Founded in 2015, Alloy aimed to help banks and fintechs make better identification and risk decisions using its unique API service and SaaS offering.
Since then, the startup has offered to automate onboarding identity decisions as well as transaction monitoring and credit underwriting.
And today, Alloy is announcing that it has raised an additional $52 million at a $1.55 billion valuation, eleven months after raising $100 million at a $1.35 billion valuation. Startup reality While it was able to raise this amount of capital in such a challenging fundraising environment, it also increased its value.It is noteworthy considering that many companies these days are struggling to raise or raise in flat or down rounds.
Increased demand for identification tools that help financial institutions acquire more “good” customers and weed out “bad” ones has led Alloy to double its annual recurring revenue (ARR) over the past year, noted Tommy Nichols, co-founder and CEO. Alloy, in an interview with Technology Flow.
Simply put, Alloy is on a mission to help banks and fintechs fight fraud and stay compliant while onboarding new customers in the US and abroad. It helps its clients pull customer information, traditional credit bureau data and other alternative data through a single point of integration.
The company announced earlier this month Global expansion to 40 countries Across North America, EMEA, Latin America and APAC.
The New York-based startup has more than 300 customers — including Ally Bank, HMBradly, Gemini, Ramp and Evolve Bank & Trust, Brex and Petal — who use its API-based product to connect to more than 160 data sources to automate identity decisions. Opening new accounts and monitoring them on an ongoing basis. Alloy claims to process over a million decisions per day. The ultimate goal, of course, is to help its users create secure fintech products and help them grow. their Customer base.
Fraud threats have evolved over time, with “professional fraud brands” trying to use stolen and synthetic identities to open accounts and move and steal money, Nichols said.
And increasingly, fraud is on the rise from organizations and individuals using social media to trick people into committing fraud on their behalf.
“You can think of Tinder as kind of a swindler, where it’s operated on a mass scale,” Nichols said. “And it’s really becoming a bigger and bigger problem.”
Raising $100 million in Series C money ‘still in the bank’
It’s a bit unusual for companies to raise almost half of what they raised in their last financing. But for the mix, according to Nichols, the decision was deliberate and strategic. And it was also made with $100 million of Series C money “still in the bank.”
“We look around, and the world has changed in this way. We have a huge opportunity in front of us. Boardrooms are making different decisions about investments,” he told Technology Flow.
Nicholas added: “Also, fraud is changing quickly for our customers. We are global and we are doing more things than ever before. We know that opportunities will arise wherever we go… We need to invest in R&D.
Lightspeed Venture Partners and Avenir Growth co-led Alloy’s latest financing, which also included participation from existing backers Canapi Ventures, Bessemer Venture Partners, Avid Ventures and Felicis Ventures.
Justin Overdorf, a partner at Lightspeed, doubled down on Alloy (his firm also led the startup’s September 2021 Series C) because he “saw the company’s role not only in helping companies get financial products to market faster, but also in getting them to market faster without the risk of fraud or compliance. But it also helps companies grow their customer base safely.
“So as investors we see a lot of potential for the company, but also what it can do to power the entire ecosystem,” he wrote via email.
As a former Strip employee and current fintech investor, Overdorf believes what many people don’t understand is the risk associated with space.
“Building financial products is inherently risky – because there are (should be) rules and regulations in place to keep people’s money safe and there are bad actors out there trying to take advantage of any vulnerability,” he added.
Alloy, according to Nichols, plans to use its capital to improve its service to existing markets, “solve global problems for global companies” and expand its offerings. It also wants to continue the recruitment. The startup currently has 290 employees.
During Alloy’s last raise, early investor Brad Swarluga, general partner at Basic Venture Partners, summed up the company’s ascent in a challenging environment: “When Tommy Nichols, Laura Spiekerman and Charles Hearn started the company in 2015, they were swimming. upstream. Being a startup that sells cutting-edge technology into the traditional world of financial institutions is tough. But over the past few years, Alloy has helped shift the scale of trust in disruptive fintech and partnerships.
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