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South Wales graduate tech start-up, Hut Six Security, is poised for strong growth supporting firms and organisations to comply with tough new European cyber security legislation carrying fines that could run into millions of pounds.

With growing concerns over breaches of customer data and hacking from next year companies and organisations not taking appropriate steps to mitigate against such events, face being fined as much as 4% of their global revenues or nearly £17m, depending on which is the larger.

The new EU legislation is called the General Data Protection Regulation.

And even after the UK leaves the EU, the fine regime and required public disclosure of breaches, will pass into UK law.

Fines will be reduced if companies and organisations can demonstrate taking all possible steps to avoid such breaches.

Gartner, the technology market research specialists, has estimated the current information security awareness (ISA) market at nearly £1bn annually, with estimated growth at 13% year on year.

Computer based training is the largest single segment of the ISA market, accounting for over 25% of revenues.

Recognising that most breaches are the consequence of human error, Hut Six has developed software training packages for application across any organisation.

Its software supports businesses and organisations to create a responsible, security-conscious culture. It achieves this by inducing the correct behavioural responses to the threat of security breaches.

The business, which incorporated after its team of graduate directors successfully came through the graduate entrepreneurship programme of the Alacrity Foundation in Newport, is already working with two of Wales’ leading firms in technology venture IQE and the Celtic Manor Resort.

It is also in talks with a number of government agencies, as well as targeting the financial and professional services sector.

And in a further boost, Hut Six has secured equity seed funding of £250,000 – the maximum amount the Alacrity Foundation can provide in funding for graduate businesses successfully coming through its programme.

Hut Six will use the funding to develop new information security products and to expand sales and marketing activities.

Its managing director, Simon Fraser, said: “Prompted by the General Data Protection Regulation the market for our products is set to experience a period of rapid expansion.

"The timing of this investment positions the company perfectly to capture a significant portion of the information security awareness market."

Simon Gibson, chief executive of technology investment fund Wesley Clover, and a trustee and mentor of the Alacrity Foundation, said: “We have funded a very talented team with a platform capable of capturing significant market share in the Information Security Awareness market.

"Global threats and regulatory changes have resulted in Hut Six fulfilling a rapidly expanding and essential market requirement.

"We were further persuaded to make the investment based on early client reaction to the Hut Six platform.”

Hut Six is named after the location at Bletchley Park where the German enigma code was cracked during the Second World War.

The business is located at the Wesley Clover Innovation Centre in Newport.