Socure raises $30 million to combat identity fraud with machine learning
Identity fraud: It’s more common than you think. In 2017, 6.64 percent of consumers — or about 16.7 million people — fell victim to it, according to a report by research firm Javelin Strategy. (That’s up 1 million from 2016.) And in 2018 alone, over 2.6 billion records were stolen or exposed in more than 1,100 data breaches around the world.
That’s enough to give anyone the willies, but New York-based Socure hopes to put minds at ease with its cloud-based identity verification and fraud prevention solution. To accelerate its market expansion and grow its sales, marketing, research, and customer support teams, the startup has completed a $30 million series C funding round led by Scale Venture Partners, with participation from contributors Commerce Ventures, Flint Capital, Two Sigma Ventures, Synchrony, along with new investor Sorenson Capital.
It brings Socure’s total venture capital raised to $57.5 million, and comes after a year in which revenue grew more than 300 percent year-over-year. CEO Tom Thimot says that Socure’s clients include six of the top 10 U.S. card issuers and a top five online retailer, among over 100 other brokers, payment providers, and other companies.
“This funding will enable us to grow our footprint in strategic new U.S. market sectors that are in need of accurate, automated identity verification technology, including health care and the public sector,” Thimot said, adding that Socure’s workforce more than doubled this year and moved into a larger office near New York City’s Penn Station. “We will also invest in bringing on the talent required to continue innovating and expanding our machine learning-based predictive analytics platform.”
Socure’s digital ID verification suite — dubbed Aida — leverages a wealth of machine learning and predictive analytics techniques to authenticate people from “thousands” of offline and online email, phone, address, social media, and IP data points from over 300 sources in real time. It tabulates a “trust score” for people in less than a second, and provides a detailed explanation as to how it came to its conclusions.
Aida is the brainchild of cofounder Sunil Madhu, who was struck after immigrating from Europe to the U.S. by how hard it was to get approved for things without an established credit history.
“Security and fraud prevention continue to hold back companies in the financial services and other industries, primarily because traditional approaches to digital identity verification are unreliable, slow, and create unnecessary friction for users,” said Scale Venture Partners’ Rory O’Driscoll, who will joining Socure’s board of directors as part of the series C. “Socure has developed a proven, mature, and market-leading technology platform that enables organizations to accept more new customers without manual reviews while dramatically reducing fraud.”
The latest version of Socure features a modular design, and includes new anti-money laundering capabilities — along with an optional document verification component that can validate the authenticity of physical IDs — through a single API. That makes it ideal for businesses, like lenders, ecommerce and retailers, and banks, that deal with potentially risky clients or “thin-file” clients, says Thimot.
Socure claims that on average, customers see reductions in fraud rate and manual review costs by 80 percent and 90 percent, respectively, and a decrease in ID authentication failures involving millennials by as much as 40 percent.