Software company SecureMethods Inc. said it will use a new $3 million investment to expand its sales efforts as it sets up shop in Martinsburg, W.Va.

With the backing of about $500,000 in angel investment, the company was run from the Washington area homes of its founders.

With the new money, the company will open its first headquarters.

SecureMethods sells software that helps authenticate computer users for online communication and encrypt the data they exchange.

"It's a software plug-in," said James J. Condon, SecureMethods' chief executive.

"It works seamlessly with whatever application you're using."

The company is moving to West Virginia with the help of a Small Business Administration program that encourages venture capital investments in areas where such investment is scarce, such as the Appalachians.

Adena Ventures, an Ohio-based firm that led the round of funding, received matching government money.

Another of Adena's portfolio companies, software maker Butterfly.net, is also based in Martinsburg.

Adena founding partner Lynn Gellermann learned of SecureMethods at Butterfly.net board meetings, where he met Steve Walker. Walker's venture fund was one of SecureMethods' early backers.

Most of the company's customers are federal agencies, including Defense Department. The Internal Revenue Service also uses the software to process corporate income tax payments. An intellectual-property law firm uses it to protect its communication with clients.

Condon is hoping to sell SecureMethods' software to businesses that deal with confidential information, such as health care and financial services companies.

"You don't want that information hacked or shared across the planet," he said.

Condon said no more investment should be necessary before SecureMethods becomes profitable, which he expects early next year.

"It's a large and growing market, which is great," Gellermann said.

"Also the industry has picked up recently in part due to 9/11 and homeland security."