Baselayer Raises $6.5M Seed Round to Redefine Business Risk with AI Risk Engine
May 01 2024 - 10:00AM
Business Wire
With a 5x oversubscribed round, Baselayer has
created a custom AI-based knowledge graph to simplify and secure
the business verification process, reduce financial ecosystem
fraud, and accelerate small business performance
Baselayer, a B2B platform utilizing proprietary Graph AI
technology to fight fraud and optimize business onboarding, today
announced its official emergence from stealth with a $6.5 million
seed round and an experienced team of compliance and machine
learning experts. Securing almost 30 customers in under 6 months,
including Rho and one of the top-five loan infrastructure systems,
Baselayer has expanded its total reach to over 25 million potential
business accounts.
The seed round, which was 5x oversubscribed, included Torch
Capital, Afore Capital, Founder Collective, Picus Capital,
Gilgamesh Ventures and notable financial industry executives
including Eric Woodward, former President of Early Warning
Services, Jason Mikula, executives from Stripe, Brex, Valley Bank,
Airbase, and 15 other fintech founders. Despite fintech funding
hitting its lowest level in seven years during Q1 2024, the
significant interest in this funding round underscores the market's
urgent need for innovative solutions that combat evolving fraud
tactics while simplifying small businesses' access to essential
banking services.
The banking industry has long faced challenges in verifying
small businesses during Know Your Business (KYB) reviews, resulting
in lengthy manual processes that can span days or weeks. This
undertaking has become even more challenging with the advancement
of fraud strategies and increasing prevalence of fraud, which cost
global banks $500 billion in 2023. Fraud poses an escalating threat
to the revenue and growth of both traditional banks and fintechs,
complicating efforts to quickly validate the legitimacy of business
customers.
“For a new or small business, waiting days or weeks to have
access to a bank account can be devastating,” said Jonathan Awad,
CEO and Co-Founder of Baselayer. “Without a bank account, it’s
impossible to run a business, and as fraud has gotten more
sophisticated, it’s become even more difficult for banks to verify
small or new companies. We saw this problem firsthand, so we built
our own solution that provides all banks, lenders, and payments
companies on our platform access to fraud sharing on businesses
that does not exist anywhere else in the market. Baselayer can now
identify, assess and predict the risk of all potential business
customers in real-time, eliminating the friction that has
previously existed in the KYB process to provide more security to
the banking system than ever before.”
Awad and Baselayer Co-Founder and CTO, Timothy Hyde, found
themselves unable to secure a business banking account in the wake
of multiple bank failures in early 2023. They quickly identified
they were not the only new company experiencing the issue, which
left them unable to pay bills or vendors. With no solution besides
waiting over a month for the manual review process to unfold, they
decided to build one themselves. In particular, they saw an
opportunity to utilize artificial intelligence generated knowledge
graphs, in which Hyde had expertise after previously building and
selling a machine learning company to a Fortune 500 company.
Baselayer is now transforming the critical problem of data
sharing between financial institutions, which the U.S. Treasury
Department recently outlined as severely lacking, as one of the
only solutions in the market with an infrastructure to surpass the
legacy credit bureaus, pool data, and allow for real-time alerts.
Baselayer can predict and differentiate legitimate from fraudulent
patterns, enabling financial institutions and government agencies
to swiftly verify the legitimacy and assess the risk of new
business customers in seconds.
“All consumers will ultimately be businesses,” said Eric
Woodward, former President of Early Warning and creator of Zelle
Risk. “This underscores the importance of banks and providers being
able to quickly and accurately assess and verify the identities and
risks of small businesses at scale. While there have been
tremendous innovations in consumer verifications, there has not
been a comparable solution in the market to secure and simplify the
KYB process, which Baselayer is now uniquely providing.”
In just six months since launch, Baselayer is already integrated
into clients and systems ranging from traditional bank providers to
small business fintechs, including one of the top-five loan
infrastructure systems, which manages loans for over 25 million
accounts across almost one thousand unique banks and lenders. Rho,
the powerful business banking platform with award-winning customer
support and built-in spend management, is an early adopter of
Baselayer.
“Working with Baselayer has been a game changer for us,” said
George Remennik, Acting Chief Compliance Officer, Rho. “Baselayer
helps us accurately verify business applicants and get new Rho
customers up and running on our platform significantly faster,
while also supporting the integrity of our world-class compliance
operations."
With the funding, Baselayer plans to double down on investing
and scaling its platform as well as refining and building out new
features in its GenAI model.
About Baselayer: Baselayer is an innovative B2B platform
utilizing proprietary artificial intelligence technology to reduce
fraud, automate business onboarding for SMBs, and increase security
throughout the entire banking system. Its platform transforms the
silo of data sharing that has previously existed across financial
institutions to elevate levels of customer confidence and provide
an enhanced sense of security to all banks across the country.
Industry veterans and entrepreneurs Jonathan Awad and Timothy
Hyde co-founded Baselayer in 2023, after seeing firsthand the
complexities in verifying businesses across the financial system
and an opportunity to revolutionize the process through customized
AI models. Baselayer is backed by Torch Capital, Afore Capital,
Founder Collective, Picus Capital, and angel investors including
executives from Early Warning, Brex, and Stripe. To learn more,
visit www.baselayerhq.com.
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Press Contact: Libbie Wilcox Libbie@bevelpr.com