15 July 2021

ARIA invested in Nethone

Over the past year, Nethone, a Polish company that fights payment fraud online, has doubled its customer base and just closed a Series A funding round of PLN 25 million. ARIA and AtmosVentures lead this round alongside InnovationNest, Plug and Play Ventures, Firlej Kastory, and several angel investors.

COVID-19 has increased the activity of fraudsters online while allowing for faster than ever development of solutions to prevent it. Passive behavioral biometrics, developed by Nethone, allows companies operating online to stop more than 95 percent of the illegal account takeovers (ATOs) that are spreading around the world at an alarming rate. In addition to protecting against ATOs, the Polish company also secures payment transactions by systematically improving the precision of fraud detection. Compared to traditional methods based on static rules, the effectiveness of Nethone’s models is more than 10 p.p. higher.

The funding will allow Nethone to accelerate its market expansion efforts and strengthen its proprietary KnowYourUsers (KYUTM) user profiling technology. Nethone is doing this to equip customers with the right tools to fight fraudsters.

COVID-19 reinforced the importance of cybersecurity in the context of the pandemic-induced increase in demand for online commerce (both from websites and mobile) and connected next-generation financial services. The last 12 months have provided Nethone with sufficient momentum to double its customer base in the e-commerce, digital goods, and financial services sectors.

Fighting fraud in the COVID era

The past year has seen an unprecedented increase in fraud activity. The COVID-19 era has fueled the “professionalization of fraud” trend that Nethone has seen steadily escalate since its inception in 2016. “The barriers to entry for people aspiring to become ‘professional’ fraudsters have steadily decreased. Increasingly sophisticated tools based on the SaaS model have become available to virtually anyone with some financial resources. We observe advanced technical solutions built by well-organized, experienced groups of fraudulent IT experts. Such conditions and tools allow for complex anonymization and automation of illegal activity, as well as impersonation of historically reliable digital identities that most of the current fraud detection solutions on the market have no chance to identify,” states Hubert Rachwalski von Rejchwald CEO at Nethone.

“The solution of the future for anyone who wants to successfully conduct online transactions is to deeply understand each individual user as they browse a website or use a mobile app. Our real-time KYU profiling technology gives you access to insights into what’s really going on with a device, how it interacts with a platform’s servers, and, just as importantly, how the user themselves behave: how they press keys, move a mouse, hold a smartphone (thanks to gyroscope or accelerometer readings) and type on it. Passively in the background, we analyze more than 5,000 attributes that, through years of research and engineering, we acquire about each individual user. Importantly, we never affect the customer’s final experience with the site because we are invisible to them. We also do not violate user privacy due to the low-level nature of the data we analyze,” adds Aleksander Kijek, CPO at Nethone.

In addition to expanding its market activities, Nethone plans to raise capital that will be invested in increasing the pace of development of its product and its key features. ”

Series A led by international investors

Investors have recognized Nethone for screening the modus operandi of fraudsters and turning that activity into a tangible profiling solution, especially on mobile devices. Their success is also driven by the cutting-edge passive biometrics used to authenticate returning users and the transparency of machine learning models. Nethone’s new investors internationally are known for investing in high-tech start-ups focused on research, development, and commercialization of cutting-edge technologies.

“The pandemic-accelerated growth of e-commerce (up 30% in value by 2020) naturally increases the scale of fraud in the digital space. Nethone solves the problem of online payment and identity fraud with an annual value of approximately $50 billion. The technology provides maximum protection without affecting the end-user experience. I see tremendous potential to apply this technology, including to the other companies in our portfolio, wherever payments are involved. I am impressed with the motivation of the Nethone team, as well as the organizational maturity for an early-stage company. Nethone has proven to be effective in bringing to market clients in a variety of industries from traditional banks to fast-growing start-ups around the world,” emphasizes Dariusz Lewandowski, CEO of ARIA, one of the lead investors in the round.

“Given the growing importance of post COVID fraud prevention and the fierce competition in creating a seamless user experience, Nethone has a novel approach to profiling technology that is powered by machine learning. “As Atmos focuses on developing deep technology in commercial ML-based solutions, Nethone Profiler combined with the ‘explainability’ of machine learning models was an obvious choice for us,” said HadiSolh, Managing Partner at Atmos. “We are excited to join the team to arm e-commerce with deeptech tools in the fight against fraudsters.”

“Nethone is a unique company for two reasons: a team that attracts more talented members, and because it has the best product in terms of technology and how it addresses fraud in this market segment. That is why InnovationNest is proud to continue supporting Nethone on their journey,” adds Piotr Wilam, Managing Partner at InnovationNest.