Quantexa Secures USD 129M In Series E Funding, Boosting Valuation To USD 1.8B Amid Rising Demand For Fraud Detection Solutions

London-based Quantexa, a leading provider of AI and other advanced tools to major banks, governments, and large organizations for tackling online financial fraud and customer data management, has announced a $129 million Series E funding round, elevating the company's valuation to $1.8 billion. This significant increase follows a Series D round in July 2021 that raised $153 million at an $800 million-$900 million valuation.

The latest funding round, led by Singapore's sovereign wealth fund GIC- also a significant investor in Stripe's recent $6.5 billion round- saw participation from previous investors such as Warburg Pincus, Dawn Capital, British Patient Capital, Evolution Equity Partners, HSBC, BNY Mellon, ABN AMRO, and AlbionVC. Prior to this round, Quantexa had raised $240 million.

Despite many startups facing challenges in raising funds over the past six months, Quantexa has emerged as one of the few to defy this trend. CEO and founder Vishal Marria revealed in an interview that the round was oversubscribed, occurring at a time when the company still had "between two and three years of runway" from previous funding rounds and cash generated from its operations.

One of the key reasons for investors' strong interest is the company's impressive performance. Quantexa's core offerings lie in the areas of risk and compliance, encompassing tools for user identity verification, money laundering detection, and financial investigations. Moreover, the company employs similar techniques to develop larger user "graphs" for business intelligence and CRM purposes.

Quantexa currently serves hundreds of clients across 70 countries, including major organizations such as BNY Mellon, HSBC, Standard Chartered, Danske Bank, Vodafone, and the UK's Public Sector Fraud Authority within the Cabinet Office. The company has doubled its business over the last 18 months, expanding its user base, revenue, and targeted industries, according to Marria.

Interestingly, Quantexa's fundraising announcement coincided with another KYC startup, Fourthline, raising a substantial $54 million. While Fourthline has focused on building everything from scratch, Quantexa has adopted a different approach, developing its own solutions while heavily relying on APIs to work with customers' existing platforms and operations.

Both companies share a fundamental belief in utilizing AI tools to tackle fraud, identity management, and compliance issues. With sophisticated and varied techniques employed by bad actors, AI technologies such as machine learning, natural language processing, and computer vision can help track and counter these threats.

Quantexa plans to capitalize on this strategy by using the new funding and existing cash reserves to develop new technologies and pursue acquisitions for inorganic growth. The company aims to target interesting enterprise and big data startups that have emerged over the past few years but have struggled to raise funds and scale.

Marria noted that the recent acquisition of Irish startup Aylien exemplifies the types of acquisitions Quantexa may pursue. Aylien specializes in natural language processing (NLP), advanced AI, and unstructured data processing.

While Quantexa is not yet profitable, Marria stated that investors are willing to be patient as the startup continues to achieve its other targets. "That gives the community confidence that our plan is accurate and we can deliver on it." Quantexa is currently growing its ARR at 140% (compared to 108% for Series D subscription revenues), and Marria projects that the company will generate $100 million in revenues next year, reaching profitability by 2025.

The funds raised in this Series E round will play a pivotal role in helping Quantexa maintain its growth trajectory, enabling the company to continue developing cutting-edge AI-driven solutions to tackle financial fraud and bolster customer data management. By addressing the ever-evolving challenges of online crime and meeting the stringent requirements of regulators, Quantexa is poised to become an even more significant player in the industry.

As the demand for advanced fraud detection and customer data management solutions continues to rise, Quantexa's latest funding round underscores the market's recognition of the company's unique offerings and its potential for future growth. With a strengthened position and an ambitious roadmap, Quantexa is set to make a lasting impact on the financial services, government, and enterprise sectors, delivering the tools necessary to combat online threats effectively and safeguard the integrity of the digital landscape.