The Rise of Digital Identity Verification and Jumio's New Funding

Digital identity services, functioning as a crucial link between organizations to confirm online user authenticity, have gained significant prominence in the last year. A leading provider of digital identity solutions has now announced a substantial funding round, highlighting both the market’s scale and the company’s ambition to become a key industry player.

Jumio Secures $150 Million in Funding

Jumio, the developer of a platform offering diverse digital identity tools and technologies – leveraging biometrics, machine learning, computer vision, big data, and more – has successfully closed a $150 million funding round. The company, headquartered in Palo Alto, intends to utilize these funds to expand its platform’s capabilities and accelerate customer acquisition following a period of substantial growth.

Focus on B2B and Future Expansion

Currently, Jumio primarily serves a B2B market, providing tools to enterprise clients such as HSBC for managing digital identity verification. Investment will be directed towards enhancing its AI capabilities for anti-money laundering efforts and exploring the development of a B2C product. This potential product would utilize the company’s existing data, tools, and customer network to empower individuals to better control their online identities.

Identity as the Foundation of the Internet

“The core principle is that the internet’s foundation rests on identity, not anonymity,” stated CEO Robert Prigge. He explained that the ongoing digital transformation is driving this shift. “There’s been a considerable change over the past few years. Initially, people sought to conceal themselves behind anonymity, but now identity is paramount. Whether it’s online banking or social networking, establishing remote trust is essential.”

Balancing Identity and Privacy

While anonymity persists in modified forms, data protection regulations prioritize user privacy. Furthermore, countries like the U.K. are developing regulations to ensure a standardized framework and user oversight for services managing digital identities. This presents both a challenge and an opportunity for companies like Jumio: navigating the demand for identity verification while upholding privacy protections.

Investment Details and Company Performance

The funding comes solely from Great Hill Partners, who will join Centana and Millennium as shareholders. While the valuation remains undisclosed, Prigge shared key details illustrating the company’s current standing.

Jumio reported $100 million in revenue last year, marking its first funding round in nearly five years after securing $16 million in 2016. This round represents the largest single investment ever received by a digital identity company.

A Competitive Landscape

Despite the favorable market conditions, the digital identity and anti-money laundering (AML) space is becoming increasingly competitive, with numerous startups emerging and attracting investment. Recent funding rounds include ForgeRock ($96 million), Onfido ($100 million), Payfone ($100 million), ComplyAdvantage ($50 million), Ripjar ($36.8 million), Truework ($30 million), Zeotap ($18 million), and Persona ($17.5 million).

Industry Consolidation and Acquisitions

Acquisitions, such as Equifax’s purchase of Kount and Okta’s acquisition of Auth0 for $6.5 billion, indicate growing competition from adjacent markets like credit rating agencies and corporate login service providers, alongside broader consolidation trends.

The Impact of the Pandemic

The pandemic has accelerated the shift towards online access for services previously available in person. Simultaneously, cybercrime targeting this environment is increasing, driving a greater need for robust ID verification tools.

Jumio’s Position in the Market

Jumio distinguishes itself as one of the larger and more established companies in this space. Prigge stated the company currently serves around 1,000 customers, including major enterprises like HSBC, United Airlines, and Singtel, operating in 200 countries.

A Platform-Based Approach

Jumio’s platform approach, offering a range of tools, sets it apart from many newer entrants focusing on specific technologies or narrower aspects of the complex identity verification problem. The company’s ability to “read” approximately 3,500 document types has facilitated over 300 million verifications on its platform.

Holistic Onboarding and AML/KYC Capabilities

“Most vendors confirm you are who you claim to be, but not that it’s genuinely you. This is where biometrics becomes crucial. We view it as a holistic onboarding process,” Prigge explained. “We are among the few AML and KYC [know your customer] providers.” The AML tools were integrated through the acquisition of Beam Solutions last year.

A History of Transformation

This funding round represents a significant milestone for a company with a complex history.

Prigge emphasizes that the current Jumio is distinct from a previous iteration of the company.

The Previous Jumio and its Bankruptcy

The original Jumio, founded around a decade ago, raised nearly $40 million from investors like Andreessen Horowitz and Eduardo Saverin, pioneering mobile payments with technology that scanned cards and IDs using smartphone cameras. However, the company faced scrutiny for misstated financial results and ultimately filed for bankruptcy in March 2016. Saverin attempted to acquire the business to attract other potential buyers, eventually leading to Centana’s purchase for $850,000.

While the acquisition encompassed certain assets, the original Jumio remained in bankruptcy proceedings, which are still ongoing nearly five years later, due to accusations against the original founder regarding document destruction.

Great Hill Partners’ Investment Rationale

Great Hill Partners’ investment is noteworthy, reflecting a broader trend of private equity firms increasing their involvement in later-stage startup funding rounds. Their interest stems from Jumio’s leadership position in a rapidly growing market, projected to reach $12.8 billion by 2024, up from $6 billion in 2019.

“Jumio possesses an exceptional foundation – an experienced management team, a robust product roadmap, and a global reach that positions the company for substantial growth as online transactions and associated fraud reach record levels,” stated Nick Cayer, partner at Great Hill Partners. “We have strong confidence in Jumio’s AI-powered identity verification solution, Jumio Go, and its KYC orchestration platform.”

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