Merit Secures $50M Series B Funding to Grow Digital Credentials Platform

Digital Identity and Government Credentials

Typically, digital identity is secured through usernames and passwords. However, Merit (formerly known as Sigma) is focused on assisting governments in issuing digital credentials. These credentials will be directly linked to official government license databases, aiming to replace easily lost or damaged paper identification cards.

$50 Million Series B Funding

The company recently announced a significant $50 million Series B funding round. Rose Park Advisors spearheaded this investment, with contributions from existing investors including a16z, Bow Capital, and Govtech Fund. New investors such as Experian Ventures, Spike Ventures, InState Capital, Collier Fund, and Metaplanet Holdings also participated, bringing Merit’s total funding to $80 million.

Creating Verifiable Digital Identities

According to co-founder and CEO Tomer Kagan, the core concept is establishing a digitally verifiable identity. A driver’s license currently serves as state-granted permission to operate a vehicle, but exists as a physical plastic card. Merit intends to modernize this process by transitioning these credentials to a digital format and connecting them to the issuing government’s database.

Programmatic Verification of Credentials

“Individuals should have the ability to securely share information with third parties in a way that is programmatically verifiable,” Kagan stated. “This means the information’s authenticity is automatically confirmed because it originates from a trusted organization whose legitimacy can be verified.” He further explained that Merit has spent the last five years developing a platform to facilitate this process by enabling organizations to connect with various databases.

Automated Credential Updates

Over the past five years, the company has collaborated with numerous governments to create connectors to licensing databases. This allows third parties to access and receive automatic updates to the data. For example, a plumbing business could showcase its employees’ credentials on its website, with those credentials automatically updating upon renewal – or reflecting any lapse in licensing.

Miami Building Collapse Response

A notable application of Merit’s technology involved a project following the unfortunate building collapse in Miami last year. Within a single month, the company implemented a system to verify the authorization of vendors and personnel accessing the site. This involved verifying the identities of over 16,000 individuals, as reported by the company.

Government Partnerships and Scalability

Currently, Merit operates by establishing direct partnerships with individual government entities. Each project necessitates a unique workflow and custom connectors. However, Kagan emphasizes that each successful implementation contributes to the development of future projects, reducing the need to begin anew with each client.

Company Growth and Diversity

Merit currently employs approximately 70 people and plans to expand its team to around 100 by year-end. Kagan has prioritized building a diverse and inclusive workplace as the company grows.

Remote Work and Hiring

“Our teams outside of engineering already demonstrate good diversity,” Kagan noted. “However, we are continually striving to increase representation, particularly of women, within our engineering department.” He attributes some success in this area to the company’s fully remote work model. “Operating outside of the Bay Area has proven beneficial for attracting a more diverse talent pool.”

Navigating Government Contracts and Funding

Kagan acknowledged that securing funding during the pandemic presented challenges. He had to demonstrate the viability of a business model centered around providing services to government entities. Some investors avoid companies heavily reliant on government contracts due to internal policies, but ultimately, he successfully raised $50 million, indicating strong investor confidence.