Identitypass, an id verification API for Africa, raises $2.8M seed funding – TechCrunch

Cell 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 fulfill 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 every of them, Identitypass, is at this time asserting 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 investment final November, bringing its whole funding to $3.1 million.  

Reviews 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 accordance with co-founder and CEO Lanre Ogungbe, the staff 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 available in the market that had the type of infrastructure that we needed to make use of. We needed to construct an alternative to authentication. That was it,” the CEO advised TechCrunch in an interview.

The staff reached out to fintechs asking how they remedy fraud and id points, seeing rising demand from that phase. The overarching suggestions, Ogungbe mentioned, was a setup involving an in-house compliance staff and enacting thresholds on transactions. Clients would wish to move 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 will by no means work for us,” mentioned Ogungbe. “As we speak, we’ve fundamental authentication utilizing OTPs or a four-pin password, however by beginning Identitypass, we needed 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 knowledge level in January 2020. However now, 200 lively companies throughout fintech, e-commerce, training, and mobility hook up with 18 knowledge factors to confirm their clients’ identities on the platform. These companies are based mostly in Nigeria, the U.Okay., 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 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 a number 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, comparable 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 id and verification platform prices between 10 cents to twenty cents on each verification it executes. 

Just lately, the two-year-old firm launched a SaaS platform along with its APIs. Ogungbe mentioned this new providing — software program slightly than a plug-and-play resolution — provides Identitypass a bonus over an identical gamers available in the market, comparable 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 at this time, we’re the one suppliers of each an API and a SaaS-based resolution for verification. So as to add, we’ve extra knowledge factors than most suppliers within the area. And the best way we use knowledge and biometrics for verification, no different participant available in the market makes use of it that manner.”

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 on account of compliance points. He mentioned Identitypass might forestall such occasions sooner or later if it onboards corporations of Mercury’s stature to conduct checks on people and companies from Africa.

“We won’t simply cease there,” Ogungbe mentioned. “We’d additionally work with many regulatory companies to develop a top-notch knowledge safety framework throughout Africa. Lastly, we are going to work with a number of alliances and type extra formidable and strategic partnerships throughout completely different nations in Africa.”

Powered by this seed funding led by MaC Enterprise Capital, Identitypass plans to broaden 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 staff. Y Combinator, Soma Capital, True Capital Fund and Sherwani Capital are amongst its different buyers.