NS8, a Las Vegas-based company developing a software-as-a-service (SaaS) solution designed to combat online fraud, today announced that it has raised $26 million in financing led by Edison Partners, with participation from Sorenson Ventures, Lytical Ventures, TDF Ventures, Hanna Ventures, and others. It follows on the heels of a $7.5 million seed round in November 2017, and brings the company’s total raised to $39.9 million, according to Crunchbase.
The fresh capital will fuel NS8’s expansion in “multiple areas” including product innovation and channel development, according to CEO Adam Rogas, and comes after a year of impressive growth. NS8’s fraud prevention suite is now used by over 2,300 businesses worldwide in more than 50 countries, and the company saw revenue and bookings increase five times and 400 percent, respectively, year-over-year.
“Thousands of businesses embrace and use our services consistently to better protect themselves against fraud, which has a significant impact on their bottom line. NS8 is enhancing the extensibility and key functional areas of our software with this funding,” said Rogas. “This is a very exciting time in the evolution of our company. We would like to thank Edison Partners and our entire investment group for sharing our vision of growth.”
NS8 — which was founded in 2016 by Rogas, David Hansen, Eric Kay, Paul Korol, Phil Vizzaccaro, and Sean Clauretie, and which successfully exited from the MACH37 cybersecurity accelerator program a few months after — offers behavioral analytics, real-time user scoring, and monitoring products optimized for ecommerce use cases. They protect against transaction fraud, advertising fraud, and site reliability issues, in part with a proprietary scoring engine — EQ8 — that distinguishes legitimate site traffic from low-quality visitors by analyzing over 170 attributes in “fractions of a second,” the company says.
NS8’s tool set works with range of major ecommerce platforms like Shopify, Shopify Plus, Magento, WooCommerce, PrestaShop, and thirty bees, and it boasts a robust set of APIs that integrate with “large-scale” sites and platforms.
“Ecommerce fraud according to industry reports continues to grow almost twice as fast as eCommerce sales. This has created significant market demand from merchants for NS8’s ‘revenue protection’ solutions,” said Edison Partners’ Lenard Marcus, who will join NS8’s board of directors as a part of today’s raise. “With this funding, NS8 is well poised to build on its strong revenue and bookings growth, and further innovate and scale its offerings to even larger enterprises.”
Marcus makes a compelling case: Ecommerce fraud is on the rise. Experian reports that attacks in 2017 were up more than 30 percent year-on-year — nearly twice the growth rate of ecommerce consumer sales that year. Shipping fraud alone was up 37 percent from 2016, and billing fraud rates saw a 34 percent uptick.
It comes as no real surprise, then, that there’s a lot of competition in the fraud detection and prevention market. Socure recently raked in $30 million for its cloud-based identity verification and fraud prevention solution. And roughly three years ago, Stripe rolled out a tool — Radar — designed to deliver advanced fraud detection insights to merchants.
But if analysts estimations are right, there’s plenty of cash to go around. The segment was worth $19.5 billion in 2018, according to Markets and Markets, and is expected to hit $63.5 billion by 2023.