Israeli fraud prevention startup Identiq has raised $47 million at Series A as the company eyes international growth, primarily driven by the spike in online spending during the pandemic.
The round was led by Insight Partners and Entrée Capital, with participation from Amdocs, Sony Innovation Fund by IGV, and existing investors Vertex Ventures Israel, Oryzn Capital, and Slow Ventures.
Fraud prevention is big business, slated to be worth $145 billion by 2026, ballooning by eightfold in size compared to 2018. But it’s a data-hungry industry, fraught with security and privacy risks, having to rely on sharing enormous sets of consumer data to learn who legitimate customers are to weed out the fraudsters, and therefore.
Identity takes a different, more privacy-friendly approach to fraud prevention without having to share a customer’s data with a third party.
“Before now, the only way companies could solve this problem was by exposing the data they were given by the user to a third-party data provider for validation, creating huge privacy problems,” Identiq’s chief executive Itay Levy told TechCrunch. “We solved this by allowing these companies to validate that the data they’ve been given matches the data of other companies that already know and trust the user, without sharing any sensitive information at all.”
When an Identiq customer — such as an online store — sees a new customer for the first time, the store can ask other stores in Identiq’s network if they know or trust that new customer. This peer-to-peer network uses cryptography to help online stores anonymously vet new customers to help weed out bad actors, like fraudsters and scammers, without collecting private user data.
So far, the company says it already counts Fortune 500 companies as customers. Identity said it plans to use the $47 million raise to hire and grow its workforce and aims to scale up its support for its international customers.