Lagos-based Identitypass has secured $2.8 million in a seed funding round led by MaC Venture Capital. Y Combinator, True Capital Fund, Soma Capital, Sherwani Capital, etc., were also participants in the funding round.
Identitypass provides identity verifications and KYC information for businesses, fintech, e-commerce companies, etc. Its solution helps the aforementioned businesses to tackle crime, online theft, etc., by verifying the information of people that come onto their platform.
The seed funding round follows months after graduating from Y Combinator’s accelerator program and just a few months after raising a pre-seed investment of $360,000. The total amount thus raised so far by Identitypass is $3.1 million. With the new funding, the startup plans to expand its existing infrastructure, ramp up efforts around compliance, security, and data, hire new talents in addition to its 14-man team, and enter new countries in Africa.
The need for startups like Identitypass cannot be overemphasized because businesses are at the risk of losing millions of dollars every year to cybercrime. Currently, about $1 trillion is being lost every year to cybercrime, so KYC checks and identity confirmations of users are a need for businesses, especially those operating in the digital space.
Originally, Identitypass wasn’t built to verify people or combat cybercrime. According to CEO Lanre Ogungbe, the startup was built as a platform where consumers can use their biometrics and cards to make payments, but the numerous challenges the team encountered made them decide to become what they are today. “At the point of when we’re building it (referring to the payment solution), there was no one in the market that had the kind of infrastructure that we wanted to use. We wanted to build a substitute for authentication. That was it,” the CEO said.
In the process of building what it is today, Identitypass’ team reached out to a handful of fintech companies making research on how they can combat crimes relating to fraud and identity issues. The team concluded that many of these fintechs do not have good KYC processes and mostly required not so much information to bring them onto their platforms. “We knew it would never work for us,” the CEO said adding that “Today, we have basic authentication using OTPs or a four-pin password, but by starting Identitypass, we wanted to introduce more authentication options into the market.”
Identitypass was founded in 2021 by Lanre Ogungbe with Niyi Adegboye and Ebuka Obi. The startup acquired various licenses as well as certifications to be able to carry checks on people. Today 200 businesses across education, e-commerce, mobility, and fintech existing in Nigeria, the UK, the US, and India, use the startups’ 18 data points solution to verify the identities of their customers.
“The core of our business is making it possible for digital businesses in Africa to easily verify and validate that their customers are who they say they are. Before we came into the market, someone could pick another person’s BVN and use that to assess a loan facility. But with technologies like ours, we can do this kind of verification to tell that the person submitting the BVN, phone number or bank details isn’t the owner,” the CEO explained.
The startup has processed over 1 million separate verifications since it went into business using government-approved IDs, debit cards, Bank Verification Numbers (BVNs), vehicle plate numbers, tax history, etc. It charges between 10 to 20 cents on each verification depending on the number of points that a business wants to connect to.
The startup recently launched a SaaS platform in addition to its APIs. According to CEO Lanre Ogungbe, this will give the startup an advantage over its rivals such as Dojah and Smile Identity. “That makes us different from anyone in the market because today, we’re the only providers of both an API and a SaaS-based solution for verification. To add, we have more data points than most providers in the region. And the way we use data and biometrics for verification, no other player in the market uses it that way,” he said.
The startup wants to become a market leader and a big name on the continent. It plans on expanding into other African territories and working with more regulatory agencies. “We will not just stop there. We would also work with many regulatory agencies to develop a top-notch data security framework across Africa. Lastly, we will work with multiple alliances and form more formidable and strategic partnerships across different countries in Africa,” CEO Lanre Ogungbe said.