Technology

Identity verification company Youverify extends seed funding to $2.5M as it expands across Africa – TechCrunch

Over the past month, several African fintechs such as Flutterwave and Union54 have made headlines over compliance checks and fraud issues. Both unrelated events re-emphasize the importance of know-your-customer (KYC) and anti-money laundering (AML) checks and why regulators are enforcing strict policies to which financial institutions must be held accountable while operating across the continent and operate worldwide.

For the many startups whose services help keep the operations of financial institutions like banks and fintechs in check, this time underscores their relevance more than ever. In the latest development, Youverify, a Lagos and San Francisco-based identity verification company that helps African banks and startups automate KYC and other compliance processes, announces that it has secured a seed round extension of secured $1 million. The startup raised a $1.5 million round in 2020, bringing its total seed raise to $2.5 million.

Africa-focused VCs Orange Digital Ventures (ODV) and LoftyInc Capital, the two investors who co-led the initial seed round, also led the renewal. Other investments came from Octerra Capital, Plug & Play Venture, Syntax Ventures, HTTP Investors, Afer Group and Fronesyz Capital.

The proliferation of financial services in Africa is gradually attracting more attention from regulators. According to reports, $116 billion worth of transactions will be processed through digital payment channels this year, requiring strict measures to prevent identity theft and fraud. Hence, the increasing focus on maintaining transparency in financial regulations and enhancing strategies for KYC and AML through the implementation of regulatory technologies has become a significant growth driver for the market. And as regtech demand increases globally, so will Africa. According to reports, it will reach about $1.2 billion in the next five years.

Youverify entered the regtech scene in Africa as a founder and CEO Gbenga Odegbami founded the company in 2018. Launched on the Nigerian market, Youverify initially provided several financial institutions with an API for address and identity verification. Now it has added more KYC products and expanded into new markets such as Ghana, Ivory Coast, South Africa, Kenya and Uganda.

“Our customers see us as helping them automate their KYC and compliance issues,” Odegbami said in a conversation with TechCrunch.

In addition to verifying identities beyond Nigerian bank verification number (BVN) and addresses, Youverify offers layers of KYC and compliance products like transaction monitoring, according to Odegbami. He further explained that these offers address issues some fintech platforms have been facing recently: alleged AML issues in the case of Flutterwave in Kenya and Ping Express in the US and fraud in the case of Union54 chargebacks. In the latter case, Youverify claims it could have prevented large-scale chargeback fraud by identifying the transaction pattern to flag fraud, blocking the virtual cards and tying them back to scammers perpetrating the multiple fake chargebacks.

“She [Union54] grown faster than they could set up the right transaction monitoring and fraud detection systems that identify transactions from their customers,” the CEO said of the chargeback situation Union54 has been dealing with over the past few months. “A system like ours will be able to recognize previous and new patterns in a way that we could use to help the company.”

Youverify only started dealing with fintechs last year. Initially, most of its customers were government agencies, large corporations like Bolt, and banks. Nearly two-thirds of Nigerian commercial banks such as Standard Chartered, Standard Bank and Fidelity Bank use the platform’s identity verification and KYC products, Youverify said.

However, to serve more customers, the company has launched its proprietary technology Youverify OS (YVOS), which provides a single platform for automating due diligence, combining risk and compliance management with its core identity verification platform to these fintechs provide enterprise-class compliance solution. Its other product, vFORM, a low and no-code tool, allows companies to create a custom process for onboarding new customers using a drag-and-drop builder.

As a result of diversifying its client base and demand for its KYC products, Odegbami said Youverify’s client base has grown by 300% to serve more than 400 banks and high-growth startups. In the last 24 months, Youverify’s application processes have grown by more than 1,000% to more than 5 million applications, helping its clients hire talent, sell financial products and onboard drivers remotely. The company’s YouID digital identity platform has added more than 500,000 users, with 600 service providers on the marketplace waitlist across the continent. Odegbami said the Lagos-based identity verification company surpassed an ARR of over $1 million last year.

Youverify is not the only identity verification company in Africa. Similar providers include Smile Identity and YC-backed companies IdentityPass and Dojah. Odegbami bluntly said his company was the “market leader” because it entered the market much earlier, had more experience and provided more datasets than the others.

Over the next 18 months, Youverify plans to expand its presence to 30 countries, particularly in the southern, eastern and francophone parts of Africa, where the company will aggressively recruit, according to Odegbami. It also intends to increase the number of IDs it can verify from 400 million to 2 billion and to develop new automated compliance products for the gaming, travel, healthcare and telecom industries.

https://techcrunch.com/2022/08/02/identity-verification-company-youverify-extends-seed-funding-to-2-5m-as-it-expands-across-africa/ Identity verification company Youverify extends seed funding to $2.5M as it expands across Africa – TechCrunch

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