Why We Invested In Socure: Securing The Internet One Identity At A Time
Today, BCV is thrilled to announce our Series E investment in Socure, the leading online identity verification platform
When COVID first struck, we all wondered what the long-term impact on the world would be. Some first-order impacts happened right away: ecommerce boomed, but physical retail sank. Food delivery surged, but restaurants suffered. Medical workers were in short supply, but employees of movie theaters and concert halls were cast adrift.
Less predictable were the second-order effects that would result from COVID several months later: the remote work revolution, the rise of mental health telemedicine, the global supply chain dislocation, virtual wedding ceremonies, and the surge in retail trading.
In retrospect, maybe it was obvious that our entire lives — professional, personal, financial, medical — would move online. The digital infrastructure to support that transition will be as critical to our future as physical infrastructure was in the past: instead of conference rooms, bank branches, and trade shows, we have Zoom, neobanks, and online marketplaces.¹
This brings me to one of the most important pieces of infrastructure for our online lives: identity. Identity is a foundational element of a digital economy. The phrase “I am who I am” dates back to the Old Testament, but its practical importance has never been more relevant in an online world where identity can be created or manipulated for nefarious gains. We need systems to verify that you are who you say you are.
We invested in Socure because we believe it will become the default utility for identity on the internet. Over the last couple of years, Socure has already established itself as the clear winner in this important category with massive tailwinds. Identity verification is required for a wide variety of events in financial services, where Socure has been focused to date: account openings, money transfers, credit applications, and more. Socure provides the infrastructure for any online company to verify a person’s identity quickly and accurately. Socure is the go-to platform for financial institutions and fintechs.
Socure has amassed a deep and broad data set to enable identity verification, translating into higher accuracy rates than competitors and a “top of waterfall” positioning in its customers’ identity verification stacks. This is a self-reinforcing cycle: because Socure is the most accurate filter, every identity check passes through its gates first. Specialized or niche vendors may only see accounts that require deeper review, making it hard for them to amass the same volume of data.
For example, some competitors can only verify a person’s physical state ID, but can’t verify an identity based on an email, phone number, address, or other data source. As a result of its breadth of coverage and data accuracy, Socure has become the default choice for financial institutions and fintechs for identity verification, reinforcing its data advantage as each incremental customer generates identity checks that further refine its models. Socure has a data advantage that compounds with scale and scope, leading to a winner-take-most scenario.
Like Stripe and Plaid, two iconic fintech infrastructure companies, Socure has a consumption-oriented business model, which leads to ongoing revenue expansion driven by an underlying base of high-growth customers. Socure’s customer list is a “who’s who” of financial services and fintech. We view an investment in Socure as a macro bet on the continued growth of its underlying customer base of fintech companies. Plaid has benefited from the same dynamic in fintech, and Stripe more broadly in ecommerce.
We are most excited about where Socure can go from here. Socure may have started in financial services, but it will not end there. Socure is already expanding into new verticals. The use cases for identity verification online are unbounded; it will be required for a wide range of online activities from buying anything expensive (car, house, jewelry) to online gaming to signing important documents.
Longer term, Socure will augment its scope to become an end-to-end identity platform across venues, devices, and time. Identity is fixed, even though the places where we need to affirm it are varied and constantly changing. There is plenty of opportunity to expand within the online world, not just in new verticals but also across new products, but an equally large opportunity exists offline, too. Impersonators beware: Socure sees you!
We are honored to partner with the world’s most innovative identity verification company. Welcome to the BCV family, Socure!
¹ As an aside, this physical-to-digital transition manifests in our vocabulary: ever notice how payments people love to say “rails”? Or how Zoom puts you in a “waiting room” and Shopify gave us “storefronts”? I digress!