers, worms, viruses, or Trojans. They're looking for someone to do it for them. The market for hosted security providers is about to emerge.

Anil Miglani, senior vice president of research group AMI-Partners in New York City, has been keeping an eye on this growing market. She says there's plenty of room for new startups to provide technology security services. "Outsourced IT security is particularly attractive to smaller businesses, which often lack adequate IT savvy and don't have any full-time IT staff."

The internet may make you a global company, but sometimes your best prospects are close to home. "Most organizations prefer to outsource their IT security to local providers," says Miglani. "New startups can also focus on specific verticals like legal, health care and professional business services, as well as e-commerce businesses, which are very security-conscious."--A.C.K.

Data Backup
Whoops. There went six months of business data, all lost in the fickle failings of a dying hard drive. It would be poetic if it weren't so detrimental. A recent Gartner Inc. study showed that the worldwide storage-management software market alone was set for double-digit growth in 2005. Still, many companies either lack a backup solution or rely on outdated and ineffective methods. With laws like Sarbanes-Oxley in effect, data storage is more important than ever.

Many businesses are looking for a better way to back up. Lasso Logic in San Francisco has a simple message: Tape sucks. Their Lasso CDP (continuous data protection) backup appliance is proving to be a big hit with growing businesses, especially since it covers both on-site and remote backup in real time. With 2005 sales nearing $1 million, they're tapping into an underserved marketplace that's growing fast.

"Accounting, legal, medical, health-care and financial services--those are the types of businesses that seem to really have an acute awareness of how valuable their data is," says Anna Yen, 36, co-founder of Lasso Logic , along with Steve Goodman, 38, Dave Bernat, 40, and Sal Sferlazza, 31. For companies offering simpler, more reliable, real-time data backup systems, plenty of opportunities exist in hardware and software development as well as online backup options.--A.C.K.

Surveillance Cameras
With recent events like 9/11 and the London bombings fueling terrorism fears nationwide, we're seeing an increased interest in security and surveillance products. Video surveillance cameras are a huge part of that trend: Consulting firm Frost & Sullivan estimates surveillance cameras will be a $4.09 billion market by 2010.

Simon Harris, senior analyst at IMS Research in Wellingborough, England, believes much of the opportunity lies in software, particularly video content analysis software, a projected $839 million market by 2009. The applications, while widespread, include the ability to analyze live or recorded video streams to detect suspicious activities, events or behavior patterns. One market leader is ObjectVideo in Reston, Virginia. The multimillion-dollar firm creates security software products currently in use by several airports, the Marine Corps in Fallujah, and at U.S./Canada and U.S./Mexico border checkpoints.

IMS Research predicts that residential users, too, will be a huge market. Paul Brewer, co-founder of ObjectVideo, concurs, adding that installation and maintenance of the systems will be a hot opportunity. "As the technology gets out into the mass market, the opportunity is there for somebody to act as a channel for [manufacturers]," says Brewer, 38. Learn more by visiting the Securities Industry Association website .--April Y. Pennington

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This article was originally published in the December 2005 print edition of Entrepreneur with the headline: The Hot List.

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