Online fraud costs people and organizations billions of dollars each year — with one aspect alone, identity fraud, a $16.9 billion problem in 2019, says Javelin Research, and each dollar of spend online estimated to cost $3.13 in fraud recovery, according to LexisNexis Risk Solutions. Today, a startup that’s built a platform to identify and prevent fraud across a range of e-commerce-related cases is announcing a large round of growth funding to help bring those numbers down.
NS8, a Las Vegas-based startup that provides tools to prevent fraud within e-commerce marketplaces, online merchants, payments gateways and ticketing services, has raised $123 million in venture funding, money that it plans to use to expand its technology and product stacks and to continue expanding the network of partners that it covers, which today includes commerce platforms Shopify, BigCommerce, Magento and WooCommerce.
“Thanks to this investment from Lightspeed, AXA Venture Partners, and our full backing group, we can continue to scale to meet the growing demand for fraud prevention technology in the global marketplace,” said NS8 CEO and co-founder Adam Rogas, said in a statement. “This partnership positions NS8 to empower even more businesses with enterprise-level fraud defenses, regardless of size or industry.”
The round is led by Lightspeed Venture Partners with backing also from AXA Venture Partners, and has the additional distinction of being the largest-ever venture funding for a startup out of Vegas to date, the company notes (based on PitchBook data).
The company is not disclosing its valuation, but it looks like it has raised just over $150 million overall, with the first tranche of this latest, outsized, round closing in May of this year. It says it’s seen growth of 200% in year-on-year revenues, in part due to the surge of demand because of the coronavirus pandemic and the push for many merchants (and their customers) to take business online.
Vegas is synonymous with gambling and a history of nefarious activity connected to that; it seems that this is not exactly the germination of NS8’s business.
Rogas, who co-founded the company with Eric Kay, David Hansen and Sean Clauretie, is a graduate of UNLV who studied hotel administration and computer science and had worked at and founded a number of other digital businesses before this. The NS8 team now numbers 200 employees across its HQ in the city, plus offices in San Francisco, San Ramon, Miami, Amsterdam, Singapore and Melbourne.
The rise of NS8, and companies like it, comes at a time when we are getting generally much more sophisticated when it comes online fraud.
Many (but not all) transactions now require more than just card numbers to be processed, and those handling payments (for example, Stripe’s Radar service) have developed sophisticated, AI-based systems to track and identify strange activity.
Developments like these have helped to slow the growth of fraud, for sure, but at the same time e-commerce has continued to grow — not least because of situations like the current one, where people are increasing online shopping and decreasing in-person payments to follow through on coronavirus-related social distancing rules. So, despite the many advances, fraud continues to outstrip them.
NS8’s particular approach has been a platform that integrates with the companies that are providing e-commerce tools to businesses that are building online storefronts, and provide them with an all-in-one toolkit to monitor all activity on the site in an easy way. Its tools include scoring technology, data analytics, behavioral analytics, customer verification, ad campaign scoring and performance monitoring. The key for investors has been the ease of integration and use of the platform, and the fact that it works across so many different commerce tools.
“Online fraud prevention has grown rapidly due to the acceleration of ecommerce adoption by merchants and, with it, an increased threat of those seeking to attack online stores. Merchants of all sizes need to invest in security products to ensure a safe and secure online experience,” said Bradley Twohig, partner at Lightspeed Venture Partners, in a statement. “NS8’s platform allows its partners and their merchants to stand up a full-service fraud prevention hub, in a matter of a day, across almost every ecommerce platform. The time to value is simply best in class.”
“NS8 has built a market-leading fraud detection and prevention platform combining advanced data analytics with real-time scoring. NS8’s rapid growth is a testament to the strength of the company’s product and the value NS8 delivers to its customers,” said Alex Scherbakovsky, general partner at AXA Venture Partners and NS8 board member, in a statement. “We are excited to partner with Adam and the NS8 team to scale the business globally.”
Prices range from $30/month to negotiable (unpublished) rates depending on the size of the business.