Nigerian Identity Verification Startup Youverify secures additional $1M in seed round extension

Youverify is a tech startup that automates KYC and other compliance processes for African commercial banks and businesses, with offices in Lagos and San Francisco. The startup recently received $1 million in a seed round extension. In 2020, the firm raised an initial $1.5 million, now bringing its overall seed funding to $2.5 million.

The two investors who co-led its initial seed round, Africa-focused VCs Orange Ventures and LoftyInc Capital, also co-led the seed extension round. Octerra Capital, Plug & Play Venture, Syntax Ventures, HTTP Investors, Afer Group, and Fronesyz Capital all contributed to the additional funding.

African financial services are becoming more widespread, and authorities are starting to pay them more attention. This year, $116 billion in transactions will reportedly be made via digital payment platforms, necessitating strict security measures to guard against identity theft and fraud.

Several African fintech companies, like Flutterwave and Union54, made news last month for compliance checks and fraud concerns. Know your customer (KYC) and anti-money laundering (AML) checks are crucial, which is why authorities impose strict regulations that financial institutions must abide by while conducting business both domestically and internationally. These two unrelated occurrences serve to underscore this point.

As a result, a key driver of market expansion is the increased emphasis on ensuring integrity in financial regulations and strengthening KYC and AML procedures through the application of regulatory technology. Africa's market for regtech is expected to rise along with worldwide demand; according to some estimates, it will amount to $1.2 billion within the next five years.

When Youverify was established in 2018, its CEO and creator Gbenga Odegbami entered the African regtech landscape. Youverify was first introduced to the Nigerian market, where it offered numerous financial institutions an API for address and identity verification. Additional KYC products have since been launched, and it has also penetrated new markets like Ghana, Côte d'Ivoire, South Africa, Kenya, and Uganda.

Odegbami claims that Youverify overlays KYC and compliance solutions including transaction monitoring in addition to authenticating ids beyond the Nigerian bank verification number (BVN) and residences.

 He continued by saying that these services address problems that various fintech platforms have recently encountered, including fraud and claimed AML difficulties with Union54 chargebacks and Flutterwave in Kenya and Ping Express in the United States. Youverify asserts that in the latter case, it could have stopped widespread refund fraud by spotting the trend of transactions to signal fraud, disabling the virtual cards, and connecting them to the criminals responsible for the numerous false refunds.

The first time Youverify dealt with fintechs was last year. Earlier, the majority of its clients were governmental agencies and big firms like Bolt and commercial banks. In order to extend its services to more potential clients, Youverify launched its patented technology, the Youverify OS (YVOS), which serves as a single platform for automating due diligence and incorporates risk and compliance management with its fundamental identity verification system to deliver these companies a top-notch compliance solution.

Odegbami claimed that Youverify's customer base rose by 300 percent to service more than 400 commercial banks and high-growth startups as a result of expanding its client-base and demand for its KYC services, according to TechCrunch. Youverify said it has processed more than 5 million applications in the past 24 months, an increase of more than 1,000%.