African blockchain anti-infringement company Custos raises R4 million in seed round

Baozou Commentary : The loss caused by film copyright infringement to small production companies is huge, although it is still within the tolerance range for large film companies like Hollywood. Startup Custos has taken on the responsibility of resisting piracy. After raising $265,000 in seed investment from South African private investors and Digital Currency Group (DCH), it has developed an innovative Bitcoin application to solve the copyright infringement problem that independent producers are worried about. However, detecting infringers is only the beginning of Custos' business, and blockchain will play a greater role in this industry in the future.

Translation: Nicole

Custos, a startup that uses blockchain technology to fight piracy, is a great way for Hollywood studios to get their start-up doors opened, and at least one group of investors would agree.

The Stellenbosch, South Africa-based startup recently announced that it had recently raised $265,000 in seed funding from private South African investors and Digital Currency Group (DCH). New York-based DCG has been an active seed investor in the cryptocurrency industry, with 60 investments in 20 countries.

Custo’s technology allows the company to watermark bitcoins into media, track when they were infringed on the blockchain and identify the infringer. There’s also a crowdsourcing element, offering bounties to downloaders who identify pirates.

While still in the LaunchLab incubator in Cape Town's university town, the company has secured contracts with the largest broadcaster and the largest producer and distributor on the continent.

Custos CEO CJ van Rooyen said the startup plans to use the funds to expand its customer base, particularly pirates who cost production budgets tens of millions of dollars.

He said:

“We are very excited to be working with these investors who are so motivated to help us reach our target markets.”

While large studios can afford these losses, small independent film companies cannot. Custos COO Fred Lutz said:

"For these small independent film companies, piracy can mean the difference between making money or going bankrupt."

Barry Silbert

Barry Silbert, founder and CEO of Digital Currency Group (DCG), said:

“We are excited that the Custos team has developed an innovative Bitcoin application that solves a problem that is prohibitively expensive for producers.”

Custos has received a new round of funding following an initial investment of R2,100,000 ($140,000) from Innovus last year, and the University of Stellenbosch’s Technology Transfer Office has enabled the initial concept to be developed.

Custos is currently firmly targeting independent film companies, with Hollywood studios as the ultimate goal. The startup is also testing solutions for protecting e-books.

Luts said detecting infringers is just the beginning for Custos, as the company sees bitcoin’s potential to make media production, distribution and consumption more equitable.

Lutz said:

“We are excited to see how the industry will be restructured driven by blockchain technology. Custos provides this technology, forming a content protection layer for this new distribution method.”