By Michael Miao, Karthik Ramakrishnan, Jules Maltz, and Eric Liaw
Cat and Mouse
The cartoon classic “Tom and Jerry” tells the story of two lifelong adversaries locked in a comical cat-and-mouse conflict. Tom is a pampered house cat and Jerry is a small brown mouse who lives in the walls of Tom’s home. Tom is significantly larger than Jerry, and has access to a seemingly endless arsenal of anvils, mallets, and explosives. Despite Tom’s obvious advantages, Jerry always gets the best of him. What Jerry lacks in size and strength, he makes up for with other winning qualities: his speed, wit, and adaptability. In this way, the predictable and slow-moving Tom always gives Jerry the upper hand.
“Tom and Jerry” is an appropriate metaphor for another type of conflict: the ongoing skirmish between online businesses and fraudsters intent on stealing their customers’ identities and sensitive financial information. In this scenario, it’s the online businesses who are the slow-moving Tom and the fraudsters who are the nimble Jerry. The only difference is that online businesses are forced to contend with not just one Jerry, but hundreds of thousands, and these Jerries are growing smarter, faster, and more agile by the minute.
More and more consumer activity is moving online; alongside this explosion in online spending, a proliferation of fraud has erupted. According to Veriff’s 2021 Fraud Report, online fraudulent activity increased 61% in 2021, with identity fraud accounting for 60% of all fraudulent activity. Given the rapid rise of online identity fraud, IVP believes that securing identity on the internet is one of the most powerful and exciting areas of investment today.
SEON Fraud Fighters
Enter SEON Fraud Fighters. SEON, which stands for SEcurity ONline, is a next-gen fraud prevention platform that helps companies of all sizes eliminate fraudulent activity at account creation and monitors ongoing account activity. SEON draws on data from across the internet to establish a users’ digital footprint based on a single email address, IP address, or phone number. Customers can either use SEON’s data directly to power their own homegrown fraud models or use SEON’s Sense Platform as their core fraud prevention engine. Global companies like Revolut, Nubank, Afterpay, Sorare, Patreon, and Mollie all rely on SEON to power their fraud detection and prevention capabilities.
SEON’s founding story is a classic example of two co-founders solving their own problem. In 2016, Tamas Kadar and Bence Jendruszak launched a cryptocurrency exchange and immediately found themselves the target of fraud. The two co-founders tried every fraud prevention tool on the market but soon realized that the existing solutions were either difficult to use or ineffective. Tamas and Bence saw a massive opportunity: they could build a fraud prevention tool of their own, one that was product-led, easy-to-use and capable of combating fraud faster and more effectively than any of the other available solutions on the market.
Today, SEON is one of the fastest-growing fraud prevention tools available as well as the highest-rated solution for fraud prevention on G2’s momentum grid. SEON is determined to make online business safer and become the most ubiquitous fraud prevention tool on the internet. SEON’s team is already well on their way to making these goals a reality.
IVP is thrilled to join SEON on this journey, by leading its $94M Series B financing alongside our friends at Creandum and Portfolion. We are joined by an incredible set of angel investors including Gokul Rajaram (DoorDash), Olivier Pomel (DataDog), Amit Agarwal (DataDog), Daniel Dines / Crew Capital (UiPath), Ilkka Paananen (Supercell), Oskari Saarenmaa (Aiven), Kaarel Kotkas (Veriff), Godard Abel (G2), Harsh Sinha (Wise), Tamar Yehoshua (Slack), Emilie Choi (Coinbase), Paul St. John (GitHub) and Praveer Melwani (Figma).
While this is IVP’s first investment in a Hungarian team, this happens to mark our sixth investment in Europe in the last 18 months as we hope to back many more exceptional European entrepreneurs.
Why We Invested
During our diligence process, IVP spoke with 15+ SEON customers. They gave some of the most favorable customer feedback we’ve ever heard. Customers raved about the high quality, real-time, and differentiated data that SEON offers as well as its ease of implementation. Given the proliferation of online fraud driven by the pandemic, IVP believes that SEON’s market opportunity is massive and will continue to grow.
Business Model Innovation: Existing legacy fraud prevention software tools generally demand months long implementation, onsite consultants, costly setup fees, and lengthy, multi-year contracts. SEON flips the traditional fraud prevention software model on its head, offering a product that is quick and easy to use, alongside rich APIs and public documentation. Additionally, SEON offers pay-as-you-go pricing with no long term commitment required so that customers can easily try the product, no strings attached.
Technology Innovation: Most incumbents in this space rely solely on proprietary databases filled with stale data. Typically, these same players offer limited data types and their fraud engines are a veritable black box, making it difficult for fraud managers to understand why users are approved or denied. SEON’s technological advantage lies in their real-time data aggregation and rich social media lookups (SEON works with more than 35 social media platforms and all of the top messaging applications), which provide accurate information on each user’s online identity. SEON offers the most technologically advanced solution for fraud prevention on the market, making them the obvious choice for many of the world’s fastest-growing fintech, gaming, and consumer internet companies.
As consumer activity continues to move online, preventing fraud and securing identity will play an increasingly critical role in ensuring consumers’ safety as they shop, play, and communicate online. To that end, SEON plans to use their Series B funding to expand internationally, double down on their product-led-growth engine, partner closely with e-commerce platforms, and release a Know-Your-Business (KYB) product. IVP is excited to partner with Tamas and Bence on this journey and help build SEON into a generational company. Additionally, the company is hiring – if you’re interested in hopping aboard this rocket ship, check out SEON’s open recs here.