Cellular penetration in Africa is rising impressively at about 46% as extra individuals come on-line for the very first time. In flip, this has elevated the market alternative for startups, particularly fintechs and e-commerce, which attempt to present numerous options to satisfy the monetary wants of the populace.
However to do this, these companies should perform sure identification verifications and KYC to fight fraud, amongst different issues. Many platforms energy these KYC processes, and one among them, Identitypass, is in the present day saying that it has raised $2.8 million in seed funding, months after graduating from Y Combinator. The spherical additionally comes a couple of months after the startup raised $360,000 in pre-seed investment final November, bringing its complete funding to $3.1 million.
Experiences say African companies lose $4 billion annually to cybercrime. The worldwide determine for this incidence stands at $1 trillion. Thus, the necessity for fintechs and digital companies in Africa to carry out stringent KYC and verification checks on their clients.
Nonetheless, for the parents at Lagos-based Identitypass, it wasn’t the love for lowering the excessive charges of fraud that led them to start out the corporate. In keeping with co-founder and CEO Lanre Ogungbe, the workforce was initially constructing a platform that required customers to make use of biometrics (face, fingerprints or voice) and playing cards to make funds. However whereas growing the platform, they encountered points performing verification checks. Therefore, the choice to pivot.
“On the level of after we’re constructing it [the payments solution], there was nobody out there that had the type of infrastructure that we wished to make use of. We wished to construct an alternative choice to authentication. That was it,” the CEO advised TechCrunch in an interview.
The workforce reached out to fintechs asking how they clear up fraud and identification points, seeing rising demand from that phase. The overarching suggestions, Ogungbe stated, was a setup involving an in-house compliance workforce and enacting thresholds on transactions. Clients would want to go additional investigative checks to make transactions above the edge for the latter.
In the meantime, a few of these fintechs didn’t exactly have glorious KYC processes as a result of clients solely needed to fill in only a few knowledge factors at their onboarding levels. “We knew it might by no means work for us,” stated Ogungbe, who based the corporate with Niyi Adegboye, Ebuka Obi and Tolu Adetuyi final yr. “Immediately, now we have fundamental authentication utilizing OTPs or a four-pin password, however by beginning Identitypass, we wished to introduce extra authentication choices into the market.”
Subsequent, Identitypass approached numerous businesses and authorities countrywide to get licenses and certifications wanted for authorizing checks throughout a full spectrum of verification factors. It launched with one knowledge level in January 2020. However now, 200 energetic companies throughout fintech, e-commerce, training and mobility connect with 18 knowledge factors to confirm their clients’ identities on the platform. These companies are based mostly in Nigeria, the U.Ok., Kenya the U.S. and India.
“The core of our enterprise is making it doable for digital companies in Africa to simply confirm and validate that their clients are who they are saying they’re,” the chief government stated.
“Earlier than we got here into the market, somebody might choose one other particular person’s BVN and use that to evaluate a mortgage facility,” stated the founder explaining why Identitypass takes a whole lot of knowledge factors into cognizance. “However with applied sciences like ours, we will do this sort of verification to inform that the particular person submitting the BVN, telephone quantity or financial institution particulars isn’t the proprietor.”
Identitypass has processed greater than 1 million distinctive verifications since launch. These finish factors are government-approved IDs, corresponding to nationwide IDs, driver licenses, worldwide passports, financial institution verification numbers (BVN), telephone numbers, registration number plate numbers, debit playing cards, safety watchlists and tax historical past. Relying on the variety of finish factors a enterprise connects to, the identification and verification platform expenses between 10 cents to twenty cents on each verification it executes.
Lately, the two-year-old firm launched a SaaS platform along with its APIs. Ogungbe stated this new providing — software program relatively than a plug-and-play resolution — provides Identitypass a bonus over an identical gamers out there, corresponding to fellow YC-batchmate Dojah and older startup Smile Identity.
“That makes us totally different from anybody out there as a result of in the present day, we’re the one suppliers of each an API and a SaaS-based resolution for verification. So as to add, now we have extra knowledge factors than most suppliers within the area. And the best way we use knowledge and biometrics for verification, no different participant out there makes use of it that method.”
This confidence in being a “market chief” is propelling the corporate into new territory: promoting to worldwide shoppers. On the decision, the CEO cited an occasion that transpired final month when U.S.-based Mercury restricted the accounts of a few African startups as a result of compliance points. He stated Identitypass might stop such occasions sooner or later if it onboards firms of Mercury’s stature to conduct checks on people and companies from Africa.
“We won’t simply cease there,” Ogungbe stated. “We’d additionally work with many regulatory businesses to develop a top-notch knowledge safety framework throughout Africa. Lastly, we’ll work with a number of alliances and type extra formidable and strategic partnerships throughout totally different nations in Africa.”
Powered by this seed funding led by MaC Enterprise Capital, Identitypass plans to increase its present infrastructure, roll out new verticals round compliance, safety and knowledge assortment, push into new African nations and make new hires to its 14-man workforce. Y Combinator, Soma Capital, True Capital Fund and Sherwani Capital are amongst its different buyers.
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