TrueBiz aims to help financial services providers onboard corporate customers faster, avoid fraud • TechCrunch

Due diligence was a big topic in 2022 for a number of reasons.

But due diligence does not only apply to investors who pour money into startups, or companies that acquire other companies. Businesses, especially those involved in financial services, must also carry out an appropriate level of due diligence, for example to avoid fraud.

As late as December, a congressional report accused several fintechs, according to NPR“of reaping ‘billions in taxes from taxpayers while becoming easy targets for those attempting to defraud the PPP, or Paycheck Protection Program'” in the early days of the COVID-19 pandemic. Specifically, the report also charged that fintechs neglected to stop “obvious and preventable fraud.”

Meanwhile, the Small Business Administration is facing pushback from organizations as the American Bankers Association and the National Association of Government Guaranteed Lenders regarding a proposal that would allow fintech startups, as reported by Politico, “to begin offering government-backed loans under the department’s flagship ‘7(a)’ program — long the domain of traditional lenders .” The groups claim, among other things, that the SBA is “ill-equipped to regulate the fintech firms that want to participate.”

enter TrueBiz. The start-up wants to reinvent how fintechs assess the risks of the businesses they are on board to avoid such fraud cases and pushback, as described above, in the future. Founded by Danny Hakimian and Max Morlocke, the company recently raised $2.4 million in a seed round led by Flourish Ventures in an effort to reinvent how financial services verify businesses during account opening. Homebrew, The Fintech Fund and Y Combinator also participated in the funding. The company participated in YC’s Summer 2022 batch.

In connection with the increase, the company also announces the launch of its new product, TrueBiz Risk Score, a summary of important risk indicators.

In particular, TrueBiz aims to add color to a business. background with over 50 data points – such as industry and revenue – from across the web, and then summarize key risk indicators, noted Satya Patel, partner at Homebrew.

“We do this by automating the review of a company’s online and offline footprint,” Hakimian told TechCrunch in an interview. “We look at their website, maybe social media profiles, review sites and hundreds of different sources to build a more complete picture of the company.”

Older solutions, he added, are too reliant on inconsistent and unverified information and often perform manual assessments.

TrueBiz’s ultimate goal is to fundamentally change how financial services organizations verify businesses during account opening, according to Hakimian.

“Our technology also automates the review of company documents captured at registration, combining this with searches of best-in-class data sources,” he said. “Our ultimate vision is to create a single sign-on for business identity. Once a business is verified using our service, they will reuse their credentials across our network without resubmitting their information. Automating the onboarding process for banks is the first step in our journey.”

Ultimately, Hakimian said, TrueBiz claims it gives financial service providers a way to onboard their business customers faster, eliminating churn that can result from verification delays.

Image credit: TrueBiz co-founders Danny Hakimian and Max Morlocke / TrueBiz

The PPP programme, he said, put financial service providers under enormous pressure to move quickly, but unarmed with the appropriate tools to do so

“The legacy vendors just couldn’t provide a significant enough review to balance speed and quality time, Hakimian said. “And even outside the OPS program, it still takes something in the 20 to 30 day range to open a business bank account in the US.”

The target customers are medium-sized financial service providers, such as banks that open new business bank accounts, or payment providers that bring merchants. Other use cases include insurance companies trying to validate the business they are offering commercial insurance to.

“There’s a lot of tailwind behind this,” Hakimian said. “The story of the last decade was about the growth of consumer fintech. But we believe that it is the underlying identity technology that will power the next wave of growth, and that really comes from B2B, embedded fintech solutions that require better tools to be able to scale up processes beyond the manual review.”

As an API-based service, TrueBiz charges its customers a fee per search. Currently, the startup has less than 10 employees and is fully distributed.

The fresh capital will be used for some hiring, expanding product functionality and for marketing and sales.

Emmalyn Shaw, managing partner at Flourish Ventures, told TechCrunch via email that the KYB (Know Your Business) problem “is a significant and significant market opportunity.”

“We know from our investment in Alloy and others in the KYC space the importance of identity verification and due diligence to reduce fraud and generate revenue. KYB introduces a significantly higher level of complexity,” she wrote. “Lack of API-driven digital sources, as well as inconsistent data tags in existing data, lead to time-consuming and intensive manual reviews. TrueBiz has the potential to unlock meaningful returns and generate additional top-line revenue.”

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