Costanoa Ventures and Norrsken22 back Smile Identity in $20M Series B funding round • TechCrunch

The importance of KYC and identity verification in an expanding fintech landscape like Africa cannot be overstated. As thousands of financial institutions serve millions of Africans, strict regulatory requirements are needed to keep hackers and fraudsters at bay, which is why investor interest in startups offering KYC and KYC services. identity verification intensifies.

Identity Smilean important actor providing identity verification and KYC compliance for African faces and identities, highlights this trend. It just received $20 million in Series B funding to pursue its expansion plans, among other roadmap activities.

The startup announced a $7 million Series A investment in July 2021. Silicon Valley investor Costanoa Ventures, one of the co-leads in this round, also co-led this recent Series B round. with Africa-focused venture capital firm Norrsken22. Lexi Novitske, general partner of Norrsken22, will join the company’s board of directors.

Participating investors include thexisting ones such as ValueStream Ventures, Intercept Ventures, Latitude, Future Africa and 500 Fintech — and new backers like Commerce Ventures, Courtside Ventures and Two Culture Capital. The African KYC Identity Verification and Onboarding Platform Has Received Over $30M from Investors Since Mark Straub and William Bares launched it in 2018.

In a statement, Smile Identity said the funding round will accelerate the development and adoption of its AI-based identity verification technology, scale up hiring efforts in East, South and Africa. West with a focus on products and engineering, and will expand to new markets including French and Arabic speaking countries. The company hopes its war chest will allow it to partner closely with ID authorities and governments to create consumer consent standards and enforce local African data protection laws across the continent.

Smile Identity helps customers limit fraud and onboard new customers more effectively. A company report, “State of KYC in Africa,” noted that fraud rates on the continent hit an all-time high of 28% last year. According to the report, the most common attacks involve fraudsters providing fake or stolen ID numbers or altered documents such as driver’s licenses, passports and national ID cards. Or face incompatibilities, where facial biometrics don’t match valid credentials. So how does Smile Identity enable its customers to catch this fraud? It is a combination of different products: identity verification, digital KYC, user onboarding, liveness checks, face verification, document verification and anti-fraud checks, but most importantly, identity data deduplication.

The most of the fraud that Smile Identity notices – on behalf of its many payment and money transfer customers – ensues at the account opening or onboarding stage, where customers have reported many situations like the one mentioned above. The deduplication product ensures that when end customers log into a customer’s platform, they are mandated to take a selfie during onboarding against their credentials, making it easier to identify the customer to the customer. using his face and rejects subsequent new registrations in case of fraud.

“If you onboard a customer and don’t verify their biometrics, you risk missing out on 50% of the fraud. The biometric deduplication engine [our smart selfie]which is trademarked like our facial recognition technology, can be used both during onboarding and at the deduplication and authentication stage,” Straub said on the call.

When we covered the six-year-old company 18 months ago, it had access to over 250 million identities and verification of 15 different identity types across six African markets while performing over a million identity checks per month. However, the recent launch of its document verification product has allowed Smile Identity to expand its capabilities; now it can cover a billion identities and verification processes worldwide, the chief executive said in the interview.

“The interesting update we have is document verification, which analyzes the photo of a document and compares it to the selfie provided by users. And with this product, we can cover all of Africa. So you know , instead of covering 250 million people, we can cover over a billion people. We are talking about more than 230 types of identity from more than 100 countries, including all of Africa, the diaspora, a large part Europe and North America,” noted the CEO.

Another area of ​​growth, Straub noted, was that Smile Identity processed more than 30 million identity verifications in 2021; this is more than half of the KYC verifications that the startup has recorded since its creation: around 50 million. The KYC verification startup, which has since doubled its customer base since 2021 and now serves more than 100 businesses in banking, fintech, education, agriculture and e-commerce, also claims perform between 2 and 2.5 million monthly identity checks.

Smile Identity has also developed its Business Verification (KYB) solution, which includes 30 detailed business searches such as registration number, incorporation, directors, beneficiaries and owner status. The product is currently available in Nigeria, Kenya and South Africa. Straub says Smile Identity grew its customer base on all of these products by more than 100% over the past year and tripled its revenue in the same time frame.

The Series B infusion of cash means there’s more work for Smile Identity to do – but for its smaller competitors (YC-backed Youverify and Identitypass and Dojah) they have their work cut out for them. challenge the Costanoa-backed upstart as market leader. While Smile Identity has the advantage of being something of a frontrunner with deep connections and on-the-ground expertise, having launched years before other startups, Straub says the company – nnow present in over 10 countries after recently opening offices in London and Cape Town — is a market leader thanks to “an incredibly diverse team and cutting-edge technology”.

“We bring those two things together and focus on delivering the best results for our clients,” he added. “Results are measured by coverage of all different types of identities and countries, success rates, user journey optimization, proper compliance,” he added. “Mall African countries are now adopting their data protection regulations. It’s hard to keep track of all of this if you operate in five or six markets, especially if you operate digital financial products. We try to simplify all of this, put it into software and make it available to your developers so you can integrate our software and start onboarding customers while protecting against fraud and staying compliant from the first. day.