The problems of the EuroZone may be giving financiers nightmares but it is proving a happy hunting ground for Cambridge UK software company Featurespace.

CEO David Excell says customer retention has become a must in the most challenging economic conditions Europe has ever witnessed – and keeping customers is exactly what Featurespace’s fraud detection and marketing analytics software is all about.

Excell told Business Weekly that the company was reining in a natural inclination to target fresh international markets but Featurespace would not be changing its model.

“There is still a lot of growth for us in Europe so we plan to achieve domination there before pushing out any further across the globe. There’s a danger for technology companies that try to juggle too many plates. it’s important that we focus on the model that is working well for us.”

Featurespace became profitable very early in its life cycle, on the advice of non-executive director Mike Lynch who has invested as an ‘angel’ in a new £1.5m funding round.

And Excell added: “While it’s great that Mike should invest in the round, his advice has proved more valuable to us than his cash. We see no reason to change the strategy Mike has informed.

“We are already gaining good customer traction with our products and this investment enables us to further build our team and sales capability to support our growing business through the next stage of our development.

“We have grown headcount from 12 people at the start of last year to 22 currently. Whether we need to recruit further or raise any additional cash going forward very much depends on how successful we are with our sales & marketing effort.

“We are really happy with the way the software has developed – with both the core algorithms and underlying analytics.”

One of the great strengths of Featurespace’s software for companies faced with data deluge is that it deals with information as it shoots across the wire, eliminating the need for data storage.

Helping clients stay close to their customers is proving a winning strategy and the developed products are generating a lot of repeat business. Excell said: “We are helping clients keep pace with any changes in customer behaviour and demand remains strong in the EuroZone, which is we we are still focusing on Europe.”

Co-founded by Excell and Professor William Fitzgerald, Featurespace has developed two innovative software solutions for fraud detection and marketing analytics, based on world-leading research carried out at Cambridge University.

Its commercial successes in securing big name customers such as Betfair, one of the world’s largest international online sports betting providers, and IG Group, a world leader in financial derivatives trading, has led to Featurespace earning a wide range of plaudits, including being dubbed a ‘Global Game Changer’ for 2012 by Business Weekly.

Featurespace’s technology processes live streams of data, building and constantly updating predictive models in real time, which are used to identify and influence change in customer behaviour.

The marketing analytics product monitors online customer activity and uses sophisticated algorithmic modelling to predict every individual customer’s future behaviour. This can enable marketers to spot – for example – indications of an increased propensity to churn, allowing them to deploy tailored customer retention activities with pinpoint precision.

The fraud detection software product provides customers with greater accuracy in identifying genuine risks to their business, a significant reduction in the number of false positive alerts, and the ability to allow a greater proportion of business to be accepted safely.

Featurespace’s products have the potential to be adopted widely across the $10bn business intelligence market which (according to Gartner in 2010) is growing at 13.4 per cent p.a. and the fraud detection market worth $270m annually and growing steadily.

The growth opportunities have encouraged existing investors NESTA, Cambridge Angels, Cambridge Capital Group, and founder and former-CEO of Autonomy, Mike Lynch, to invest in the new funding round alongside new backer Imperial Innovations Group.

Susan Searle, chief executive officer of Imperial Innovations Group, said: “This is our second investment in a Cambridge technology company. The strength of the investment syndicate for Featurespace is a great endorsement of Featurespace’s solutions and the strength of the management team.”