Identitypass, Africa’s identity verification API, is raising $2.8M in seed funding.

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Mobile penetration in Africa is growing impressively, at around 46%, as more people go online for the first time. In turn, this has increased market opportunities for startups, especially in fintech and e-commerce, that are trying to provide a variety of solutions to meet the financial needs of the public.

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But to do this, these businesses must carry out certain identity checks and KYC, among other things, to combat fraud. Many platforms support these KYC processes and one of them, Identification pass, announces today that it has raised $2.8 million in seed funding, months after its release from Y Combinator. The round also comes a few months after the startup. raised $360,000 in upfront investment last November, bringing its total funding to $3.1 million.

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Reports say that African businesses lose $4 billion annually to cybercrime. The global figure for this phenomenon is $1 trillion. As such, fintech and digital companies in Africa need to conduct rigorous KYC checks and background checks on their clients.

However, for Identitypass employees in Lagos, it wasn’t the desire to reduce fraud that led them to start the company. According to co-founder and CEO Lanre Ogungbe, the team was initially building a platform that required consumers to use biometrics (face, fingerprint or voice) and cards to make payments. But when developing the platform, they ran into problems when performing checks. Hence the decision to turn.

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“The moment we build it [the payments solution], there was no one on the market who had the kind of infrastructure we wanted to use. We wanted to create a replacement for authentication. That’s it,” the CEO told TechCrunch in an interview.

The team contacted fintech companies to find out how they are tackling fraud and identity issues, seeing the growing demand in this segment. The pervasive feedback was a tweak that involved in-house compliance team and introduced transaction thresholds, Ogungbe said. Clients will have to pass additional investigative checks in order to transact above the threshold for the latter.

Meanwhile, some of these fintech companies didn’t have great KYC processes because there was very little data to be filled in by customers during the registration steps. “We knew it would never work for us,” Ogunbe said. “Today we have basic authentication using one-time passwords or a four-pin password, but with the launch of Identitypass, we wanted to bring more authentication options to the market.”

Identitypass then approached various agencies and authorities across the country to obtain the licenses and certifications needed to authorize checks across the full range of checkpoints. It was launched with one data point in January 2020. But now, 200 active companies in fintech, e-commerce, education and mobility are connecting to 18 data points to verify the identity of their customers on the platform. These businesses are based in Nigeria, UK, Kenya, USA and India.

“The foundation of our business is enabling digital businesses in Africa to easily verify and verify that their customers are who they say they are,” said the CEO.

“Before we entered the market, someone could pick another person’s BVN and use it to score credit,” the founder said, explaining why Identitypass takes into account a lot of data points. “But with technology like ours, we can do that kind of verification to determine that the person sending the BVN, phone number, or bank details is not the owner.”

Since launch, Identitypass has processed over 1 million unique checks. These endpoints are government-approved identities such as national identity cards, driver’s licenses, foreign passports, bank verification numbers (BVNs), phone numbers, vehicle license plates, debit cards, security checklists, and tax history. Depending on the number of endpoints the business connects to, tThe Identification and Verification Platform charges between 10 and 20 cents for each verification performed.

The two-year-old company recently launched a SaaS platform in addition to its APIs. Ogungbe said this new offering – software rather than a plug-and-play solution – gives Identitypass an edge over identical market players such as colleagues YC classmate of Dodge and old startup Smile.

“This sets us apart from everyone in the market because today we are the only providers of both an API and a SaaS-based solution for validation. In addition, we have more data points than most providers in the region. And the way we use data and biometrics for verification is not used by any other player in the market.”

This belief that it is the “market leader” propels the company into new territory: selling to international clients. During the call, the CEO mentioned an event that happened last month when US company Mercury restricted the accounts of several African startups due to compliance issues. He said that Identitypass could prevent similar events in the future if it uses companies like Mercury to conduct background checks on individuals and businesses from Africa.

“We will not rest on our laurels,” Ogunbe said. “We will also be working with many regulators to develop a first class data security system across Africa. Finally, we will work with multiple alliances and form larger and more strategic partnerships across Africa.”

With this seed funding, led by MaC Venture Capital, Identitypass plans to expand its existing infrastructure, roll out new verticals in compliance, security and data collection, and expand into new African countries. Y Combinator, Soma Capital, True Capital Fund and Sherwani Capital are among the other investors.


Credit: techcrunch.com /

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