Setting up cyber-risk modelling firm DeNexus in Bermuda has been “super easy” so far, according to founder Jose Seara.

The Bermuda Monetary Authority granted DeNexus a sandbox licence in July after a yearlong application process. DeNexus now has office space with law firm Appleby on Victoria Street in Hamilton and a local director and several local contractors working for them.

“There has been nothing unexpected,” Mr Seara said. “Sometimes predictability is not easy with regulators. There is always another thing that they never disclosed that now you need to do but that has not been my experience with the BMA.”

He said the BMA were “business-oriented” regulators.

“They do their job but they want to facilitate bringing business to the island,” he said.

However, his bid to find capital outside Bermuda has not been as simple.

“The most recent funding round has been the most difficult I have experienced in the last four years,” he said. “The world is a little bit upside down. We are a smaller start-up and need financing to keep growing.”

He said interest rates and inflation uncertainty were behind the difficulties he had experienced.

“Things are going to get a lot worse before they improve,” he predicted.

Despite the challenging market conditions, DeNexus is succeeding at raising capital.

“I am a firm believer in the opportunity that we are chasing,” Mr Seara said.

He became interested in cyber-risk modelling when he noticed a gap in the market while working in the energy industry.

“The previous company where I was chief executive officer was warehousing a significant amount of cyber-risk,” he said.

He was frustrated by the industry’s lack of solutions to understand, mitigate and transfer the risk.

In 2019, he set up DeNexus in Spain and the United States to model cyber-risk and advise on mitigating that risk.

“My duty is to give my clients better data,” he said.

A fintech-friendly atmosphere and strong technological infrastructure attracted him to Bermuda.

Mr Seara said DeNexus was making progress, one step at a time.

“We are in a marathon, not a sprint,” he said. “The world has been modelling other risks for decades and we are just scratching the initial surface of this one with super powerful computers that can process vast amounts of data.”

He said artificial intelligence was part of his “secret sauce”.

“We use a lot of AI machine learning on top of traditional probabilistic models,” he said.

DeNexus has now begun to think about new insurance products that could use data sets to do a better job.

Mr Seara said the market was waking up to cyber risk.

“The cyber insurance market is growing,” he said. “This has been a good year. Last year was bad and premiums went up.”

He was previously based in San Francisco, California, but has now moved his US office to Boston, Massachusetts.

“Now it only takes me two hours to get to Bermuda,” he said. “That is a lot easier.”