Identiq raises $47M to verify identities using a cryptographic network

Identiq, a Tel Aviv, Israel-based identity validation startup, today announced it has raised $47 million in series A funding. The company says the funds will be used to accelerate its growth by adding members to its network, with the goal of improving identity validation, quality, and coverage for all members.

A Google survey found that at least 65% of people reuse passwords across multiple, if not all, sites. Another recent survey found that 91% of respondents claim to understand the risks of reusing passwords across multiple accounts, but 59% admitted to doing it anyway. That’s perhaps why compromised passwords are responsible for 81% of hacking-related breaches, according to the Verizon Data Breach Investigations Report.

Identiq, which was cofounded in 2019, offers a peer-to-peer network for validating users without using data providers. It calls its technology Fully Anonymous Identity Resolution, which allows members of the network to ensure the data they hold, like identities payment details, matches that of other members without sharing it between them.

“In 2017, I uncovered how easy it was to buy massive personal data online, completely legally, from perfectly respectable third-party data providers. I realized what this meant for privacy, and that of my family and millions of others around the world. I was horrified and decided to start digging more into technologies that could protect privacy, instead of hindering it,” CEO Itay Levy told VentureBeat via email. “It was then that I was extremely fortunate to meet Uri Arad, my cofounder. We teamed up with Ido Shilon’s technical brilliance. The rest, as they say, is history.”

The authentication services market is expected to grow from $507 million in 2016 to $1.61 billion by 2022, according to Markets and Markets. Among Identiq’s competitors is Secret Double Octopus, which helps companies bypass passwords by allowing employees to authenticate their logins to apps through a simple “touch-and-go” process. There’s also Beyond Identity and Trusona, which recently raised $20 million to bring its passwordless authentication technology to more businesses, and Auth0, whose platform supports single sign-on through a universal flow that directs users to a centralized authorization server.

But the decentralized Identiq offers a range of features, including identity validation, funding-source ownership verification, password reset protection, and trusted shipping addresses. Companies tapping the network for verification can’t learn anything about users and also can’t learn who’s verifying the user data in the first place. Moreover, they can’t learn who’s requesting the verification or whether the identity is ultimately determined legitimate or fraudulent.

“Many companies and consumers don’t realize that every time a company sends a query to one of these legacy third-party data providers, the information they send gets added to the providers’ vast centralized store of third-party data, slowly but surely creating a central copy of all the user’s private information,” Levy continued. “That made sense back when communication was slower and data theft was less likely. But now, [companies are stuck] between privacy concerns, which are increasingly being turned into regulation; data breaches; and the fact that these centralized databases are too static, providing companies with data which is often stale and unreliable. It’s time for a change.”

Insight Partners and Entrée Capital led Identiq’s latest funding round, with participation from Amdocs; Sony Innovation Fund by IGV; and existing investors Vertex Ventures Israel, Oryzn Capital, and Slow Ventures. It brings the company’s total raised to date to $52 million.