Identitypass, an id verification API for Africa, raises $2.8M seed funding

Cell penetration in Africa is rising impressively at about 46% as extra folks come on-line for the very first time. In flip, this has elevated the market alternative for startups, particularly fintechs and e-commerce, which attempt to present numerous options to fulfill the monetary wants of the populace.

However to do this, these companies should perform sure id verifications and KYC to fight fraud, amongst different issues. Many platforms energy these KYC processes, and considered one of them, Identitypass, is immediately saying that it has raised $2.8 million in seed funding, months after graduating from Y Combinator. The spherical additionally comes just a few months after the startup raised $360,000 in pre-seed investment final November, bringing its complete funding to $3.1 million.  

Reviews say African companies lose $4 billion annually to cybercrime. The worldwide determine for this prevalence stands at $1 trillion. Thus, the necessity for fintechs and digital companies in Africa to carry out stringent KYC and verification checks on their prospects.

Nonetheless, for the oldsters at Lagos-based Identitypass, it wasn’t the love for decreasing the excessive charges of fraud that led them to start out the corporate. Based on co-founder and CEO Lanre Ogungbe, the group was initially constructing a platform that required shoppers to make use of biometrics (face, fingerprints, or voice) and playing cards to make funds. However whereas growing the platform, they encountered points performing verification checks. Therefore, the choice to pivot.

“On the level of after we’re constructing it [the payments solution], there was nobody out there that had the type of infrastructure that we wished to make use of. We wished to construct an alternative to authentication. That was it,” the CEO informed TechCrunch in an interview.

The group reached out to fintechs asking how they resolve fraud and id points, seeing rising demand from that phase. The overarching suggestions, Ogungbe stated, was a setup involving an in-house compliance group and enacting thresholds on transactions. Prospects would want to move additional investigative checks to make transactions above the brink for the latter.

In the meantime, a few of these fintechs didn’t exactly have glorious KYC processes as a result of prospects solely needed to fill in only a few information factors at their onboarding levels. “We knew it might by no means work for us,” stated Ogungbe, who based the corporate with Niyi Adegboye and Ebuka Obi final 12 months. “Immediately, we have now fundamental authentication utilizing OTPs or a four-pin password, however by beginning Identitypass, we wished to introduce extra authentication choices into the market.”

Subsequent, Identitypass approached numerous businesses and authorities countrywide to get licenses and certifications wanted for authorizing checks throughout a full spectrum of verification factors. It launched with one information level in January 2020. However now, 200 lively companies throughout fintech, e-commerce, training, and mobility hook up with 18 information factors to confirm their prospects’ identities on the platform. These companies are primarily based in Nigeria, the U.Ok., Kenya, the U.S. and India.

“The core of our enterprise is making it potential for digital companies in Africa to simply confirm and validate that their prospects are who they are saying they’re,” the chief govt stated. 

“Earlier than we got here into the market, somebody may choose one other individual’s BVN and use that to evaluate a mortgage facility,” stated the founder explaining why Identitypass takes a whole lot of information factors into cognizance. “However with applied sciences like ours, we are able to do this type of verification to inform that the individual submitting the BVN, telephone quantity or financial institution particulars isn’t the proprietor.”

Identitypass has processed greater than 1 million distinctive verifications since launch. These finish factors are government-approved IDs, similar to nationwide IDs, driver licenses, worldwide passports, financial institution verification numbers (BVN), telephone numbers, registration number plate numbers, debit playing cards, safety watchlists and tax historical past. Relying on the variety of finish factors a enterprise connects to, the id and verification platform costs between 10 cents to twenty cents on each verification it executes. 

Just lately, the two-year-old firm launched a SaaS platform along with its APIs. Ogungbe stated this new providing — software program somewhat than a plug-and-play resolution — offers Identitypass a bonus over similar gamers out there, similar to fellow YC-batchmate Dojah and older startup Smile Identity.

“That makes us totally different from anybody out there as a result of immediately, we’re the one suppliers of each an API and a SaaS-based resolution for verification. So as to add, we have now extra information factors than most suppliers within the area. And the way in which we use information and biometrics for verification, no different participant out there makes use of it that manner.”

This confidence in being a “market chief” is propelling the corporate into new territory: promoting to worldwide shoppers. On the decision, the CEO cited an occasion that transpired final month when U.S.-based Mercury restricted the accounts of some African startups resulting from compliance points. He stated Identitypass may forestall such occasions sooner or later if it onboards firms of Mercury’s stature to conduct checks on people and companies from Africa.

“We won’t simply cease there,” Ogungbe stated. “We’d additionally work with many regulatory businesses to develop a top-notch information safety framework throughout Africa. Lastly, we’ll work with a number of alliances and type extra formidable and strategic partnerships throughout totally different nations in Africa.”

Powered by this seed funding led by MaC Enterprise Capital, Identitypass plans to increase its present infrastructure, roll out new verticals round compliance, safety and information assortment, push into new African nations and make new hires to its 14-man group. Y Combinator, Soma Capital, True Capital Fund and Sherwani Capital are amongst its different traders.

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