Digital identity startup Passbase, which offers SDKs for running remote identity checks, has raised $10 million in Series A funding as it dials up attention on crypto compliance — touting tools to help fintechs with rapidly evolving regulatory requirements.
The funding is led by Costanoa Ventures, with participation from Lakestar, Eniac Ventures, Cowboy Ventures and Seedcamp.
It follows an unannounced $3.5 million seed round — which almost doubled the $3.6 million in seed funding that Passbase raised back in 2019. So the 2018-founded startup’s total raised to date is around $17.7 million.
The digital identity space is a crowded one, but on the crypto compliance front Passbase is keen to point back to early experience and claim it as a differentiator — the team having started out building a cryptocurrency wallet before pivoting to identity authentication — which it argues helps it understand the needs of that particular (and some might say peculiar) industry.
“Our primary focus is on crypto,” says the startup, describing the typical customer for its SDKs as a “fast growing digital first financial services product, particularly fiat to crypto onramp services”.
Passbase’s subscription developer product provides tools to create a verification flow and back-office compliance for regulatory needs such as AML (anti-money laundering), KYC (Know Your Customer) and age restrictions — with different tiers targeted at startups, growth and enterprise users.
Its top-line claim is the product can be integrated in as little as 30 minutes, and covers more than 6,000 IDs across 190 countries and 15 languages.
Passbase says it has around 180 customers for the dev product at this stage.
While, over the last year, it says revenue has grown 8x.
While the (hyper frothy) crypto market is where Passbase spies the biggest opportunity for its regulatory support tech, it also says it’s keeping an eye on developments around online age verification — an area that’s seeing rising attention from regulators in certain markets (such as the U.K.) as a result of concerns around child safety.
“Age verification is secondary priority but we have a few use cases such as online gaming, digital cannabis, online sale of e-cigarettes and online sales of alcohol… but we do continue to track regulations in age verification such as COPPA, the Preventing Online Sales of E-Cigarettes to Children Act, and others,” it told us.
Passbase says the Series A funding will be used for launching a new no-code policy system to allow customers to design their own onboarding flows for multiple regions and regulatory requirements — with the startup saying it has a big focus on scaling companies that are looking for compliance support as they expand into new markets and geographies.
“This will solve the need for companies to both understand what they need to do to comply in different markets (i.e. through policy templates) and manage how to do it (i.e. workflows within our verification product),” Passbase suggests of the incoming policy tools.
Expanding the system’s capabilities to provide what it bills as “market-optimized onboarding solutions for different geographies and use cases” is another slated aim.
Its overarching vision is to be a key player in a digital identity network comprised of a sharable KYC token and verifiable credential model — which it argues will enable “a privacy preserving identity ecosystem”, as envisaged by the decentralized identity model now being hyped as “web3”.
However there are a number of (rather better) resourced startups also selling identity verification tools — Passbase names Jumio, Onfido, Persona and Veriff as its closest competitors.
Notably Stripe also recently added ID checks — launching into the space this summer and creating a fresh layer of competition for AI-powered verification via a self-serve tool.
Stripe’s arrival obviously causes a big headache for all the startups founded on dreams of becoming “Stripe for identity verification” (which was literally how Passbase was talking about its business back in 2019).
But despite fierce competition on core ID checks, Passbase isn’t throwing in the towel — it’s just betting on specializing in crypto compliance needs (and there being a market for specialized crypto compliance tools) instead. Hence its marketing thrust now talks about bringing “KYC to crypto” — and stays silent on the arrival of Stripe on its turf — again arguing that its early experience in crypto and web3 provides a competitive edge for the crypto niche it’s now zeroing in on.
“It’s important to remember, our team came from the web3 and crypto space with Coinance. We understand the needs of web3 better than anyone in the IDV [identity verification] space. These competitors existed when we were looking for solutions and there is a reason we didn’t choose them,” it argues, dialling up the crypto hype.
“Our seed round got us to table stakes to be a competitive solution in IDV, with improvements such as more flexible pricing for scaling companies, a more user-friendly verification flow, deeper customization for product leaders and better documentation so developers can integrate in minutes, not weeks. The Series A is about taking the next step towards an accessible global compliance solution and the decentralized identity model web3 was built to facilitate.”
Source: Tech
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