Identity verification company Socure is the latest payments category business to hint at an initial public offering, with additional capital driving growth and a C-suite hiring spree bolstering management.
“Keeping up with unprecedented demand and growth, with an eye on an IPO, the company has made numerous strategic leadership appointments and new hires,” Socure said in a Thursday release.
That was the New York-based company’s second announcement in as many weeks touting accomplishments. On June 3, Socure said it had landed an unspecified investment from Capital One Ventures, the venture arm of consumer bank Capital One Financial. And the release Thursday said the company had year-over-year growth of 113%, though it didn’t spell out exactly what had grown. The bid for attention may be the handiwork of the company’s recently hired first chief marketing officer.
He's part of a new team that's been assembled recently, particularly since the November exit of CEO Tom Thimot. He was replaced by Co-founder and Chief Product Officer Johnny Ayers.
E-commerce, and the need for companies to know their customers, has increased during the COVID-19 pandemic, which kept people home to avoid the deadly virus and doing more transactions online. That increased demand for Socure’s fraud detection and prevention services.
E-commerce retailers may lose $20 billion this year because of online fraud, up 18 percent from $17.5 billion last year, according to a report from Juniper Research.
Socure "applies artificial intelligence and machine learning techniques with trusted online/offline data intelligence from email, phone, address, IP, device, velocity, and the broader internet to verify identities in real time," according to the company.
That jump in activity has also given a boost to Socure’s competitors, one of which was acquired recently. Mega card company Mastercard decided to ramp up its in-house identity verification abilities with the recent acquisition of Ekata. Meanwhile, the smaller rival Alloy has also been building its business, with a recently announced relationship with crypto exchange Gemini.
IPO potential
Although Socure told TechCrunch last year that it wouldn’t consider a public market stock sale until next year or 2023, the company’s latest moves to build up its management team and polish its public image may be a sign it will move faster. The payments industry has been gaining momentum for a couple years now, with eager venture capitalists driving growth.
With payments fintechs having raised venture capital at record levels over the past two years, the companies will be cognizant of wanting to reward investors with IPOs at the right time. “The pipeline of IPOs is probably going to be pretty healthy,” said Alex Kern, a senior analyst at research firm CB Insights, said in an interview last month.
Payments companies have demonstrated in recent weeks that public investors have a healthy appetite for the category. Cross-border payments company DLocal’s shares jump 54% in their first day of trading earlier last week and Marqeta’s shares rose 13% in their debut this week.
With Socure closing on a $100 million venture capital fundraising in March and about $200 million total raised since inception in 2012, Socure has plenty of investors that could be eager to cash in while the market is hot.
Socure likes to cite the industry’s growth prospects in its statements, predicting that the $15 billion market could double by 2023, according to research and advisory firm One World Identity.
So far, Socure has made a sizable bite in that market, attracting four of the five top banks and seven of the ten top card issuers; plus a top credit bureau, gaming operator, buy now-pay later company and payroll provider, the company has said, without providing names.
