Socure, the identity verification service that raised a massive $450 million Series E round at a $4.5 billion valuation during the heady fundraising days of late 2021 (and $100 million earlier in 2021), today announced that it has acquired identity verification service Berbix for $70 million in cash and stock transactions. Berbix previously raised a total of $11.6 million, including a $9 million Series A round led by Mayfield in 2020.
This marks Socure’s first acquisition.
Founded in 2018, Berbix focuses on verifying users’ identities by checking scanned IDs in real time. Using its patent-pending forensics engine, Berbix can help businesses detect fake IDs to reduce fraud and ensure compliance with local regulations.
Socure’s platform, meanwhile, takes a slightly broader and multi-dimensional approach that includes both active and passive means to deter fraud in a wide range of sectors, ranging from e-commerce to healthcare.
“From a product perspective, Socure is moving with a high velocity into new markets and new geographies, covering e-commerce marketplaces, gig economy, public sector and healthcare, among others,” Socure founder and CEO Johnny Ayers said. “We are finding repeatedly that there is a need for best-in-class active and passive — documentary and non-documentary — identity verification and fraud controls to solve very complex fraud and customer acquisition challenges.”
He noted that Socure’s customers are asking for the ability to check IDs online that, combined with the company’s existing tools, can help them ensure that, for example, a driver applying to a grocery delivery service is who they say they are.
“Our combined solution is easily quantifiable in terms of speed, accuracy and fraud capture which equate to immediate revenue lift and spend reduction,” said Ayers.
He also noted that Socure is in a good position to make an acquisition like this. He noted that Socure’s revenue grew over 50% in 2022, all while other companies in the space were flat to down. “We are looking to be offensive where it makes sense,” he said. “There are a number of companies that made some very interesting investments in innovation in the past couple of years, but unfortunately don’t have the runway or access to capital to continue independently. It makes sense to continue assessing what is in the market.”
Socure already integrated Berbix in its existing Predictive Document Verification service, which is launching version 3.0 today. The updated service combines Berbix’s forensics engine for spotting fake IDs with Socure’s image capture app and user experience. The company notes that while users can use the document verification service as a stand-alone application, it’s also integrated into the overall Socure platform.
This acquisition is part of a wider trend we’ve been seeing, with well-funding startups capitalizing on their ability to acquire companies that may have a hard time raising the next funding round and/or justifying their previous valuations.
“The cost of capital in the last 18 months for most companies has gone from single digit to 20-30% or more, which we expect will mean a lot of really great assets are coming to market trying to find a home in the winner in a given space,” said Ayers. “We are seeing that every venture fund is bucketing their portfolio into categories of ‘great’, ‘good’, ‘ok’ or ‘not good’ — and anything that’s good or less, they’re going to be more open to trade previously overpriced private stock to a much higher quality stock with higher upside and shorter term liquidity within the winner of a market. We expect there to be individual point solutions that are just never going to get big enough to be a long-term independent company.”