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 try this, these companies should perform sure id verifications and KYC to fight fraud, amongst different issues. Many platforms energy these KYC processes, and one in all them, Identitypass, is at present saying that it has raised $2.8 million in seed funding, months after graduating from Y Combinator. The spherical additionally comes just a few months after the startup raised $360,000 in pre-seed funding final November, bringing its whole funding to $3.1 million.
Studies say African companies lose $4 billion yearly 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 prospects.
Nonetheless, for the oldsters 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 line with co-founder and CEO Lanre Ogungbe, the crew was initially constructing a platform that required shoppers 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 once we’re constructing it [the payments solution], there was nobody available in the market that had the sort of infrastructure that we wished to make use of. We wished to construct an alternative to authentication. That was it,” the CEO instructed TechCrunch in an interview.
The crew reached out to fintechs asking how they resolve fraud and id points, seeing rising demand from that section. The overarching suggestions, Ogungbe stated, was a setup involving an in-house compliance crew and enacting thresholds on transactions. Clients would wish 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 wonderful KYC processes as a result of prospects solely needed to fill in only a few information factors at their onboarding phases. “We knew it could by no means work for us,” stated Ogungbe. “Immediately, we’ve 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 information level in January 2020. However now, 200 lively companies throughout fintech, e-commerce, schooling, and mobility connect with 18 information factors to confirm their prospects’ identities on the platform. These companies are primarily based in Nigeria, the U.Ok., Kenya, the U.S. and India.
“The core of our enterprise is making it attainable for digital companies in Africa to simply confirm and validate that their prospects are who they are saying they’re,” the chief government stated.
“Earlier than we got here into the market, somebody might decide one other particular person’s BVN and use that to evaluate a mortgage facility,” stated the founder explaining why Identitypass takes lots of information factors into cognizance. “However with applied sciences like ours, we are able to 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, resembling 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 id and verification platform costs between 10 cents to twenty cents on each verification it executes.
Not too long ago, the two-year-old firm launched a SaaS platform along with its APIs. Ogungbe stated this new providing — software program somewhat than a plug-and-play answer — provides Identitypass a bonus over similar gamers available in the market, resembling fellow YC-batchmate Dojah and older startup Smile Identification.
“That makes us totally different from anybody available in the market as a result of at present, we’re the one suppliers of each an API and a SaaS-based answer for verification. So as to add, we’ve extra information factors than most suppliers within the area. And the way in which we use information and biometrics for verification, no different participant available in the market makes use of it that approach.”
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 some African startups as a result of compliance points. He stated Identitypass might forestall 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 information safety framework throughout Africa. Lastly, we are going to work with a number of alliances and type extra formidable and strategic partnerships throughout totally different international locations in Africa.”
Powered by this seed funding led by MaC Enterprise Capital, Identitypass plans to increase its current infrastructure, roll out new verticals round compliance, safety and information assortment, and push into new African international locations. Y Combinator, Soma Capital, True Capital Fund and Sherwani Capital are amongst its different buyers.
