SheerID, an identity marketing firm that can verify whether you qualify for a student discount or other kinds of discounts, has raised $64 million in funding to fuel its expansion.
CVC Growth Partners led the round, alongside Centana Growth Partners and Voyager Capital, which led its earlier financing rounds in 2017 and 2015, respectively.
The new funding comes on the heels of 450% revenue growth over the last three years, which enabled SheerID to hit the rank of 243 in this year’s Deloitte and Touche Fast 500.
Over the last year, SheerID has expanded its customer base to include more than 200 customers across a diverse range of Fortune 2000 business-to-business brands, such as Target, Amazon, Lowe’s, Comcast, Google, T-Mobile, and Urban Outfitters.
Jake Weatherly, CEO of the Portland, Oregon-based company, said in an interview with VentureBeat the idea came after he noticed that his wife always had to produce a pay stub to get a teacher’s discount at stores. He looked into it and found there were archaic systems for verifying things like whether a student is really a student and qualifies for a discount. The same goes for veterans, seniors, and other groups.
Weatherly, David Shear, and Marci Hansen started SheerID in 2012. The company created its SheerID Identity Marketing Platform so brands can identify and acquire consumer tribes — like students, teachers, or the military — with personalized offers backed by instant verification via 9,000 authoritative data sources.
“I just kept finding these places where they were being asked to apply, where they were being asked to go into a store and show documentation that didn’t feel comfortable for them because the level of personally identifiable information,” Weatherly said. “We just started to look at the world of eligibility verification. There are records within the school district where my wife is a teacher that prove beyond [a] shadow of a doubt that these individuals really are eligible. The individuals who are eligible should be able to prove their eligibility without any friction.”
The rise of identity marketing
In a recent report from market researcher WBR Insights, 77% of marketers felt more pressure to meet customer acquisition and revenue goals than they did the year prior, citing brand differentiation and the current privacy climate as their top two concerns.
This is why marketers across a number of industries are turning to identity marketing, a new form of personalization focused on winning over consumer tribes that align with their brand’s promise.
“Gen Z is the future of streaming media. We knew our growth potential with this audience was vast and our personalized offer to students has taken off,” said Cheri Davies, senior director of acquisition marketing for Comcast, in a statement. “Partnering with SheerID has given us a powerful new way to capture and retain our ideal customer segment.”
These tribes share important aspects of their identity, such as life stage, occupation, and values. They are socially connected and readily share information with each other, like special product offers and brand experiences that are exclusively provided by brands to their group. This has the double benefit of increasing marketing reach while decreasing customer acquisition costs, often producing ROAS (return on ad spend) results of 25 to 1 or higher. SheerID takes a small cut of each transaction.
In January, T-Mobile president Mike Sievert announced “We had the best fourth quarter for our business group in our history.” Sievert attributed much of this growth to the fact that the company had started targeting specific customer segments with promotions, including members of the military.
SheerID provides the digital verification technology that makes T-Mobile’s offers to the military possible.
And the company has gotten better at detecting fraud. Instead of relying on an .edu email address, SheerID verifies student credentials by accessing hundreds of global, authoritative data sources. This prevents graduates from exploiting an offer, which saves brands money. It also makes discounts available to students without an .edu email address, which brings clients more customers and revenue.
SheerID only checks into someone’s identity when that person tries to get a targeted discount, like one limited to students.
Target offers a discount for teachers, for example, but it can only do so if it’s able to verify that someone really is a teacher. The reason these offers work is because brands are in effect saying: “We have a great offer for you if you’re willing to let us verify your identity.” With this model, everything is out in the open.
“It always starts with the individual raising [their] hand, saying ‘I’m excited about this offer, and I want you to know this about me,'” Weatherly said. “And what we’ve done — a few ideas we’ve connected to the original data, the authoritative data. At a university or college, it is the enrollment database through the Office of the Registrar for their single sign-on into the university systems.”
For years, SheerID has provided brands a means to digitally and instantly verify the credentials of individuals who attempt to redeem tribe-specific offers. SheerID’s Verified Identity Network includes 1.3 billion consumer attributes across nearly 9,000 authoritative data sources.
As an example, SheerID works with Spotify and Youtube to verify that the people attempting to access a student discount on those platforms are indeed students. Roughly 30% to 35% of the requests that SheerID’s system processes are from people pretending to be part of the targeted group, so the system reduces a significant amount of discount fraud for brands.
I asked if blockchain technology, the secure and transparent decentralized ledger, could help.
“Blockchain digital identity is theoretically strong, I think,” Weatherly said. “Thus far, it’s been academic in comparison to real adoption, especially in the the world of consumers.”
Use of new funds
In addition to bringing on new customers, SheerID has expanded to 120 employees, and it will continue to grow in various areas of the business, including marketing, sales, and engineering.
This will allow the company to expand its platform so businesses in all geographies can engage an even broader range of consumer groups related to occupation, interests, causes, and affiliations, worldwide.
“We are incredibly excited to partner with the SheerID team in their next phase of growth,” said Jason Glass, senior managing director at CVC Growth Partners, in a statement. “As part of our long-standing efforts in fraud prevention and commerce enablement software, we identified SheerID as the industry leader in identity marketing and identity attribute verification.”
Doug Behrman, director at CVC Growth Partners, added in a statement, “SheerID’s track record and growth [have] been very impressive, and the company stands to benefit from powerful secular trends across privacy regulation, personalization, and ecommerce. We are proud to partner with a team that provides meaningful value not only to their customers, but to groups like students, first responders, and military veterans.”
Glass and Behrman will join SheerID’s board of directors.
“There were many, many times — 2012, 2013, 2014 — where I felt like I was the crazy guy in the room, explaining the way that I thought the world could work, and people were skeptical,” Weatherly said. “What we found is just amazing return-on-investment for our customers.”
Correction, 1:50 p.m. CVC Growth Partners was incorrectly called CVC Ventures. We’ve fixed the error.