Keep up with the digital identity landscape.
The identity verification market has been on a tear recently. Developer focused authentication startup Auth0 closed a $120 million Series F round this summer and Payfone, which uses mobile phone data to verify users, closed a $100 million round in June. COVID-19 has accelerated the adoption of digital identity verification platforms by businesses, and the industry is expected to grow to $16 billion by 2025.
Seattle-based startup Vouched is capitalizing on this momentum, pulling in a recent $3 million funding round led by Fly Fish Partners. Vouched’s platform combines facial recognition technology with data extraction from physical IDs to allow companies to verify users more safely and efficiently. As noted in Geekwire, by turning a previously complex process into a few lines of code, Vouched aims to apply Stripe’s model to identity verification.
Vouched’s APIs allow developers to integrate their identity verification technology into their product, so the verification process happens within the client’s platform. Users are asked to upload a selfie along with requested identification documents, such as their driver’s license and passport.
According to the company website, Vouched then analyzes the uploaded information across five vectors:
The combination of facial recognition features and data extraction from identification documents is nothing new, and puts Vouched in competition with earlier-stage startups Berbix and IDnow and budding giants like the aforementioned Auth0 and Payfone.
We asked Vouched about their differentiation, and they pointed us to a surprising factor: their pricing model. “Vouched has innovated on pricing structure and flexibility to learn and adapt faster/better than the competitors,” said John Baird, CEO of Vouched. “Our AI-driven verification process detects fraud in real-time without adding drag to your customer experience. Instead of clunky, knowledge-based ID verification, Vouched APIs enable you to meet compliance requirements while building trust with the people who count on your product.”
Digging into Vouched’s pricing approach, developers can onboard Vouched for free, and companies pay a small fee for each verification. The pricing system is tiered depending on how many verifications run through the platform. At the lower end, Vouched charges 50 cents per verification. That figure drops to 40 cents at 30,000 verifications or greater.
Additionally, the more companies are willing to pay, the more touchpoints Vouched will check. Advanced features include confirming a user’s physical address, IP address and driver’s license information, as well as performing a data cross-check and dark web analysis. Vouched also offers an option to leverage all their features for a flat $2 fee.
While per-user fees can increase short-term customer value, they can also disincentivize clients from making significant investments in the platform. Auth0, for example, uses a subscription model for developers who use their authentication tools. It will be interesting to see whether Vouched maintains their current usage-based pricing model as they scale, and whether subscriptions or per-verification models win out in the verification space.
Vouched’s early traction may validate their bold claims on pricing and their ability to adapt quickly. Despite only being in business for two years, Vouched has verified more than 850,000 people on its platform in 50 countries. The map below shows every country in purple where a Vouched verification has taken place.
Vouched’s fundraising has reached $7.4 million to date, and the company is planning to use the new capital to push the product into the European market. Vouched also onboarded a new customer through the round. Bankers Health Group invested alongside Fly Flish partners, and will use Vouched for verification services for its 1,200 members. Existing investors include Madrona Venture Labs, SK Ventures and Sea Change.
Apart from its pricing model, one source of long-term differentiation for Vouched is its focus. The startup currently serves companies in financial services, gig economy and healthcare sectors. We asked Baird about where he sees the company in five years, and he noted that “The overarching goal of Vouched is to give people the ability to be verified. Vouched wants to verify people and give them access to things they couldn’t without being verified. From banking, healthcare, to gig/share economy companies, everyone deserves access to whatever they want.”
Vouched notes on their website that they have plans to expand into verification for hotels, marketplaces, gaming, cryptocurrency and real-estate. However, the fact that Baird highlighted its three current verticals when discussing the future of the company suggests they may focus more on strengthening its positions within existing verticals than expansion.
Regardless, having hit impressive milestones in such a short period, Vouched is making a strong play in the fast-growing identity verification space. We will be monitoring its progress and expansion in the years to come.
ABOUT THE WRITER
Quinn Barry is a Tech Innovation Fellow from Stanford University covering innovations in digital privacy across finance and government.
Contact Quinn Barry at firstname.lastname@example.org.
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