What Exactly is a Stealth Startup and Should You Go Stealth-Mode with Your Business

Everyone likes a little bit of mystery, right?

People love the Bond movies or watching CSI, and enjoy the interactive books where they can be the Sherlock Holmes to figure out the culprit.

And on the other side of the coin, secrecy can benefit people in life in multiple ways.

No one has to know what you’re up to always, right?

I sound like I’m urging you to commit a crime but really, I’m not. I’m just saying that if you’re thinking about coming up with a product or starting a new business, you don’t have to shout what you’re doing from the rooftops.

Or share it on the internet.

You can choose to keep your start-up under cover before you launch and hire people in secret.

Sound exciting right?

The idea of a stealth start-up is that give your business well-deserved privacy. Although the method has its downsides too, it’s was very popular in the early 2000s and according to Entrepreneur, stealth startups are on the rise in India currently.

Before I tell you about the advantages of stealth mode and show some examples of stealth startups that have made it, let's define the term:

What is a Stealth Startup?

A Stealth Startup, as you can figure out from its name, is a business (a startup) that operates to launch a new product or a service in an undercover state (aka the stealth mode).

There are two types of stealth mode:

• Complete stealth mode is when a organization aims keep all of its actions as secret as posssible. It might even lead people to think that they’re working in a different industry if their members act in such secrecy. Stealth startups have websites that doesn’t offer detailed information about their employees or the location of their base. 

In extreme cases, they may even use a temporary name that doesn’t hint anything regarding the service or the product the company offers.

• In-company stealth mode is when an existing business tries to keep a new project or idea as secret as possible until it’s time for release. Microsoft, for example, has a long history of assigning codenames to various projects — Windows 95 was Chicago, Windows Vista was Longhorn — in order to keep scrutiny at a minimum.

Also, their secrecy extends further than just the public eye. In-company stealth mode ensures that all stakeholders stay away; thus, preventing dismissal of a concept or idea in its early stages. A business operating under in-company stealth mode can do covert testing, generate a cover story and come up with new resources to keep its secrecy.

Why Should Businesses Go Stealth?

1. Hide your new tech

High-tech firms that are developing really groundbreaking technologies or waiting to secure or get key patents may be hesitant about disclosing too much information about their work. This is logical, however, these kinds of businesses are quite uncommon.

Stealth mode is most commonly used by companies in the pharmaceutical, heavy industrial, or cutting-edge industries to safeguard their technology. Keeping their plans under wraps can help prevent competitors from copying their technologies.

2. Be prepared for the grand debut

Another reason why many entrepreneurs go into stealth mode is to create a great splash when they ultimately debut. When it comes to establishing a business, there are two schools of thinking, but I believe early launches make more sense.

Still, some entrepreneurs with media ties or a sizable personal following may choose to remain in stealth mode until their startup's content marketing, social media, and PR channels are prepared. They may also want to make certain that their product is capable of handling the expected fast start.

Furthermore, being in the spotlight might affect your team's performance and harm your firm. A stealth mode company may be the ideal option if you want to focus only on your product or service without having to worry about things like branding or public relations.

This allows you to focus on things like strategies and developing new skills while reducing the need for (and cost of) more initiatives for the public eye.

When your startup is in stealth mode, it is unlikely to receive much attention from the press.  However, this might be a useful thing because it allows you to keep your actions out of public view.

It also means you have greater control over the information that potential consumers and investors perceive. With the widespread use of social media sites such as Facebook, Twitter, Instagram, and even LinkedIn, creating your own press is perhaps one of the simplest things you can do these days.

3. Avoid Distractions

Some entrepreneurs, particularly those with a product-to-engineering background, have a tendency to overbuild their initial product. They consider sales and marketing as a diversion until they've perfected every aspect of their product.

However, if you want to focus on your product instead of focusing on sales and marketing, stealth mode might be right for you. Although I have to say that this might be dangerous as well since the connection between you and your target customers is as important as the quality of your product. 

You can’t design the best product without connecting and interacting with your audience. You might end up developing a product that’s not desirable or needed by clients.

You should compare the advantages and disadvantages of the privacy of stealth mode before you make a decision.  However, there are many companies that were in stealth mode (are still in stealth mode) and very successful.

Let me give you some examples.

13 Examples of Stealth Startups That Made It

Regardless of some disadvantages, countless now-successful firms started out in stealth mode. Here are ten examples that may help you understand why and how stealth companies get started:

1- Mist Systems

When the former Cisco CTO departed to start his own business in 2014, he kept the specifics to himself. No details on what’s he’s doing whatsoever. After they debuted publicly, they had received $144 million in venture capital to improve networking with artificial intelligence. 

The company became so successful that it was sold to Juniper Networks for $405 million just five years later. Amazing right?

2- Velo3D

I’ve always found the idea of 3D printing interesting and a little bit crazy so Velo3D has been an excellent startup to keep my eye on. Benny Buller, the creator of Velo3D, raised $22 million after a long career as an executive in the energy and industrial industries. 

Yeah, you read that right. $22 million.

Velo3D currently produces unique 3D printed metal parts for precision industry demands, thanks to the investment.

3- Coda

You may have heard of Coda today, but the firm was once known as Krypton and was created by Shishir Mehrotra, a former YouTube executive. With a $400 million pre-launch value, the business secretly developed its masterpiece who murdered Excel in cold blood.

Now Coda is preferred by the most well-known organizations like TED, Figma, The Newyork Times, Buzzfeed, and Uber.

4- Proprio vision

Light field technology and AI replace microscopes, loupes, displays, and other standard surgery visualization tools with Proprio vision. The brand aims to create a virtual picture of the human body that provides surgeons with more extensive and precise data.

For years, the business worked in secrecy, perfecting its technology and even receiving $7 million in funding while remaining anonymous.

5- Koverse

Koverse was founded in 2012 and advertised AI technology that gathers through massive and diverse datasets to produce new goods and services for business clients.

While the firm wasn't trying to hide its technology, Jon Matsuo, president, and CEO of Koverse said clients often request that the company stay quiet about the job they accomplish. Koverse, on the other hand, had a rare chance to show off its services when it unveiled itself as a big data platform meant to assist auditing giant PwC examine global supply chains for risk. The "Know Your Vendor" system detects anything from minor missteps to grave human rights violations.

“Our customers don’t want us talking about what we’re doing with them, and so they put the clamps on us,” Matsuo said in an interview.

“We’re really helping them with strategic use cases; it’s not operational stuff where you’re saving 10 percent here or there. We’re generally helping these organizations with something that’s fundamentally ingrained in their service — a new product or service, or something that really gives them a competitive edge.”

6-  DUST Identity

DUST Identity came out of stealth mode in mid-November, garnering $2.3 million in early capital in the process. The MIT-based firm built the first unclonable security tracking system for hardware authentication utilizing nanodiamonds, or diamond particles so tiny that they are measured in nanometers. Under a DARPA-funded program, the startup developed its main technology and transformed it into a commercial product for modernized supply chain and manufacturing security. To secure their most vital assets, DUST is collaborating with some of the US government's largest agencies, as well as tech leaders in supply chain and business operations.

7- Forge.ai

Forge.AI launched in early December with an outstanding $11 million Series A investment under its belt, after a year in stealth mode. The Cambridge-based firm is on a quest to make sense of unstructured data, which makes for almost 80% of all data on the world, such as social network postings, news stories, and SEC filings. 

Forge.AI intends to employ AI to assist organizations in making the most of it all, utilizing natural language technology and a unique self-learning knowledge graph. Underscore VC led their most recent investment, which included Accomplice, Boston Seed Capital, Imagination Capital, and Project 11 Ventures. Jennifer Lum, a co-founder, stated that the funds will be utilized to expand the company's personnel and accelerate product development.

8- Perceptive Automata

Perceptive Automata, a company that develops software to anticipate human behavior in autonomous vehicles, came out of stealth mode in July 2018 with $3 million in preliminary funding. In addition, JAZZ Venture Partners led a $16 million round in October for the Somerville-based business. 

Perceptive Automata's software utilizes behavioral science to make vehicles "think" like humans, pedestrians, and other motorists, allowing autonomous vehicles to navigate human-dominated highways reliably and safely. Perceptive Automata will continue to the funds to hire outstanding engineers to improve its human intuition AI software and expand its product development and client implementation, teams.

Now, brands like Toyota and Aurora prefer working with Perceptive Automata.

9- Berkshire Grey

Highly secretive robotics company Berkshire Grey emerged from stealth mode in early December 2018, announcing that it had been quietly deploying AI-enabled robots at more than 100 retailers and fulfillment centers. Its customers use their smart robotic systems to automate tasks like picking, packing, and sorting for e-commerce, retail, and logistics. According to Berkshire Grey, robots are way faster and more accurate than humans. 

In 2021, the brand was in the top 200 in America’s best startup employers list by Forbes.

10- Randori

Have you ever wondered about the perspective of an attacker? Well, Randori can show you. Randori is an industry-leading attack surface management platform that helps you to enter the minds of the wicked.

The company exited from the stealth mode in October 2018 with a $9.75 million fundraising from Accomplice Ventures, with participation from 406 Ventures and Legion Capital. The company claims to have developed the first "nation-state caliber attack platform" that can simulate genuine cyberattacks on clients in real-time, offering real-time feedback on how well-prepared businesses are, as well as how attackers view their security infrastructure. 

Interesting right? 

Now, big names like Forbes, Wallstreet Journal, Bloomberg, and TechCrunch trust Randori to strengthen their security.

11- Symbolic IO

Founded in early 2012 by Hewlett-Packard's former storage CTO, Brian Ignomirello.

Symbolic IO's website used to have one specific sentence that described what they do a bold description of its work:

"Symbolic IO has developed technology that creates a fundamental change in compute technologies that will forever transform how information is stored, shared, and transported; limitless by performance, limitless by scale.”

The company raised millions of dollars in stealth mode and now, they have a website filled with catchy articles. 

12- CNEX Labs

“A new world of Data”

Once there was only one line on CNEX Lab's website: "Leading the evolution in big data storage." 

The San Jose-based firm, co-founded by Yiren Huang, former chip engineer at Huawei/Brocade/Cisco, and Alan Armstrong, former semiconductor at Marvell, is the most well-funded company that remained in stealth mode for years.

The company raised $38.8 million and now, their website even includes a press blog. A big leap, not gonna lie.

13- Hyperscience

The New York-based company, Hyperscience, aims to deliver the best artificial intelligence to enterprises. One of the investors (Firstmark Capital, High Line Venture Partners, Slow Ventures) of Hypersicence claims that the product will help each enterprise to connect with their customers smarter.

Its website page shows some data and reviews from their users and you can find out about their product and business partners. The company isn’t in stealth mode anymore but they started off in stealth mode and climbed up the steps of success and raised 10.9 million dollars.

Going Dark?

Whether you should or shouldn't turn your idea into a stealth startup is up to you, purely because you know what your product is, and can estimate which way it will succeed in the end.

Plus, keeping a secret is always fun, right?