The banking industry has long faced challenges in verifying small businesses during Know Your Business (KYB) reviews, resulting in lengthy manual processes that can span days or weeks. This has become even more challenging with the advancement of fraud strategies and the increasing prevalence of fraud, which cost global banks $500 billion in 2023.
New York-based Baselayer is transforming the critical problem of data sharing between financial institutions. It can predict and differentiate legitimate from fraudulent patterns, enabling financial institutions and government agencies to swiftly verify the legitimacy and assess the risk of new business customers in seconds.
Secures $6.5M funding
In a recent development, Baselayer, a B2B platform using its proprietary Graph AI technology to fight fraud and optimise business onboarding, has emerged from stealth with a $6.5 million seed round.
This oversubscribed funding round saw participation from Torch Capital, which backed Creature Comforts, Afore Capital, Founder Collective, Picus Capital (which invested in Flawless and CEEZER), Gilgamesh Ventures, and notable financial industry executives including Eric Woodward, former President of Early Warning Services, Jason Mikula, executives from Stripe, Brex, Valley Bank, Airbase, and 15 other fintech founders.
With the funding, Baselayer plans to double down on investing and scaling its platform as well as refining and building out new features in its GenAI model.
Idea behind Baselayer
Baselayer was founded by industry veterans and entrepreneurs Jonathan Awad and Timothy Hyde in 2023. They found themselves unable to secure a business banking account in the wake of multiple bank failures in early 2023. They quickly identified they were not the only new company experiencing the issue, which left them unable to pay bills or vendors.
With no solution besides waiting over a month for the manual review process to unfold, they decided to build one themselves. In particular, they saw an opportunity to use AI-generated knowledge graphs, in which Hyde had expertise after previously building and selling a machine learning company to a Fortune 500 company.
AI to combat fraud and optimise business onboarding
Baselayer’s technology reduces fraud, automates business onboarding for SMBs, and increases security throughout the entire banking system. Its platform transforms the silo of data sharing that has previously existed across financial institutions to elevate levels of customer confidence and provide an enhanced sense of security to all banks across the country.
Already, the company has secured almost 30 customers in under 6 months. It has been integrated into clients and systems ranging from traditional bank providers to small business fintechs, including Rho and LoanPro. It has expanded its total reach to over 25 million potential business accounts.
“For a new or small business, waiting days or weeks to have access to a bank account can be devastating,” said Jonathan Awad, CEO and Co-Founder of Baselayer. “Without a bank account, it’s impossible to run a business, and as fraud has gotten more sophisticated, it’s become even more difficult for banks to verify small or new companies. We saw this problem firsthand, so we built our solution that provides all banks, lenders, and payments companies on our platform access to fraud sharing on businesses that does not exist anywhere else in the market. Baselayer can now identify, assess, and predict the risk of all potential business customers in real-time, eliminating the friction that has previously existed in the KYB process to provide more security to the banking system than ever before.”
“All consumers will ultimately be businesses,” said Eric Woodward, former President of Early Warning and creator of Zelle Risk. “This underscores the importance of banks and providers being able to quickly and accurately assess and verify the identities and risks of small businesses at scale. While there have been tremendous innovations in consumer verifications, there has not been a comparable solution in the market to secure and simplify the KYB process, which Baselayer is now uniquely providing.”
“Working with Baselayer has been a game changer for us,” said George Remennik, Acting Chief Compliance Officer, Rho. “Baselayer helps us accurately verify business applicants and get new Rho customers up and running on our platform significantly faster, while also supporting the integrity of our world-class compliance operations.”
