Onfido, a provider of cloud-based identity verification tools, today announced that it raised $100 million in equity financing. CEO Husayn Kassai says the bulk of the fresh capital will be put toward product R&D and global expansion, including further market penetration in North America.
“Unlike most tech companies, our first investment check was $20,000 back in 2012, and we made that last for a year. One thing that has become apparent as we’ve scaled is that the size of the round matters far less than the size of the problem, and the drive to solve it,” Kassai told VentureBeat via email. “We feel privileged that our view of the world — where users are empowered to prove their real identity in a seamless and secure way — is starting to become the new global standard for digital access.”
Onfido — which was founded in 2012 by three Oxford University graduates who observed that background checks were largely done manually and were therefore prone to human error — develops a software-as-a-service (SaaS) platform that taps AI to perform background checks on would-be employees at each stage of the hiring and recruitment process. It initially targeted on-demand businesses and contract workers, but gradually expanded in scope to identity verification in financial services and ecommerce segments.
Technologies like Onfido’s could help to address the global rise in personal identity fraud. In 2017, 6.64% of U.S. consumers became victims of identity fraud. The next year, the U.S. Federal Trade Commission estimated that such fraud caused over $1 billion in losses.
Millions of employees of Onfido’s over 1,500 customers verify their identities by snapping a selfie and a picture of their passport, driver’s license, identity card, or one of hundreds of other forms of identification. They perform an on-screen liveness check involving one of 4,000 combinations of randomized actions (like blinking, saying a sequence of numbers, or smiling). Then, using optical character recognition, facial biometrics, criminal records, driving misdemeanors records, blur and glare detection, and other checks, Onfido generates a risk report indicating its confidence in the person’s identity.
Onfido claims its AI-driven platform can automate checks of over 4,500 document types from 195 countries, though it also leans on humans to verify outliers. And it says that its solution complies with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, helping it to catch up to 98.7% of ID fraud attempts (including forged, counterfeit, blank stolen, camouflage, lookalike, and compromised documents) and achieve completion rates of 90%.
Onfido has paying customers, including Expensify, DraftKings, Drivy, Revolut, Remitly, Orange, Bitstamp, and Zipcar, in over 60 countries, but the company recently began offering select services at no cost to nonprofit and charity health care, home service, and education services working to provide relief from the COVID-19 pandemic. Eligible organizations get U.K. driver license, U.K. passport, and U.S. driver license verification for six months from the start of their agreement with Onfido, until at least December 31.
“The United Nations estimates that up to 5% of the world GDP is laundered money, which is $2 trillion — translating to a 99% failure rate. That’s a shameful statistic when you think about it,” said Kassai. “Our approach is to anchor digital accounts in a real identity … All [identity verification] is done without collecting personal information, forcing tasks or questions, and never referring to a centralized database of potentially breached data. This type of digital access is only becoming more important at a time where physical access is particularly challenging given the need to isolate, verifying volunteers, delivering financial relief, or even enabling online healthcare.”
Onfido says it has over 355 employees (up from 250 in April 2019) across nine offices in San Francisco, New York, Albuquerque, Lisbon, Berlin, Paris, New Delhi, and Singapore in addition to its London headquarters. The company anticipates this workforce will grow to 450 by 2021, driven in part by a 130% year-over-year growth in business.
TPG Growth led this latest investment in Onfido, which saw participation from Salesforce Ventures, M12 Capital (one of Microsoft’s venture arms), and other backers. It brings the company’s total raised to $200 million following a $50 million funding round last April and a $30 million series C in September 2017.
Other companies occupying the nearly $22.68 billion identity verification space include San Francisco-based Checkr, which raised $100 million in April 2018. Microsoft led a $10 million funding round in Trusona, a startup that aims to verify that internet users are who they say they are. Meanwhile, Socure and OneLogin earlier this year raised $30 million and $100 million, respectively.