Despite the ongoing coronavirus pandemic and sharply falling global investment levels, British regtech startup Onfido raised a $100 million funding round this week, led by TPG Growth.
Founded by a trio of Oxford graduates in 2012, Onfido plugs into various publicly available databases to give organisations quick identity verification and background checks for things like employment and criminal records by matching a photo ID with a selfie video, using advanced algorithms to identify fakes.
This round brings total investment to $200 million, including a 2019 round led by Softbank Investment (SBI, not to be confused with the larger Vision fund) and Salesforce Ventures, with support from M12Capital (formerly Microsoft Ventures), FinVC and others.
Fundraising in a crisis
The firm started the fundraising process in January, before the COVID-19 pandemic really took hold of the world, meaning the due diligence was a little more rigorous than the company faced when it last raised money, back in 2019.
Onfido CEO, Husayn Kassai, told Techworld that he estimates as many as 30 people were involved in the due diligence process of this deal. “I think that is a good thing and founders should know there is extensive referencing on them,” he said.
Kassai adds that he was in the “fortunate position of this being a competitive round, so we had multiple term sheets. That may have had a role to play,” in closing the round during a global crisis. TPG Growth stood out amongst the investors for its “reputation and operational experience”, especially thanks to its investments in technology unicorns like Uber, Spotify and Airbnb.
He notes that existing investors have all been helpful in providing weekly digests and information that is relevant to their business during the global health crisis. “There’s quite a lot of activity across our investors and good content is being circulated,” he said.
He has also observed an uptick in rival firms picking up the phone to ask about the possibility of merger or acquisition activity since the pandemic hit. “We have had competitors reach out to talk about us acquiring them,” he added.
The new investment is being earmarked to grow the sales and technology functions of the business, helping it expand across regions and new use cases, as well as identifying new fraud cases quickly and at scale. “Demand is significantly greater than we can absorb, we want to scale,” Kassai said.
Responding to the pandemic
Kassai points out that there is growing demand for remote solutions such as Onfido’s identification platform as a result of the pandemic, and he has seen an increase in demand from major banks having to verify new customers without the use of their branches, and telemedicine providers like Babylon looking to give patients medical advice without visiting a surgery.
Weekly volumes for Onfido identity checks on healthcare platforms has increased fourfold over recent weeks and is up 1.3 x for remittance and payments clients also.
Another example comes from the supermarket giant Tesco, which uses Onfido as part of its hiring process to verify employee’s right to work status. As supermarkets have had to quickly ramp up staff as a result of the pandemic, Onfido has seen a sixfold increase in demand from this type of customer.
Onfido is also partnering with various firms to help drive the development of so-called ‘immunity passports’, which would help governments identify individuals who have developed immunity to COVID-19. This could significantly help economies bounce back after the peak of infection rates starts to flatten.
A big part of this is “educating and helping policymakers recognise how this has to happen,” Kassai said. “It needs to be scalable, conducted remotely and needs to be robust and tied to physical identity, with privacy embedded and no centralised database.”
“The current focus remains finding the most effective testing kit, and as that is getting to a better state the next topic will be binding that test result to that person’s identity,” he added.