E-commerce is on the rise, but that also means the risk, and occurrence, of e-commerce fraud is, too. Now, Forter, one of the startups building a business to tackle that malicious activity, has closed $300 million in funding — a sign both of the size of the issue and its success in tackling it to date.

The new funding, a Series F, values Forter at $3 billion — notable not least because the funding is coming only about six months since Forter’s previous round, a $125 million Series E that valued it at over $1.3 billion.

Tiger Global Management is leading this latest equity infusion, with new backers Third Point Ventures and Adage Capital Management, and existing investors Bessemer Venture Partners, Sequoia Capital, March Capital, NewView Capital, Salesforce Ventures and Scale Venture Partners, also involved.

The plan will be to use to the money to expand Forter — founded in Tel Aviv and now based in New York — geographically, bring more functionality into its product and explore adjacent areas where Forter might expand its capabilities, either organically or by way of acquisition.

Forter today focuses mainly on identifying fraud at the point of transaction and building an AI-based platform that “learns” more behaviors to improve its accuracy; it also builds models that keep more people transacting and helps bring down the number of “false positives” where activity that appears suspicious actually is not.

One area on its roadmap for expansion is remediation after the fraud occurs, said Liron Damri, Forter’s co-founder and president.

“Our vision is to serve the merchant as the go-to trusted partner for everything, so remediation is definitely on our roadmap,” he said of potential acquisition targets.

Damri, who co-founded the company with Michael Reitblat, CEO, and Alon Shemesh, chief analyst, said in an interview that the startup — which works with some 350 large customers like Priceline and Instacart and a growing number of service providers like FreedomPay and Flutterwave, altogether seeing some $250 billion worth of transactions globally last year — wasn’t proactively looking for more money.

“All we wanted to do was go back to run the company,” he said. “But in the past six months we’ve seen such a great momentum, doubling revenue and ARR, and seeing our customer volumes grow.”

That led to a lot of investors proactively reaching out and asking questions, he continued. He described Tiger as a “kingmaker” in the category of e-commerce, so it was an easy decision to make, and gave it the “gas” it needed to take its next growth steps.

E-commerce has been one of the major technology growth stories of the last year, fueled by a rush of consumers and businesses playing out their lives online at a time when it has been harder, and in some cases impossible, to transact in person.

While we have definitely seen a lot of growth, and growing sophistication, in the number of tools on the market to combat cybercrime, it’s in some ways an ouroboros of a problem: The more transactions that are made, the more there are that need to be monitored for suspicious activity. And in any case, fraud in e-commerce is not exactly going away. It’s estimated that it will cost retailers some $20 billion in 2021 and is always on the rise.

Forter got its start in 2013 focusing first on monitoring activity on sites wherever customers happened to be to identify suspicious behavior — a sign that it might be a bot or someone on an illicit spending spree racking up a lot of items in quick succession — with the bigger concept being to build a network of activity from which to learn and help make more informed decisions over time.

In more recent years, the essence of the issue has expanded somewhat, and also grown more sophisticated. As companies have grown their businesses to reach beyond early adopters and core audiences, and into a more “omnichannel” environment beyond basic check-outs on their own sites, so too have the kinds of consumers coming to shop.

This has meant that traditional “signals” of legitimate buyers no longer were the same as before — a predicament that really rose in profile in the last year, as many newcomers came to e-commerce for the first time during the pandemic. In fact, Damri told me that in 2020 there were seven times more “newcomers” to sites than in 2019.

So with most of the flagging of suspicious activity coming up at the point of transaction, Forter expanded to analyzing activity there.

As with a recent acquisition of Stripe’s, Bouncer, to build out its own anti-fraud product, a large part of Forter’s attention these days is on providing tools to companies to identify suspicious purchasing, but even more than that, to make sure that the many occasions that might look suspicious are not, to help reduce the amount of “cart abandonment” and increase conversions.

The old way of doing things, Damri said, involved “thousands of rules and applying suspicion on everyone. You were guilty unless proved otherwise.”

Using its AI engine and some risk analysis (not unlike the kind that, say, an insurance or loan provider might apply in their businesses), Forter turned the proposition on its head.

“We wanted to approve as much as possible. We wanted to gradually increase the trust you have of your own customers. We changed the sentiment and approach… especially in areas that were neglected, such as those who saw significant changes in life,” Damri said. “This was extremely important as COVID-19 hit.”

Forter’s risk tolerance model, it seems, has so far proven out. Damri said that its algorithms applied reduce the total number of declines by 80%, but also reduce the number of chargebacks — one indicator of a mistake — by 60%.

This implies that it’s blocking more of the “wrong” kind of purchases, and letting through more of the legitimate ones. (That is, he pointed out, in addition to a few bad actors Forter intentionally lets buy things, just to learn how they operate. Damri referred to this as “paid-tuition.”)

Risk-based approvals, coupled with algorithms to learn what is truly bad, has resonated with customers, and investors.

“With the unprecedented rate of digital transformation and the fierce competition in creating the slickest user experience, superior fraud prevention plays an ever more critical role in e-commerce revenue growth” said John Curtius, a partner at Tiger Global Management, in a statement. “After we talked with dozens of customers of every relevant solution in this space, it was very clear to us that Forter is the clear leader in performance and scale.”

“As a longtime investor, it’s been incredible to see Forter’s ascent,” added Ravi Viswanathan, NewView Capital. “It’s a testament to the leadership team’s vision and execution in allowing merchants to provide the seamless experiences customers expect and to be able to accept as many transactions as possible, while still accurately identifying and blocking fraud.”

With more people than ever before going online to pay for things and pay each other, startups that are building the infrastructure that enables these actions continue to get a lot of attention.

In the latest development, Paysend, a fintech that has built a mobile-based payments platform — which currently offers international money transfers, global accounts, and business banking and e-commerce for SMBs — has picked up some money of its own. The London-based startup has closed a round of $125 million, a sizable Series B that the company’s CEO and founder Ronnie Millar said it will be using to continue expanding its business geographically, to hire more people, and to continue building more fintech products.

The funding is being led by One Peak, with Infravia Growth Capital, Hermes GPE, previous backer Plug and Play and others participating.

Millar said Paysend is not disclosing valuation today but described it as a “substantial kick-up” and “a great step forward in our position ahead toward unicorn status.”

From what I understand though, the company was valued at $160 million in its previous round, and its core metrics have gone up 4.5x. Doing some basic math, that gives the company a valuation of around $720 million, a figure that a source close to the company did not dispute when I brought it up.

Something that likely caught investors’ attention is that Paysend has grown to the size it is today — it currently has 3.7 million consumer customers using its transfer and global account services, and 17,000 small business customers, and is now available in 110 receiving countries — in less than four years and $50 million in funding.

There are a couple of notable things about Paysend and its position in the market today, the first being the competitive landscape.

On paper, Paysend appears to offer many of the same features as a number of other fintechs: money transfer, global payments, and banking and e-commerce services for smaller businesses are all well-trodden areas with companies like Wise (formerly “TransferWise”), PayPal, Revolut, and so many others also providing either all or a range of these services.

To me, the fact that any one company relatively off the tech radar can grow to the size that it has speaks about the opportunity in the market for more than just one or two, or maybe five, dominant players.

Considering just remittances alone, the WorldBank in April said that flows just to low- and middle-income countries stood at $540 million last year, and that was with a dip in volumes due to COVID-19. The cut that companies like Paysend make in providing services to send money is, of course, significantly smaller than that — business models include commission charges, flat fees or making money off exchange rates; Paysend charges £1 per transfer in the U.K. More than that, the overall volumes, and the opportunity to build more services for that audience, are why we’re likely to see a lot of companies with ambitions to serve that market.

Services for small businesses, and tapping into the opportunity to provide more e-commerce tools at a time when more business and sales are being conducted online, is similarly crowded but also massive.

Indeed, Paysend points out that there is still a lot of growing and evolution left to do. Citing McKinsey research, it notes that some 70% of international payments are currently still cash-to-cash, with fees averaging up to 5.2% per transaction, and timing taking up to an hour each for sender and recipient to complete transfers. (Paysend claims it can cut fees by up to 60%.)

This brings us to the second point about Paysend: How it’s built its services. The fintech world today leans heavily on APIs: Companies that are knitting together a lot of complexity and packaging it into APIs that are used by others who bypass needing to build those tools themselves, instead integrating them and adding better user experience and responsive personalization around them. Paysend is a little different from these, with a vertically integrated approach, having itself built everything that it uses from the ground up.

Millar — a Scottish repeat entrepreneur (his previous company Paywizard, which has rebranded to Singula, is a specialist in pay-TV subscriber management) — notes that Paysend has built both its processing and acquiring facilities. “Because we have built everything in-house it lets us see what the consumer needs and uses, and to deliver that at a lower cost basis,” he said. “It’s much more cost-efficient and we pass that savings on to the consumer. We designed our technology to be in complete control of it. It’s the most profitable approach, too, from a business point of view.”

That being said, he confirmed that Paysend itself is not yet profitable, but investors believe it’s making the right moves to get there. To be clear, Paysend actually does partner with other companies, including those providing APIs, to improve its services. In April, Plaid and Paysend announced they were working together to power open banking transfers, reducing the time to initiate and receive money.

“We are excited by Paysend’s enormous growth potential in a massive market, benefiting from a rapid acceleration in the adoption of digital payments,” said Humbert de Liedekerke, managing partner at One Peak Partners, in a statement. “In particular, we are seeing strong opportunities as Paysend moves beyond consumers to serve business customers and expands its international footprint to address a growing need for fast, easy and low-cost cross-border digital payments. Paysend has built an exceptional payment platform by maintaining an unwavering focus on its customers and constantly innovating. We are excited to back the entire Paysend team in their next phase of explosive growth.”

Uptycs, a Boston-area startup that uses data to help understand and prevent security attacks, announced a $50 million Series C today, 11 months after announcing a $30 million Series B. Norwest Venture Partners led the round with participation from Sapphire Ventures and ServiceNow Ventures.

Company co-founder and CEO Ganesh Pai says that he was still well capitalized from last year’s investment, and wasn’t actually looking to raise funds, but the investors came looking for him and he saw a way to speed up some aspects of the company’s roadmap.

“It was one of those things where the round came in primarily as a function of execution and success to date, and we decided to capitalize on that because we know the partners and raised the capital so that we could use it meaningfully for a couple of different things, primarily sales and marketing acceleration,” Pai said.

He said that part of the reason for the company’s success over the last year was that the pandemic generated more customer interest as people moved to work from home, the SolarWinds hack happened and companies were moving to the cloud faster. “We provided a solution which was telemetric powered and very insightful when it came to solving their security problems and that’s what led to triple digit growth over the last year,” he said.

But Pai says that the company has not been sitting still in terms of the platform. While last year, he described it primarily as a forensic security data solution, helping customers figure out what happened after a security issue has happened, he says that the company has begun expanding on that vision to include all four main areas of security, including being proactive, reactive, predictive and protective.

The company started primarily in being reactive by figuring what happened in the past, but has begun to expand into these other areas over the last year, and the plan is to continue to build out that functionality.

“In the context of SolarWinds, what everyone is trying to figure out is how soon into the supply chain can you figure out what could be potentially wrong by looking at indications of behavior or indications of compromise, and our ability to ingest telemetry from a diverse set of sources, not as a bolt-on solution, but something which is built from the ground up, resonated really well,” Pai explained.

The company had 65 employees when we spoke last year for the Series B. Today, Pai says that number is approaching 140 and he is adding new people every week, with a goal to get to around 200 people by the end of the year. He says as the company grows, he keeps diversity top of mind.

“As we grow and as we raise capital diversity has been something which has been a high priority and very critical for us,” he said. In fact, he reports that more than 50% of his employees come from under-represented groups whether it’s Latinx, Black or Asian heritage.

Pai says that one of the reasons he has been able to build a diverse workforce is his commitment to a remote workplace, which means he can hire from anywhere, something he will continue to do even after the pandemic ends.

 

Databricks launched its fifth open-source project today, a new tool called Delta Sharing designed to be a vendor-neutral way to share data with any cloud infrastructure or SaaS product, so long as you have the appropriate connector. It’s part of the broader Databricks open-source Delta Lake project.

As CEO Ali Ghodsi points out, data is exploding, and moving data from Point A to Point B is an increasingly difficult problem to solve with proprietary tooling. “The number one barrier for organizations to succeed with data is sharing data, sharing it between different views, sharing it across organizations — that’s the number one issue we’ve seen in organizations,” Ghodsi explained.

Delta Sharing is an open-source protocol designed to solve that problem. “This is the industry’s first-ever open protocol, an open standard for sharing a data set securely. […] They can standardize on Databricks or something else. For instance, they might have standardized on using AWS Data Exchange, Power BI or Tableau — and they can then access that data securely.”

The tool is designed to work with multiple cloud infrastructure and SaaS services and out of the gate there are multiple partners involved, including the Big Three cloud infrastructure vendors Amazon, Microsoft and Google, as well as data visualization and management vendors like Qlik, Starburst, Collibra and Alation and data providers like Nasdaq, S&P and Foursquare

Ghodsi said the key to making this work is the open nature of the project. By doing that and donating it to The Linux Foundation, he is trying to ensure that it can work across different environments. Another big aspect of this is the partnerships and the companies involved. When you can get big-name companies involved in a project like this, it’s more likely to succeed because it works across this broad set of popular services. In fact, there are a number of connectors available today, but Databricks expects that number to increase over time as contributors build more connectors to other services.

Databricks operates on a consumption pricing model much like Snowflake, meaning the more data you move through its software, the more money it’s going to make, but the Delta Sharing tool means you can share with anyone, not just another Databricks customer. Ghodsi says that the open-source nature of Delta Sharing means his company can still win, while giving customers more flexibility to move data between services.

The infrastructure vendors also love this model because the cloud data lake tools move massive amounts of data through their services and they make money too, which probably explains why they are all on board with this.

One of the big fears of modern cloud customers is being tied to a single vendor as they often were in the 1990s and early 2000s when most companies bought a stack of services from a single vendor like Microsoft, IBM or Oracle. On one hand, you had the veritable single throat to choke, but you were beholden to the vendor because the cost of moving to another one was prohibitively high. Companies don’t want to be locked in like that again and open source tooling is one way to prevent that.

Databricks was founded in 2013 and has raised almost $2 billion. The latest round was in February for $1 billion at a $28 billion valuation, an astonishing number for a private company. Snowflake, a primary competitor, went public last September. As of today, it has a market cap of over $66 billion.

Expensify may be the most ambitious software company ever to mostly abandon the Bay Area as the center of its operations.

The startup’s history is tied to places representative of San Francisco: The founding team worked out of Peet’s Coffee on Mission Street for a few months, then crashed at a penthouse lounge near the 4th and King Caltrain station, followed by a tiny office and then a slightly bigger one in the Flatiron building near Market Street.

Thirteen years later, Expensify still has an office a few blocks away on Kearny Street, but it’s no longer a San Francisco company or even a Silicon Valley firm. The company is truly global with employees across the world — and it did that before COVID-19 made remote working cool.

“Things got so much better when we stopped viewing ourselves as a Silicon Valley company. We basically said, no, we’re just a global company,” CEO David Barrett told TechCrunch. That globalism led to it opening a major office in — of all places —a small town in rural Michigan. That Ironwood expansion would eventually lead to a cultural makeover that would see the company broadly abandon its focus on the Bay Area, expanding from a headquarters in Portland to offices around the globe.

It makes sense that a company founded by internet pirates would let its workforce live anywhere they please and however they want to. Yet, how does it manage to make it all work well enough to reach $100 million in annual revenue with just a tad more than 100 employees?

As I described in Part 2 of this EC-1, that staffing efficiency is partly due to its culture and who it hires. It’s also because it has attracted top talent from across the world by giving them benefits like the option to work remotely all year as well as paying SF-level salaries even to those not based in the tech hub. It’s also got annual fully paid month-long “workcations” for every employee, their partner and kids.

Yet the real story is how a company can become untethered from its original geography, willing to adapt to new places and new cultures, and ultimately, give up the past while building the future.