brazil’s idwall raises $38m for identity validation platform

The Rise of idwall: Combating Online Fraud in Latin America

Online fraud and identity theft represent a significant global challenge, particularly intensified by the surge in online transactions during the COVID-19 pandemic. Brazilian companies, specifically, are estimated to incur losses exceeding $41 billion annually due to fraudulent activities.

idwall's Founding and Growth

In response to this escalating issue, Lincoln Ando and Raphael Melo founded idwall in the middle of 2016. Initially established in São Paulo as an automated background check service, idwall has evolved into a comprehensive suite of products focused on data validation, identity verification, and risk assessment.

For individual consumers, the company offers “MeuID,” an application designed to empower users with greater control over their personal data and identification processes.

Series C Funding and Expansion

idwall has recently secured $38 million in a Series C funding round, spearheaded by Endurance. This investment brings the company’s total funding to almost $50 million.

The funding round also saw participation from GGV Capital, monashees, Canary, Qualcomm Ventures LLC, ONEVC, Peninsula, and Norte.

Impressive Growth Metrics

Between 2017 and 2020, idwall experienced remarkable growth, increasing by 1,458%. This translates to an average annual growth rate of 144%.

Currently, idwall serves a client base of over 300 companies, including 10 unicorns, two of Brazil’s largest banks, and prominent organizations such as iFood, Claro, Cielo, Loggi, Ebanx, QuintoAndar, and OLX.

Focus on the Fintech Sector

Fintechs constitute a substantial portion of idwall’s clientele. In 2020 alone, revenue generated from financial industry clients increased by 588% compared to the previous year.

Leveraging AI and Machine Learning

idwall utilizes machine learning and artificial intelligence to streamline the onboarding process. Its offerings include face matching, background checks, risk analysis, ID validation, and automated optical character recognition (OCR) technology, all designed to mitigate fraud.

The company’s APIs swiftly verify personal documents and information by accessing both public and private databases, ensuring compliance with relevant regulations.

The Verification Process

idwall’s verification process involves three key steps: authenticating the validity of an ID, confirming the identity of the individual presenting the ID, and conducting a comprehensive background check. The company claims to complete this entire process in under three minutes.

“We aim to make these onboarding procedures safer, more efficient, and faster for our clients,” stated idwall co-founder and CEO Ando.

Data Report Generation and Impact

Over the years, idwall has generated over 65 million data reports for its clients. This number represents a 5,000-fold increase between 2017 and 2020.

These reports have enabled clients to scale their operations, onboard more customers, optimize compliance and KYC procedures, and reduce instances of fraud.

The Impact of Digital Transformation

The pandemic-driven shift towards digital platforms resulted in a significant surge in digital bank accounts, mobile payment services, and companies expanding their digital presence – a trend that has greatly benefited idwall.

“As companies become increasingly digitized, both customer expectations and market competition intensify,” Ando explained. “Our commitment is to remain at the forefront of innovation in our sector, which is why we prioritize investment in growth and the development of a highly skilled team.”

Future Plans and Expansion

The newly acquired capital will be used to expand the team, enhance existing products, and introduce new offerings. idwall intends to increase its headcount from 200 to approximately 300 in the coming months.

The company is also exploring the possibility of extending its reach beyond Brazil to encompass the broader Latin American market.

“The identity validation and fraud challenges prevalent in Brazil are also observed in other Latin American countries,” Ando noted. “Furthermore, countries like Mexico and Colombia are home to innovative companies pushing the boundaries of identity and technology. While we still have significant goals to achieve in Brazil, we see a substantial opportunity to extend our mission further.”

Regulatory Landscape and Unique Challenges

Recent regulatory changes in Brazil have also contributed to increased demand for idwall’s services. Brazil’s fragmented documentation databases present a unique challenge, with each state maintaining its own system for the common identity document, the RG (“Registro Geral”).

Citizens can potentially possess multiple RG documents issued in different states.

“Streamlined digital onboarding and automated identity validation are crucial for unlocking the full potential of the Latin American market,” Ando emphasized. “Validating identification and personal data in Brazil is particularly complex.”

The “MeuID” Solution

idwall’s “MeuID” application addresses the inconvenience Brazilians often experience when repeatedly presenting their IDs for various transactions. It serves as a centralized digital wallet for all necessary documents required for onboarding processes with fintechs, startups, office buildings, and other businesses.

Investor Confidence

idwall’s investors express strong confidence in the company’s potential.

Hans Tung, managing partner at GGV Capital, stated that his firm prioritizes investments in category leaders leveraging technology to create positive impact for users and society.

He described idwall as a “one-of-a-kind” startup, highlighting the founders’ ability to address a significant unmet need in Brazil and achieve substantial growth. He believes idwall has the potential to become the leading personal data platform in Latin America for enterprise clients.

Marcos Toledo, managing partner at Canary, noted that idwall was one of his firm’s earliest investments, praising the founders’ ability to build and scale a business solving a critical problem in Brazil. He also commended the company’s culture, technological capabilities, and agility.