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 varied options to satisfy the monetary wants of the populace.
However to try this, these companies should perform sure identification verifications and KYC to fight fraud, amongst different issues. Many platforms energy these KYC processes, and considered one of them, Identitypass, is right now asserting 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 whole funding to $3.1 million.
Studies say African companies lose $4 billion annually to cybercrime. The worldwide determine for this prevalence 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 oldsters at Lagos-based Identitypass, it wasn’t the love for lowering the excessive charges of fraud that led them to begin the corporate. In response to co-founder and CEO Lanre Ogungbe, the group 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 creating 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 informed TechCrunch in an interview.
The group reached out to fintechs asking how they resolve fraud and identification points, seeing rising demand from that phase. The overarching suggestions, Ogungbe mentioned, was a setup involving an in-house compliance group and enacting thresholds on transactions. Prospects would want to go additional investigative checks to make transactions above the brink for the latter.
In the meantime, a few of these fintechs didn’t exactly have wonderful KYC processes as a result of clients solely needed to fill in only a few information factors at their onboarding phases. “We knew it could by no means work for us,” mentioned Ogungbe. “In the present day, we’ve got primary 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 varied companies 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 clients’ 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 clients are who they are saying they’re,” the chief govt mentioned.
“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,” mentioned the founder explaining why Identitypass takes loads of information 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, akin to nationwide IDs, driver licenses, worldwide passports, financial institution verification numbers (BVN), telephone numbers, license 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 fees 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 mentioned this new providing — software program moderately than a plug-and-play resolution — provides Identitypass a bonus over an identical gamers available in the market, akin to fellow YC-batchmate Dojah and older startup Smile Identity.
“That makes us completely different from anybody available in the market as a result of right now, we’re the one suppliers of each an API and a SaaS-based resolution for verification. So as to add, we’ve got extra information factors than most suppliers within the area. And the best way 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 purchasers. On the decision, the CEO cited an occasion that transpired final month when U.S.-based Mercury restricted the accounts of some African startups because of compliance points. He mentioned 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 mentioned. “We might additionally work with many regulatory companies to develop a top-notch information safety framework throughout Africa. Lastly, we are going to work with a number of alliances and kind extra formidable and strategic partnerships throughout completely different nations 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 nations. Y Combinator, Soma Capital, True Capital Fund and Sherwani Capital are amongst its different traders.