Cellular penetration in Africa is rising impressively at about 46% as extra folks 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 identification verifications and KYC to fight fraud, amongst different issues. Many platforms energy these KYC processes, and one in all them, Identitypass, is in the present day 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.
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 prospects.
Nonetheless, for the oldsters at Lagos-based Identitypass, it wasn’t the love for decreasing the excessive charges of fraud that led them to start out the corporate. In accordance with 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 out there that had the sort of infrastructure that we wished to make use of. We wished to construct an alternative choice to authentication. That was it,” the CEO informed Avisionews in an interview.
The group reached out to fintechs asking how they clear up 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. Clients would want 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 wonderful KYC processes as a result of prospects solely needed to fill in only a few knowledge factors at their onboarding levels. “We knew it could by no means work for us,” mentioned Ogungbe, who based the corporate with Niyi Adegboye and Ebuka Obi final yr. “Right now, we now have 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 numerous 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 energetic companies throughout fintech, e-commerce, training, and mobility hook up with 18 knowledge factors to confirm their prospects’ 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 attainable for digital companies in Africa to simply confirm and validate that their prospects are who they are saying they’re,” the chief govt mentioned.
“Earlier than we got here into the market, somebody might choose one other individual’s BVN and use that to evaluate a mortgage facility,” mentioned the founder explaining why Identitypass takes loads of knowledge factors into cognizance. “However with applied sciences like ours, we are able to do this sort of verification to inform that the individual submitting the BVN, cellphone 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, similar to nationwide IDs, driver licenses, worldwide passports, financial institution verification numbers (BVN), cellphone 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 prices 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 mentioned this new providing — software program reasonably than a plug-and-play answer — offers Identitypass a bonus over equivalent gamers out there, similar to fellow YC-batchmate Dojah and older startup Smile Id.
“That makes us completely 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 answer for verification. So as to add, we now 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 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 resulting from compliance points. He mentioned 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 mentioned. “We’d additionally work with many regulatory companies to develop a top-notch knowledge safety framework throughout Africa. Lastly, we’ll 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 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 group. Y Combinator, Soma Capital, True Capital Fund and Sherwani Capital are amongst its different traders.
