Digital Identity Verification Firm Socure Secures $100 Million in Funding

The COVID-19 pandemic instigated a rapid increase in digital services adoption, prompting businesses to enhance user validation and security measures. Socure, a company specializing in AI-powered identity verification, announced Tuesday a successful Series D funding round of $100 million, achieving a valuation of $1.3 billion.

Growth in the Digital Identity Market

The shift towards online interactions has fueled substantial growth in the U.S. digital identity market. Projections by One World Identity indicate an increase to over $30 billion by 2023, up from nearly $15 billion in 2019. This surge has created significant demand for identity verification solutions.

Socure’s core objective is to accurately verify all legitimate identities in real-time while simultaneously eradicating identity fraud across the internet.

Expanding Beyond Financial Services

While initially focused on the financial services sector, Socure intends to leverage its new funding to broaden its reach. The company plans to extend its services to various consumer-facing industries, including online gaming, healthcare, telecommunications, e-commerce, and on-demand services.

Socure’s platform utilizes predictive analytics, combining artificial intelligence and machine learning with both online and offline data intelligence. This includes information from sources like email addresses, phone numbers, addresses, IP addresses, devices, velocity data, and broader internet sources to confirm user identities during account applications.

Current Customer Base and Growth

Currently, Socure serves over 350 customers, including three of the top five banks, six of the top ten card issuers, a leading credit bureau, and more than 75 fintech companies like Varo Money, Public, Chime, and Stash.

In 2020, the company experienced over 85% year-over-year growth in its customer base and increased its workforce by more than 50%, now employing approximately 240 individuals.

Details of the Funding Round

Accel spearheaded Socure’s latest financing round, with participation from existing investors such as Commerce Ventures, Scale Venture Partners, Flint Capital, Citi Ventures, Wells Fargo Strategic Capital, Synchrony, Sorenson, and Two Sigma Ventures.

This funding round follows a $35 million investment led by Sorenson Ventures just six months prior, bringing the New York-based company’s total funding to $196 million since its founding in 2012.

Improving KYC and Financial Inclusion

Johnny Ayers, founder and CEO of Socure, states that their identity management products enable B2C enterprises to achieve know-your-customer (KYC) auto-approval rates of up to 97%. This allows financial institutions to more effectively detect fraud through Socure’s unified API.

Furthermore, the company asserts that its technology can facilitate the inclusion of underbanked populations by simplifying verification for individuals with limited credit history and younger consumers.

Pandemic-Driven Demand

Ayers believes the pandemic and subsequent lockdowns generated a substantial demand for reliable digital identity solutions. He notes a significant shift towards businesses accepting applications and onboarding customers online, accelerating their digital transformation.

Fraud attempts among Socure’s customer base nearly doubled in the second quarter of 2020, with some segments experiencing increases as high as 150%. Importantly, these suspicious activities were flagged and blocked by Socure before causing any harm.

Future Plans and Product Enhancement

The company intends to utilize the new capital to further refine its product offerings and continue developing patented technologies.

Amit Jhawar, a partner at Accel, will join Socure’s board of directors as part of the funding agreement.

Accel’s Perspective on Socure

In a blog post, Jhawar highlighted Socure as a specifically designed solution to address the influx of new online users. He emphasized that the company’s machine learning models benefit from the data accumulated from every previously verified identity.

Drawing on his experience as former COO at Braintree and general manager at Venmo, Jhawar recognizes the critical importance of identity verification, particularly within the financial services industry.

He stated that Socure’s solution is a “game-changer” due to its applicability throughout the entire customer lifecycle, from account creation to login and transactions.

Potential IPO on the Horizon

Socure has also indicated the possibility of an initial public offering (IPO) in the future.

Ayers expressed gratitude for the opportunity to innovate and collaborate with leading companies, stating, “We are energized for the opportunities that lay ahead for Socure, especially as we make our march to a potential IPO.”

Via email, Ayers clarified that the company will “potentially” explore public markets in 2022 or 2023, contingent on favorable business conditions.

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