Dyadic Security, which provides cloud-based security software, announced today new funding of $12 million. The startup helps businesses encrypt and decrypt data with virtual cryptographic keys rather than dedicated hardware.

“A cryptographic key is a digital string of bits,” Avner Mor, CEO and cofounder of Dyadic Security, wrote in an email to VentureBeat. “This string of bits is extremely sensitive, as it allows encrypted data to be transformed into plain data and vice versa. Thus who holds the key holds the data.”

Dyadic’s software allows companies to store, manage, and use cryptographic keys on servers, laptops, smartphones, and Internet of Things (IoT) devices, either on premises or in the cloud.

“Traditionally, the only way to provide clear guarantee for the security of the key against potential compromise was by storing and protecting it in a hardware device dedicated for that purpose,” wrote Mor. Dyadic’s software secures cryptographic keys by splitting each key into two random parts that are then stored on separate machines.

The startup hopes to eliminate the need for dedicated hardware, as customers can choose the device on which to run the software — it offers subscription plans for its services. Mor declined to reveal how many annual subscribers Dyadic has, but described them as mostly Fortune 500 U.S.-based enterprises.

Dyadic is competing in three sectors: hardware security modules (HSMs), key management solutions, and advanced authentication solutions. Mor named Amazon Web Services’ (AWS) CloudHSM, Box’s KeySafe, and Microsoft Azure’s Key Vault, among others, as competitors.

Goldman Sachs, Citi Ventures, and Eric Schmidt’s Innovation Endeavors led the round. Since its foundation in 2014, Dyadic has raised a total of $15 million, with an additional grant of €2 million (about $2.1 million) from the European Union’s Horizon 2020 research and innovation program. The new money will be used to expand Dyadic’s sales and marketing operations in North America.

Dyadic is based in Petach Tikva, Israel, and has 20 employees.

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