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Twilio in Deal to Acquire Security Startup Authy

The two-factor authentication app will continue on its own, but will also become part of Twilio's programming tools.

Via Twilio

Twilio, the cloud software service that gives developers the ability to add phone calls, text messaging and other communications features to their applications, has reached a deal to acquire Authy, a small startup with a two-factor authentication app.

Financial terms aren’t being disclosed, but Twilio CEO Jeff Lawson, in an interview with Re/code, said that the Authy app will continue as a standalone service, but its capabilities will also be added to Twilio’s API, allowing developers to enhance the security of their apps.

Authy helps users manage their two-step authentication information for services like Google’s Gmail, Evernote, WordPress, Dropbox and Facebook. Two-factor authentication systems use a constantly changing number generated on or sent to a smartphone as a second password to make an account harder to hack. It supports as many as 6,000 different websites.

Twilio is the service that apps like Uber and Airbnb use to connect people who use the apps. When you summon a ride from Uber, any calls or texts between you and your driver are handled in the cloud via Twilio. About a half million developers around the world in 200 countries are using Twilio.

Lawson says there has been a demand among Twilio’s developer base to add the ability to beef up account security. “Every login box on the Web needs that extra layer of security,” he said. “Developers building on top of Twilio have had to learn how to implement two-factor authentication on their own.”

Authy’s API makes it relatively simple to add that extra security to any app.

The deal also constitutes Twilio’s first acquisition. It’s starting to make noises about an IPO, and last week it disclosed it had crossed the threshold to a run rate of $100 million in revenue. It has raised $104 million from venture capital firms including Bessemer Venture Partners and Union Square Ventures, and was in 2013 said to be valued in the neighborhood of $500 million.

Authy is an early-stage company with about 20 employees that emerged from Y Combinator in 2012, and had raised a little less than $4 million from seed-stage investors.

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