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A Melbourne company that originally set out to be a neobank has found its sweet spot in anti-fraud technology, attracting $20 million in Series A funding with investors including Robinhood founder Vlad Tenev drawn to its 20-fold annual recurring revenue growth and onboarding compliance proposition.
The oversubscribed round for regulatory-tech FrankieOne was led by Australian VC heavyweight AirTree Ventures and US venture capital firm Greycroft, known for its prior investments in Bumble, HuffPost and Venmo.
Harry Stebbings’ UK-based 20VC, as well as Reinventure, Tidal Ventures, APEX Capital, and Mantis VC also contended to join the highly competitive Series A, alongside Monzo founder Tom Blomfield, New York DJs The Chainsmokers, and senior executives at Revolut and Public.com.
FrankieOne was co-founded by serial fintech entrepreneurs Simon Costello and Aaron Chipper in 2017, who during the process of trying to establish a neobank discovered first-hand how disjointed customer onboarding processes were within banks and other fintechs.
It was this revelation that led the pair to focus exclusively on resolving the problem, and the result has been a platform that combines ID verification, know your customer (KYC), know your business (KYB), anti-money laundering (AML), fraud and credit tools into one unified service for banks and fintechs.
It is a service that has resonated with global customers, with sales outside Australia now comprising approximately half of the company's revenue compared to just one percent six months ago.
In the last 18 months, the platform has attracted over 80 new clients across banking, buy-now pay-later (BNPL), digital exchanges and fintechs, including tier 1 companies such as Afterpay (ASX: APT), Westpac (ASX: WBC), and Zipmex.
With a strong global presence in Asia Pacific, Europe and a recently-opened office in the US, the funds raised from the Series A round will be put towards furthering FrankieOne's international footprint, which already connects more than 350 third-party providers and data-sources across 46 countries.
In addition, FrankieOne will be offering transaction monitoring for both fiat and cryptocurrencies later this year.
FrankieOne CEO Simon Costello says the ameliorated customer experience arising from the seamless onboarding process has been a real competitive advantage and driver of the company’s success.
"With the threat of severe penalties if customer onboarding is not performed correctly, the primary focus for banks and fintechs has been on compliance, which usually comes at the detriment of the customer experience," Costello says.
"What we have learned is that it does not need to be one or the other."
He explains regulatory and technical challenges are often a major roadblock in a fintech’s ability to rapidly scale internationally.
"Our mission is to create a platform that provides fintechs with the convenience of consuming the world’s identity verification and fraud-prevention services via a single unified API (application programming interface)," Costello says.
"This allows fintechs to “switch on” geographies and services as they need, enabling them to focus on innovation and their core business.
"We are extremely grateful to have attracted such a high-calibre cohort of prominent investors who believe in our mission, and are very much looking forward to helping more fintechs scale with our next phase of growth."
He says FrankieOne's high-profile global investors recognise the huge market potential for FrankieOne as more companies begin to embrace embedded finance, essentially becoming fintechs.
After already doubling its headcount in the last three months, which included welcoming senior hires such as former McKinsey & Co associate partner Warren Oakes as FrankieOne’s chief operating officer, the company’s growth trajectory is expected to continue into the new year as they look to bring in sales and marketing talent to double-down on the impressive organic customer growth they’ve had to date through customer referrals.
AirTree Ventures partner John Henderson says KYC and digital identity verification are board-level issues for financial services companies, but the current manual systems used by fintechs and FTSE100 companies alike are both bespoke and broken.
"The world needs a better solution, and we believe FrankieOne provides it," Henderson says.
"After seeing the incredible progress and undeniable traction Simon and the team have had, we're excited to be leading their Series A as they position themselves to be the leading identity verification and fraud risk provider."
Greycroft partner Will Szczerbiak says financial services companies are willing to pay top dollar to acquire customers.
"Upon signup, customers undergo a series of checks—including KYC, identity verification, and anti-fraud—that can force companies to turn away potentially great customers because of reliance on inadequate systems," Szczerbiak says.
"FrankieOne’s APIs extracts the complexity away, allowing their clients to onboard more great customers while delivering a delightful end user experience. It is a unique approach that scales globally, and we are excited about the partnership."
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