ONEVC invested in idwall along-side with Qualcomm Ventures, Grupo Globo, Justin Mateen (co-founder of Tinder), Hans Tung (GGV Capital, Current #7 on the Midas List). As a general partner at ONEVC, I am sharing below the reasons why we are excited about this company.
More about idwall: idwall is a technology company based in São Paulo, Brazil. Through its APIs, idwall helps companies fight fraud, automate customer onboarding processes, mitigate external risks, and ensure compliance such as KYC (“Know Your Customer”) and AML (“Anti-money laundering”). The company was founded in 2016 by Lincoln Ando and Raphael Melo, as an automated background check solution and has since grown into a full suite of data and identity validation products.
More about ONEVC: ONEVC is a Silicon Valley and Brazil-based early-stage Venture Capital firm. Its portfolio includes Rappi, Pipefy, Kovi, EmCasa, Docket, and others.
Why we invested in idwall?
1 — Good tail-winds with the rise of fintechs and marketplaces
As investors, we are always questioning ourselves "why now?. " What is changing in the market that will allow idwall to thrive and why it was not true a couple of years ago?
First of all, idwall is going after a large and growing market. The rise of fintechs, marketplaces, and gig-economy startups created a need for an automated background solution for companies, suppliers, and clients.
We estimate the BPO (“Business Process Outsourcing”) and Credit Bureau markets to do over US$ 3.8B in yearly revenues. However, this is only one piece of idwall’s addressable market. Aside from these markets, Brazilian companies lost approximately US$18B due to preventable fraud events in 2017. Idwall is positioned to earn a significant share in these markets in the coming years.
Secondly, there was an increase in demand as a result of recent regulatory changes, per below:
(1) Regulations: The new Brazilian Central Bank General Fintech Regulation created a new wave of fintechs that need a seamless background check service on the onboarding process;
(2) The urgency in adoption: Anti-Money Laundering Law, Anti-Terrorism Law, and other new regulations created urgency in the adoption of idwall;
Pedro Sorrentino, the managing partner at ONEVC, saw how powerful it is to sell a product to hyper-growth companies.
"When I was working as a Partnership Manager on Sendgrid, we were able to attract clients such as Airbnb, Uber, and Spotify when they were very little. We could have stayed months without selling, and our revenue would be skyrocketing indexed on their growth. This is the beauty of businesses such as idwall and Sendgrid: there is a negative churn component into them. idwall is serving many of the hyper-growth startups in Latam and benefiting from this favorable tail-wind. " says Pedro Sorrentino.
2 — Global trend: "Privacy by Design"
Brazilians are tired of sharing their ID to enter every building, sending a photo of their credit cards to they can buy online tickets, taking selfies holding their documents during the onboarding processes on apps and sharing their tax returns.
Idwall is launching a digital identity solution called MeuID. It will store in a single wallet all the documents necessary for the onboarding processes of fintechs, startups, office buildings, and other customers. With MeuID, idwall is the first organization (public or private) to create a centralized Identity for Brazilian Citizens, which connects biometrics with personal data (like email, phone number, background check, IDs, proof of income, proof of address), and in the future, can connect payments information (like credit cards).
This solution is very timely, as the new regulations on LGPD in Brazil and GDPR in Europe were created to protect user data. “Privacy by design” is a global tendency that will make the onboarding/signup process of fintechs and other apps more secure for users and companies. Also, MeuID is a “winner takes all” product, there will be only one app people will trust and use.
3 — Growing defensibility: "Data network effects"
As long-term investors, we want to invest in companies that can build defensibility overtime.
As most of you already know, network effects are "when a company’s product or service becomes more valuable as usage increases" [NFX Blog]. NFX — a seed-stage fund specialized on businesses with network effects — describe Data Network Effects as "When a product’s value increases with more data, and when additional usage of that product yields data, then you have a Data Network Effect."
Imagine that idwall runs a background check for all the drivers of the gig economy, running in clients such as 99, Uber, Loggi, and, Rappi. Every new company within this vertical add more value to the network existing players creating strong network effects over time.
4 — The founders: legit, ambitious, surrounded by good mentors
Lincoln Ando and Raphael Melo were working on Banco Original when they saw the need for an automated onboarding process. With their technical background and vision from the client perspective, they are the legit founders to solve it.
I met Lincoln Ando in 2014, when he was raising an angel round for VaiVolta — a marketplace designed to help construction companies to rent and manage equipment, in a simple, affordable and trusted manner. By that time, Lincoln was already a second-time founder and was able to attract the attention of the Silicon Valley-based accelerator 500 Startups. In this occasion, I did not invest in VaiVolta, but stayed close to Lincoln and was inspired by his resilience as an entrepreneur.
Lincoln is the type of entrepreneur we like to back at ONEVC. He has a great mixture of confidence and humility, always surrounding himself with great people that can help him along the way. He was able to attract a great set of angels, including Dorival Dourado (Serasa Experian), Mario Melo (VP Latam PayPal), Daniel Arbix (Head of Legal @ Google), Guilherme Horn (Advisory Board at Banco do Brasil and former Managing Director at Accenture).
“Lincoln and the founders have that perfect timing to entrepreneurship: strong background, age, market and vision. It was easy to decide to invest and back the company, especially with them helping us at Vindi.”, Rodrigo Dantas — angel investor, early client of idwall and co-founder and CEO at Vindi.
Finally, Lincoln is an ambitious visionary who keeps expanding the long-term vision of idwall. I thought that background-check was a big enough market, but was surprised by his ambitious on MeuID project.
More about idwall:
- Idwall: https://idwall.co
- Year of Foundation: 2016
- Current Round: Series B
- Co-investors in this round: Qualcomm Ventures (lead), ONEVC, Monashees, Grupo Globo, Justin Mateen (co-founder of Tinder), Hans Tung (GGV Capital, Current #7 on the Midas List).
- Previous Investors: Monashees, 500 Startups, Fundação Estudar, Mercadolivre. Angels include: Dorival Dourado (Serasa Experian), Mario Melo (VP Latam PayPal), Daniel Arbix (Head of Legal @ Google), Guilherme Horn (Advisory Board at Banco do Brasil and former Managing Director at Accenture);
Bruno Yoshimura — General Partner at ONEVC
Bruno Yoshimura is a Co-founder and General Partner at ONEVC. Bruno has accumulated 15 years of experience as a tech founder with extensive involvement in product development, sales, and marketing. Before pursuing an MBA at Stanford, he launched Kekanto, an online guide based on users’ reviews backed by Accel Partner and Kaszek Ventures, and Delivery Direto, a white-label platform for restaurants doing delivery sold to Locaweb in 2019. Bruno holds a major in computer science from the University of Sao Paulo.