Blockchain digital identity startup Authenteq has raised US$5 million in funding from Draper Associates and Capital300. The company is reportedly in talks with additional investors about a second closing of the Series A funding round which CEO Kari Thor Runarsson expects to happen in the next coming weeks.
“The reason we decided to do two closings is we were introduced to an investor (Capital300) with a startup mindset of getting things done and felt it was a great challenge to try to finish all due diligence and paperwork in two weeks after the term sheet was approved,” Runarsson said in a statement. “It was sort of a field test for us to see if they really were as agile and dynamic as they claimed to be during our discussions. We were honestly surprised how smoothly it went, despite a very thorough due diligence and legal process.”
Authenteq has developed an identity verification and privacy platform that allows users to verify their identity instantly and then use their digital biometric passport on any website to prove that they are who they claim they are.
The Authenteq ID is user-owned and controlled with all personal information either kept on the user’s phone or hashed on a permissioned blockchain that only the user has access to. This information can be shared with third parties with the user’s consent.
Authenteq launched the platform last year and managed to sign up a dozen clients in the first months.
“Until now verifying identities has been a very expensive and often manual process that requires the processing and storage of a lot of sensitive and personal information,” Capital300 said in a statement. “We are excited that Authenteq’s unique technology is disrupting the existing process and will enable affordable and fully automatic identity verification, at the same time ensuring the privacy of users.”
Seed stage venture capital firm Draper Associates was founded by third generation venture capital Tim Draper and is best known for investments in companies such as Tesla, Skype, Baidu, Twitch and Hotmail. The firm has been an active investor in blockchain and crypto startups, backing the likes of Coinbase, Ledger, Factom, and Bancor.
Authenteq claims the initial signup process takes under 90 seconds and is 100% automated. All ID verification are done automatically using Authenteq’s proprietary technology by comparing the user’s government-issued picture ID and a photo with AI-driven face recognition technology taken in real time.
The solution is targeted at any type of online service, whether online marketplaces, online betting, financial services and initial coin offerings (ICOs). Integration can be done with either APIs or by using a plugin.
Founded in 2015, Authenteq is headquartered in Reykjavik, Iceland, with office in Berlin, London and Palo Alto. The startup has received numerous awards and honors, including being named one of the leading innovative startups in Identity Management by CTIA, as well as winning the Deloitte Rising Stars competition in Iceland.
Authenteq is going after the US$10 billion identify-verification-as-a-service market, which McKinsey predicts will grow to a US$16-20 billion market by 2022, driven by the steady shift toward online transactions and the rise of cryptocurrencies.
As more commerce for which identify verification is required moves online, the firm expects demand for identify-verification-as-a-service to significantly increase.
“We expect the market for identity-verification-as-a-service to remain robust into the foreseeable future, particularly as more and more companies complete their digital transformation and new forms of online commerce, perhaps facilitated by the rise and normalization of cryptocurrencies, gain traction,” McKinsey says.