San Francisco-based fintech startup, Effectiv, has just announced a $4M seed funding round, led by Accel. The funding also saw participation from REV (funded by RELX) and other industry leaders.
Effective will as well add to its team industry veterans Bob Stock (ex-Visa) and Mike Persichini (ex-HSBC and Blue Vine) as it closes on a $3B milestone in loan volumes processed.
The increasing digitization of banking
Financial institutions have rapidly digitized their platforms, especially since the onslaught of the covid outbreak. The increasing emergence of Fintech startups and electronic wallets has only further fuelled electronic money management and transfers.
It’s unfortunate that fraudulent activity has kept up too, with fraud losses pegged at $19B in 2020. Newer offerings like buy-now-pay-later (bnpl) and peer-to-peer(p2p) lending have gained significant momentum, adding extra complexity to fraud and risk patterns. Fraud prevention techniques and strategies can thus no longer remain static, in a dynamic landscape.
An experienced team with a leading industry knowledge gap
Effectiv’s founding team is fully comprised of early team members at Simility, an enterprise fraud prevention company that was acquired by PayPal in 2018. Under PayPal‘s umbrella, the team was involved in building fraud prevention solutions for organizations like Discover, US Bank, Synchrony and millions of PayPal merchants.
With over four decades of combined experience building fraud and risk mitigation systems, the team developed Effectiv after realising that the technologies they had been building too far were often out of reach to smaller financial institutions.
“Dialogues with industry experts from banks, credit unions, combined with our team’s decades of experience in this space, helped us validate the gap that we saw in the market,” commented Ravi Sandepudi, co-founder and CEO of Effectiv. “Cutting-edge technologies that drive Effectiv have so far been prohibitively expensive and were designed for and by large organizations. Effectiv aims to change that and truly democratize AI-driven risk management, making it accessible to any financial institution. Every organization, regardless of size, should have access to best in class safety measures to protect their members and customers.”
Making fraud prevention tools more accessible
Founded in 2021 by Ravi Sandepudi, Ritesh Arora, Anupam Tarsauliya and Jonathan Doering, offers a next-gen, no-code risk management platform for mid-sized banks, credit unions, fintechs and financial institutions. Employing a cutting-edge AI and an intuitive user interface, Effectiv’s solutions enable rapid adaptation to new trends, aiming to significantly reduce the cost of managing fraud and risk.
The raised funds will be used for technology development, growing the team in the US, and marketing. Effectiv onboarded its first customer in June 2021 and have since processed over $1B in loan volume. After a successful beta test, the platform is now live and the team is actively onboarding new customers.
“As the world is on a digitization spree, we know that challenging times are ahead for financial institutions. We see tremendous value in Effectiv’s innovative approach to fraud and risk management. Their powerful yet rapidly adaptable AI platform could be the key to identifying these changing trends. We are looking forward to working with the Effectiv team in making these world-class solutions accessible to every financial institution.” replied Dinesh Katiyar, Partner at Accel to this funding news.