Before founding Forter, the three friends had worked together in an IDF intelligence unit and were a part of Fraud Sciences, which was later sold to PayPal
San Francisco-head quartered fraud solutions startup Forter announced today the close of their Series C funding round, approving $32 million in new financing.
Leading the round was Scale Venture Partners, who joined with existing investors Sequoia Capital (Series A) and New Enterprise Associates (Series B).
Co-founded in the summer of 2013 by CEO Michael Reitblat, COO Liron Damri, and Chief Analyst Alon Shemesh, the Forter team have grown to become one of the leaders in the fraud detection space. Before coming to form Forter, the three friends had worked together in an IDF intelligence unit and were a part of Fraud Sciences, the first cyber fraud firm to make the chargeback guarantee to their clients.
Fraud Science was later sold to PayPal, helping to create its strong backbone of fraud detection that has helped it to become such a trusted medium for making online payments. In 2013, the trio reunited to pursue their passion of creating frictionless commerce, free of fraud, forming Forter.
Forter works with large e-commerce clients to provide fast and effective fraud solutions, using machine learning, sophisticated algorithms, massive amounts of data, behavioral analysis, cyber intelligence and elastic identity, all leveraged and combined with their experienced human expertise.
Their Decision as a Service product, which was launched in 2014, lets clients work freely, making sales under Forter’s umbrella of a chargeback guarantee. This is extremely important for the online industry, as according to the company, over $200 billion in sales are blocked by denied transactions every year, many of which were legitimate. Add on top the $70 billion stolen by fraudsters, and you have a serious market need.
Along with their San Francisco base, they have R&D offices in Tel Aviv.
They work with what are known as “card not present transactions,” including e-commerce, mobile commerce, and phone orders. It is applicable for PayPal, Google Wallet, and others, as well as extensions for platforms like Magento.
The team’s product was built on the concept of removing the slower human element from the fraud monitoring service. Taking the idea that a transaction is “innocent until proven guilty,” they work to approve charges in a streamlined process.
According to the company, instead of searching out suspicious transactions, they have set their sights on trends, patterns, and people, essentially building signature profiles that let them easily identify the odd ones out.
“We know what a traveling student buyer looks like,” Reitblat tells Geektime, giving an example of their service in action, “We know how they behave, how they order, what to look for. So if there’s a fraudster pretending to be one, we’ll know, because it’s so difficult to get every single detail right when you’re pretending. You’d need to ace it on more than 7,000 data points and all the complex interlacing connections between those points.”
Moving forward, Reitblat says that the funding will be used to advance their vision combating and eliminating e-commerce fraud. In practice, he says that they will continue development of their Decision as a Service product, and work to expand in the U.S. market.
Mobile and electronic payments are quickly overtaking the way that the world does business. As more point of sale transactions turn to NFC / mobile phone-based payments and e-commerce continues to dominate how we spend our money, fraud solutions that build user trust in the system will be increasingly important.
This is where the guarantee of payments comes in particularly strong, giving users confidence to keep spending.
So while fraud will continue to be a cost of doing business, companies like Forter are making the nuts and bolts that will help build the bridge to the future of commerce, letting the crooks take less of our money and keeping the spigot of business open.
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