Anglo-Hungarian startup powering online fraud prevention, SEON, has just secured $94M in Series B funding led by Silicon Valley-based investor IVP. The funding, coming just a year after the company’s Series A makes SEON the most highly invested Hungarian-founded business in history as well as the largest ever Series B for a fraud prevention business.
The funding will assist SEON’s expansion across North America, Latin America, and the APAC (Asia-Pacific) region. SEON intends on building partnerships with leading e-commerce platforms, heightening product functionality, and integrating additional sources of data to help its customers better fight fraud. On top of welcoming IVP into its portfolio of investors, SEON will appoint Michael Miao, Partner at IVP to its board.
Other Series B participants included existing investors Creandum and PortfoLion, as well as, angel investors including founders and senior executives from some of the very best product-led tech companies including Aiven, Coinbase, DataDog, DoorDash, Figma, G2, GitHub, Public, Slack, Supercell, UiPath, Veriff, and Wise.
An increase in consumer fraud and identity theft
The internet has been providing a seemingly perfect cover for thieves who exploit customer information to defraud businesses for their personal gain. While many thought that fraud was at an all-time high before the pandemic, anti-fraud professionals are reporting increased fraudulent activity across nearly every business category, with the largest growth observed in insurance fraud, loan & bank fraud, financial statement fraud, and identity theft.
Online consumer activity and transactions, accelerated by the pandemic, led to an exponential growth in identity fraud. Fraud is now a problem faced by every company transacting with customers online, from the world’s most significant fintech to online marketplaces, digital health, education, gaming, and e-commerce companies. Fraudsters are increasingly becoming sophisticated and companies need better tools to fight back. Unfortunately, effective fraud tools were traditionally only readily accessible to large enterprises with the budget and staff to handle complex implementations.
SEON’s co-Founder and CEO, Tamas Kadar, gave TFN an insider’s take on the fraud prevention landscape as well as the work done at SEON to counter modern fraud.
“As online fraud continues to cause havoc for businesses, to mitigate these risks your strategy must tie in with the business’s overall goals. In the past, risk management was very much an add-on, an afterthought – with some companies still to this day keeping the same mentality,” remarked Tamas, while referring to the failure of businesses to enable their risk management team to have a full scope of their operations.
Tamas recommended openness within companies concerning risk management and fraud prevention. “Taking a top-down approach to risk allows for a more holistic overview of your users at a granular level.” continued SEON’s CEO, “Having open dialogues about potential risks, identifying risks based on the aims of your business, and structuring the company in a way that is agile and can adjust to unforeseeable events are just three examples of a good cybersecurity strategy & culture.”
From crypto to SEON
The Founding Duo was always interested in tech since their early days. While studying at the Corvinus University of Budapest, Bence Jendruszak and Tamas Kadar were enthusiastically interested in cryptocurrencies. They conceived plans for a fiat exchange platform for Central and Eastern Europe, later proceeding to launch.
“Upon launch, we found that fraudsters could easily find ways of bypassing the security measures in place, and when we began searching for a solution, we couldn’t find one suited for our needs.” recounted Tamas. This was the catalyst for launching SEON, with the aim of creating an affordable, accessible & easy-to-use fraud prevention software.
“Before long other crypto companies and high-risk merchants were getting in touch to learn more about what we developed, asking if they could try it so we turned our attention fully to cybersecurity.” Tamas further explained.
SEON employs an API-first approach, allowing enterprises to plug into their system and go live within 24 hours. SEON’s Data Enrichment module establishes an individual’s digital footprint using an email address, phone number and IP address/ or location data in real-time. This GDPR-compliant approach to analysing a user’s digital footprint assists companies to accept more transactions while blocking fraudulent ones.
Tamas elaborated, “Our email and phone enrichment offer an alternative view of your users that can be used reliably for credit scoring models and other onboarding processes. This lookup tool helps verify if the user is who they say they are or if are they using stolen credentials. Furthermore, the corresponding social media accounts can offer insights into different socioeconomic statuses and businesses can draw correlations themselves in addition to just using it as a lightweight verification check. We offer a frictionless verification solution that can filter out junk users from the getgo and can be coupled with any existing risk stack, including those using liveness, biometrics, or other IDV solutions.”
SEON’s full-fledged platform leverages the company’s advanced ML capabilities to help global enterprise teams set rules, wean out false accounts, and detect real-time fraud. The company’s solution can verify users with zero friction, enabling businesses to save money and fully complement their KYC / IDV checks.
“Our tech removes bad actors at the first stage of onboarding and is entirely built to be accessible to any merchants or organization. Partnering with such a reputable product-led growth investor in IVP, we believe we can support businesses globally,” added SEON’s CEO.
Expansion for SEON
Since its founding in 2017, SEON has served over 5,000 merchants and reviewed over 1 billion transactions, saving its customers more than €50M in potentially fraudulent transactions. The globally focused business operates offices in Austin (TX), London, Jakarta and Singapore, with its headquarters in Budapest. SEON achieved significant growth in 2021 having more than tripled its annual recurring revenue and growing its headcount by 4x. The company is increasingly becoming the go-to fraud prevention solution for companies like Revolut, NuBank, Afterpay, Patreon, Sorare and mollie.
“In the last year, we saw a 67% rise in Latin America, as well as opening up offices in Jakarta and Austin simply because fraud continues to be a global endemic. The need for effective cybersecurity measures is clear as day with the pandemic giving people the opportunity to explore other means of making money through illegitimate means.”
The company hopes to further its growth strategy by serving the underserved. Tamas supported this point, insisting, “Legacy fraud providers can’t meet the demand in areas of the underbanked populous, yet mobile adoption in these regions continues to grow (LATAM & APAC in particular). Ask anyone in the risk industry, there’s no silver bullet, no one solution that certifies every transaction. Partnerships allow for further digital insight to enable better customer decisions with traditional KYC/AML processes.”
SEON specialises in the neo banking, crypto, Web3, eCommerce & BNPL sectors. The company has recently launched an AI-based fraud detection and one-click prevention app on Shopify.
“This product-led team is making a remarkable dent in fraud prevention by making it easy for every business to adopt its data-driven solution. As fraud explodes at an exponential rate, IVP is honoured to help guide this talented group as they work to expedite the fight against online fraud,” said Michael Miao, Partner at IVP.C.
