Socure Founder & CEO on how the company is addressing identify fraud across public, private sector

Socure has closed its $100 million series D funding and secured a valuation of $1.3 billion. Yahoo Finance’s Zack Guzman and Akiko Fujita speak with Socure CEO, Johnny Ayers.

Video Transcript

ZACK GUZMAN: --to chat with us today. I want to focus in more on this cybersecurity issue here in our start-up spotlight with one startup that is riding this wave of fraud in the personal identity space. That would be Socure raising another $100 million in a Series D funding round to reach a valuation of $1.3 billion. And joining us for more on that is the CEO of Socure. Johnny Ayers joins us right now.

And Johnny, I mean, you're one of many companies focusing in on this issue. And you guys mostly focus in, at least earlier on in the fintech space, to kind of help banks and other companies working around this to really know who they're dealing with. But how big of a problem has that become now as we're talking about kind of the rewards in hacking or fraud increasing rather largely?

JOHNNY AYERS: Yeah, absolutely. Thanks so much for having me today, Zack. Just to put it into perspective, how important it is to enterprise to get this identity decision right, on a good customer, having them drop off, be it a fintech, be it a gaming operator, they could be losing between $100 and $1,000 per customer if they don't have the ability to verify known good identities.

And on the other side of the coin, a single synthetic ID fraud loss could cost an institution upwards of $15,000. So, as applications and transactions have gone almost completely digital overnight, the price of getting these decisions wrong is growing incrementally each day.

AKIKO FUJITA: Where are you seeing the biggest cracks in the system right now? When you talk about fintech, for example, certainly, they have been ahead of the curve even before this huge digital acceleration we've seen over the last year. But you've got a lot of retailers, for example, didn't have a significant footprint coming online. You've got health care providers as well increasingly putting everything online. In terms of the verification system, where is the most demand?

JOHNNY AYERS: Yeah, so I think some of the businesses that were the most far behind were in federal and state government. I think you're seeing unemployment fraud be a massive problem across different states. Employers-- you're now seeing remote onboarding having to take place in the tens of hundreds of thousands of people across the world. You're also seeing new industries like buy now pay later, online gaming, where, historically, these didn't exist 12 to 24 months ago.

And so the need in those industries are particularly acute. But if you think about the rise of retail banking, the Robinhoods, the stash, the public's, a lot of the crypto exchanges, the scale in which they're reaching in terms of new application and transaction volume are making the need for very, very accurate identity verification, fraud prediction, and AML solutions paramount today more than they ever have been before.

ZACK GUZMAN: Yeah, any money laundering, know your customer are all very important in the fintech space. But I assume a lot of this $100 million you raised in your Series D now are going to be helping you expand beyond just fintech in that sector. Talk to me about how those needs are different when you do shift into things that seem a little bit less serious, if I can say so, online gaming, e-commerce as well. Talk to me about how that shifts in how, I guess, that presents a new challenge for you guys at Socure.

JOHNNY AYERS: Yeah, absolutely. So I think the nice thing is for us, right, is we're verifying that this is Zack. Zack is a real person and that this is Zack actually presenting his identity for this application or transaction. And that's a vertical agnostic problem, right? Whether you're opening a new bank account at Chime to get your stimulus early, whether you're taking out a loan or a credit card through Sofi or Capital One, it's actually the same identity, right, that's going to open a DraftKings account, that's going to apply for social benefits with the Social Security administration.

And so we actually view the problem as being a vertical agnostic one. And so we're very excited to kind of put this capital to work in terms of bringing our best in class identity verification and classification services to a bunch of different verticals. And certainly, as we look to expand not only across verticals, but in the new geographies around the world where verifying identities at scale is an increasingly difficult problem and one in which when you look at and file underrepresented, underserved classes, we feel we're doing a great service to society at large as we help make frictionless onboarding and identity verification decisioning available to the masses.

AKIKO FUJITA: Johnny, we've been talking a lot about the amount of capital that's been raised on the private side. Certainly your funding round seems to point to that. But also, there's a lot of companies, high growth companies like yourself, that have been looking to the public markets and coming to the markets through a SPAC, some direct listings as well. How are you looking at that process right now when it seems like that window is closing in pretty quickly?

JOHNNY AYERS: Yeah, absolutely. So I think from the entrepreneur's perspective, we're very heads down on focused and executing and solving our customers' problems, right? I think for the CEO, I'm having to obviously educate myself on a variety of capital markets, be it traditional IPO, a direct listing, a SPAC.

And my view is, as long as we continue to execute, hit our numbers quarter over quarter, continue to expand revenue and profitability, I think we're going to have a variety of different financing and liquidity paths available to us as we scale. Certainly, I think SPAC is a financing opportunity, a liquidity du jour. But I think from Socure's perspective, we're really focused on executing. And I think the inevitable outcome of how we go public will take its course in due time.

AKIKO FUJITA: OK, well, we'll be watching for any announcement there. Socure CEO Johnny Ayers, it's good to talk to you today.