Socure lands $450M as the identity verification market heats up
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Socure today announced that it raised $450 million as part of an oversubscribed series E round led by Accel and T. Rowe Price, valuing the company at $4.5 billion. Bain Capital Ventures, Tiger Global, Commerce Ventures, Flint Capital, Scale Venture Partners, Sorenson, and Two Sigma Ventures also contributed to the new tranche, which CEO Johnny Ayers says will be put toward technology development; the exploration of markets, particularly in the public sector; and attracting new data science, engineering, and product talent.
Driven both by the pandemic and the increasingly digital nature of transactions, identity fraud losses reached $56 billion in the U.S. in 2020. Unemployment fraud alone totaled $400 billion. Dovetailing with this, the demand for identity verification solutions has steeply increased as more organizations build an online presence and look for growth opportunities. In a recent survey, 79% of businesses said that they’d even rather have digital transaction security than new customers.
New York-based Socure, which was founded in 2012 by Ayers and Sunil Madhu, provides a predictive analytics platform for verifying customer identities in real time. Socure’s ID verification solution leverages machine learning technologies to authenticate people from email, phone, address, social media, and IP data points, calculating a “trust score” for people.
Ayers, who’s held senior consultant and COO roles at IBM and Endeavor Up, previously worked with the founding team at health technology company Pager to create the initial business plan. Madhu, who left Socure two years ago, founded cross-channel management startup Hopskoch and was a chief architect at Cisco’s policy management business unit.
Identity theft tends to be expensive, particularly for companies in the ecommerce industry. According to the Aite Group, losses from identity theft cases cost $502.5 billion in 2019 and increased 42% to $712.4 billion in 2020. That’s perhaps why 71% of merchants are most concerned about identity theft out of all types of fraud, according to Information Age, while 63% are worried about account theft stemming from schemes like phishing.
Ecommerce retailers may lose $20 billion this year because of online fraud, up 18% from $17.5 billion last year, according to a report from Juniper Research.
In addition to identity verification, Socure offers anti-money laundering capabilities along with document verification, liveness detection, and “heterogeneous” data aggregation. Recently, the company released address normalization, date of birth matching, and algorithmic name-matching features as well as a Social Security number pre-fill capability that leverages Socure’s participation in the U.S. Social Security Administration’s Electronic Consent Based Social Security Number Verification service.
“Socure has built the most comprehensive identity graph in the industry that includes an identity resolution engine that analyzes over eight billion records and more than 700 million good and bad identities to achieve the most accurate view of identity possible,” a spokesperson told VentureBeat via email.
Above: Socure’s cloud dashboard.
According to KBV Research, the global identity verification market will reach $17.8 billion by 2026, rising at a 13.4% compound annual growth rate from January 2021. Socure competes with Identiq, a Tel Aviv, Israel-based identity validation startup, as well as AI-powered platforms Jumio, Onfido, Checkr, Trulio, and Trusona.
But 400-employee Socure has the advantage of momentum. Bookings increased 500% year-over-year while the startup’s client base climbed 221% to 750 companies, including brands in financial services, gaming, health care, telecom, and ecommerce industries such as Chime, So-Fi, Varo Money, Public, Stash, and DraftKings.
Socure told TechCrunch last year that it wouldn’t consider an initial public offering until 2022, but current market conditions could accelerate the company’s plans. Payments fintechs attracted $6.03 billion from venture capital firms during Q1 2021, more money than all but one other sector among the eight tracked by CB Insights.
Socure has raised $646 million in capital to date.
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