NS8 Inc., which sells technology to fight online fraud, received a $26 million round of funding led by Edison Partners, Sorenson Ventures and Lytical Ventures. The funding round also includes money from TDF Ventures, Hanna Ventures and others.
NS8 plans to use the new capital to “continue to grow in multiple areas including product innovation, channel development and sales acceleration,” but offered no specifics. With the current funding round, the Las Vegas-based firm has raised a total of $34.9 million over six rounds since it launched in 2016, according to Crunchbase data.
NS8’s flagship NS8 Protect product—which is designed to protect against transaction fraud, advertising fraud and website reliability problems—is used by more than 2,300 businesses in more than 50 countries, the company says. NS8 says its technology prevents fraud via a proprietary algorithm that analyzes hundreds of user attributes to generate a risk-assessment score for each transaction. The core capabilities of NS8 software are available as plugins on ecommerce platforms BigCommerce, Magento, PrestaShop, Shopify, Shopify Plus, thirty bees and WooCommerce.
NS8’s funding round follows other recent deals in the realm of ecommerce web security. In February, U.K.-based identity data intelligence and fraud detection firm GB Group plc. (more commonly known as GBG) acquired IDology Inc. for $300 million in an all-cash transaction. Like GBG, Atlanta-based IDology offers identification verification technology.
In January, ShopRunner, which operates a membership-based two-day shipping service and an app-based online marketplace, bought fraud-prevention service Precognitive. ShopRunner plans to provide the Precognitive product for free to its network of about 140 retailers.
Retailers and investors have good reasons to take an interest in firms like NS8, GBG, IDology and Precognitive. Criminals are making more fraud attempts—both successful and unsuccessful—according to a LexisNexis report published near the end of 2018. That report found the problem was worse for ecommerce retailers with more than $10 million in annual revenue than for smaller retailers with less than $10 million a year in sales.
LexisNexis surveyed 200 risk and fraud executives in retail organizations that earn at least 80% of their revenue via online and/or mobile channels, Researchers found the larger retailers reported a total of 1,525 fraudulent attempts per month, up 43% from 1,068 a year earlier. 572 of those attempts were successful and 953 failed. Smaller players, meanwhile, reported an average of 249 fraud attempts per month in 2018, up 11% from 225 a year earlier. 67 attempts were successful while 182 failed.
About a year ago, information services company Experian analyzed millions of online transactions in 2017 and found online shopping fraud grew 30% that year—twice the rate of online sales growth.Favorite