Due diligence is a big topic in 2022 for a number of reasons.
However, due diligence does not only apply when an investor puts money into a start-up or when a company acquires another. Businesses, especially those operating in financial services, should also conduct an appropriate amount of due diligence, for example to avoid fraud.
As recently as December, Congress report slams some fintechs NPR“In the early days of the COVID-19 pandemic, it ‘became an easy target for those seeking to defraud PPPs or Paycheck Protection Programs while earning billions in fees from taxpayers’.” Specifically, the report accused fintech of failing to thwart “obvious and preventable fraud.”
On the other hand, the Small and Medium Enterprise Agency facing pushback from the organization As reported by Politico, the American Bankers Association and the National Government Guaranteed Lenders Association, etc. The group claims, among other things, that the SBA “is ill-equipped to regulate fintech companies that want to participate.”
input TrubizThe startup hopes to reinvent the way fintechs review the risks of businesses they participate in to avoid fraud cases and pushbacks like the one above in the future. Founded by D.Annie Hakimian and Max Morlocke, the company recently raised $2.4 million in a seed round led by Flourish Ventures in an attempt to reinvent how financial services validate businesses when they open accounts. Homebrew, The Fintech Fund and Y Combinator also participated in the fundraising. The company participated in YC’s Summer 2022 batch.
In conjunction with the capital increase, the company also announced the launch of a new product, TrueBiz Risk Score, a summary of key risk indicators.
Specifically, TrueBiz aims to add color to your business. Homebrew partner Satya Patel says they compile key risk indicators against the backdrop of more than 50 data points, including industry and revenue.
“We do this by automating reviews of a business’s online and offline footprint,” Hakimian told TechCrunch in an interview. We then consult hundreds of different sources to build a more complete picture of the company.”
He added that traditional solutions rely too much on inconsistent and unverified information, often still manually reviewed.
According to Hakimian, TrueBiz’s ultimate goal is to fundamentally change the way financial services organizations verify businesses when opening accounts.
“Our technology also automates the review of company documents captured during registration and combines this with searching in best-in-class data sources,” he said. “Our ultimate vision is to create a single sign-on for business identities. Once a business is verified using our service, they can use their credentials across networks without having to resend the information. Automating the bank onboarding process is the first step in our journey.”
Ultimately, Hakimian said TrueBiz claims to provide a way for financial services providers to onboard business customers faster and eliminate churn caused by verification delays.
Image credit: TrueBiz co-founders Danny Hakimian and Max Morlocke / TrueBiz
He said PPP programs put a lot of pressure on financial service providers to act quickly, but they don’t have the right tools to do so.
“Traditional providers haven’t been able to provide enough reviews to balance speed and quality,” Hakimian said. “And outside of the PPP program, it takes him around 20 to 30 days to open a business bank account in the US.”
Its target customers are medium-sized financial services providers such as banks opening new business bank accounts and payment providers onboarding merchants. Other use cases include insurance companies trying to validate businesses offering commercial insurance.
“There is a big tailwind for this,” Hakimian said. “The story of the last decade has been about the growth of consumer fintech. We believe it comes from fintech solutions embedded in B2B that require better tools to enable processes to be scaled beyond .”
As an API-based service, TrueBiz charges customers per search. Currently, the startup has less than 10 employees and is completely distributed.
The new capital will be used for some hiring, product feature expansion, and marketing and sales.
Emmalyn Shaw, managing partner at Flourish Ventures, told TechCrunch in an email that the Know Your Business (KYB) issue is “a significant and huge market opportunity.”
“We know first-hand the importance of identity verification and due diligence in mitigating fraud and driving revenue from investments such as Alloy in the KYC space. bring,” she wrote. “The lack of API-driven digital sources and inconsistent data tagging of existing data necessitates time-consuming and intensive manual review. It has the potential to promote.”
Want more fintech news in your inbox? Sign up here.
Got news tips and insider info on the topics we covered? We’d love to hear from you. You can contact us via Signal at 408.404.3036. Or contact us at tips@techcrunch.com. We gladly honor anonymous requests.
