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Fraud protection startup nSure AI raises $6.8M in seed funding
Fraud protection startup nSure AI has raised $6.8 million in seed funding, led by DisruptiveAI, Phoenix Insurance, AXA-backed venture builder Kamet, Moneta Seeds and private investors.
The round will help the company bolster the predictive AI and machine learning algorithms that power nSure AI’s “first of its kind” fraud protection platform. Prior to this round, the company received $550,000 in pre-seed funding from Kamet in March 2019.
The Tel Aviv-headquartered startup, which currently has 16 employees, provides fraud detection for high-risk digital goods, such as electronic gift cards, airline tickets, software and games. While most fraud detection tools analyze each online transaction in an attempt to decide which purchases to approve and decline, nSure AI’s risk engine leverages deep learning techniques to accurately identify fraudulent transactions.
NSure AI, which is backed by insurance company AXA, said it has a 98% approval rating on average for purchases, compared to an industry average of 80%, allowing retailers to recapture nearly $100 billion a year in revenue lost by declining legitimate customers. The company is so confident in its technology that it will accept liability for any fraudulent transaction allowed by the platform.
Founders Alex Zeltcer and Ziv Isaiah started the company after experiencing the unique challenges faced by retailers of digital assets. The first week of their online gift card business found that 40% of sales were fraudulent, resulting in chargebacks. The founders began to develop their own platform for supporting the sale of high-risk digital goods after no other fraud detection service met their needs.
Zeltcer, co-founder and chief executive, said the investment “enables us to register thousands of new merchants, who can feel confident selling higher-risk digital goods, without accepting fraud as a part of business.”
NSure AI, which currently monitors and manages millions of transactions every month, has approved close to $1 billion in volume since going live in 2019.
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Fraud prevention platform Sift raises $50M at over $1B valuation, eyes acquisitions
With the increase of digital transacting over the past year, cybercriminals have been having a field day.
In 2020, complaints of suspected internet crime surged by 61%, to 791,790, according to the FBI’s 2020 Internet Crime Report. Those crimes — ranging from personal and corporate data breaches to credit card fraud, phishing and identity theft — cost victims more than $4.2 billion.
For companies like Sift — which aims to predict and prevent fraud online even more quickly than cybercriminals adopt new tactics — that increase in crime also led to an increase in business.
Last year, the San Francisco-based company assessed risk on more than $250 billion in transactions, double from what it did in 2019. The company has over several hundred customers, including Twitter, Airbnb, Twilio, DoorDash, Wayfair and McDonald’s, as well a global data network of 70 billion events per month.
To meet the surge in demand, Sift said today it has raised $50 million in a funding round that values the company at over $1 billion. Insight Partners led the financing, which included participation from Union Square Ventures and Stripes.
While the company would not reveal hard revenue figures, President and CEO Marc Olesen said that business has tripled since he joined the company in June 2018. Sift was founded out of Y Combinator in 2011, and has raised a total of $157 million over its lifetime.
The company’s “Digital Trust & Safety” platform aims to help merchants not only fight all types of internet fraud and abuse, but to also “reduce friction” for legitimate customers. There’s a fine line apparently between looking out for a merchant and upsetting a customer who is legitimately trying to conduct a transaction.
Sift uses machine learning and artificial intelligence to automatically surmise whether an attempted transaction or interaction with a business online is authentic or potentially problematic.
Image Credits: Sift
One of the things the company has discovered is that fraudsters are often not working alone.
“Fraud vectors are no longer siloed. They are highly innovative and often working in concert,” Olesen said. “We’ve uncovered a number of fraud rings.”
Olesen shared a couple of examples of how the company thwarted fraud incidents last year. One recently involved money laundering through donation sites where fraudsters tested stolen debit and credit cards through fake donation sites at guest checkout.
“By making small donations to themselves, they laundered that money and at the same tested the validity of the stolen cards so they could use it on another site with significantly higher purchases,” he said.
In another case, the company uncovered fraudsters using Telegram, a social media site, to make services available, such as food delivery, with stolen credentials.
The data that Sift has accumulated since its inception helps the company “act as the central nervous system for fraud teams.” Sift says that its models become more intelligent with every customer that it integrates.
Insight Partners Managing Director Jeff Lieberman, who is a Sift board member, said his firm initially invested in Sift in 2016 because even at that time, it was clear that online fraud was “rapidly growing.” It was growing not just in dollar amounts, he said, but in the number of methods cybercriminals used to steal from consumers and businesses.
“Sift has a novel approach to fighting fraud that combines massive data sets with machine learning, and it has a track record of proving its value for hundreds of online businesses,” he wrote via email.
When Olesen and the Sift team started the recent process of fundraising, Insight actually approached them before they started talking to outside investors “because both the product and business fundamentals are so strong, and the growth opportunity is massive,” Lieberman added.
“With more businesses heavily investing in online channels, nearly every one of them needs a solution that can intelligently weed out fraud while ensuring a seamless experience for the 99% of transactions or actions that are legitimate,” he wrote.
The company plans to use its new capital primarily to expand its product portfolio and to scale its product, engineering and sales teams.
Sift also recently tapped Eu-Gene Sung — who has worked in financial leadership roles at Integral Ad Science, BSE Global and McCann — to serve as its CFO.
As to whether or not that meant an IPO is in Sift’s future, Olesen said that Sung’s experience of taking companies through a growth phase such as what Sift is experiencing would be valuable. The company is also for the first time looking to potentially do some M&A.
“When we think about expanding our portfolio, it’s really a buy/build partner approach,” Olesen said.
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Cyber threat startup Cygilant hit by ransomware
Cygilant, a threat detection cybersecurity company, has confirmed a ransomware attack.
Christina Lattuca, Cygilant’s chief financial officer, said in a statement that the company was “aware of a ransomware attack impacting a portion of Cygilant’s technology environment.”
“Our Cyber Defense and Response Center team took immediate and decisive action to stop the progression of the attack. We are working closely with third-party forensic investigators and law enforcement to understand the full nature and impact of the attack. Cygilant is committed to the ongoing security of our network and to continuously strengthening all aspects of our security program,” the statement said.
Cygilant is believed to be the latest victim of NetWalker, a ransomware-as-a-service group, which lets threat groups rent access to its infrastructure to launch their own attacks, according to Brett Callow, a ransomware expert and threat analyst at security firm Emsisoft .
The file-encrypting malware itself not only scrambles a victim’s files but also exfiltrates the data to the hacker’s servers. The hackers typically threaten to publish the victim’s files if the ransom isn’t paid.
A site on the dark web associated with the NetWalker ransomware group posted screenshots of internal network files and directories believed to be associated with Cygilant.
Cygilant did not say if it paid the ransom. But at the time of writing, the dark web listing with Cygilant’s data had disappeared.
“Groups permanently delist companies when they’ve paid or, in some cases, temporarily delist them once they’ve agreed to come to the negotiating table,” said Callow. “NetWalker has temporarily delisted pending negotiations in at least one other case.”
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Phone fraud detection service Next Caller raises $5 million
Fraud detection is a huge problem for retailers and the banking industry. But as companies fortify their defenses against fraudsters, the criminal element finds new weaknesses to exploit. The latest tactic has been phone spoofing, and fraud at the call center itself. Helping to ward off the latest wave of fake accounts is Next Caller, a Y Combinator-backed startup based in New York. Read More
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