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Fraud management platform Effectiv raised $4.5 million in seed funding led by Better Tomorrow Ventures

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Effectiv, a real-time fraud and risk management platform for financial institutions and fintech companies, has raised $4.5 million in seed funding led by Silicon Valley-based Better Tomorrow Ventures. The funding round also saw participation from Accel, among others. The California-based startup, with operations in India, provides artificial intelligence (AI)-powered solutions such as payment fraud detection, customer and business onboarding verification, and compliance management. It has crossed $1 million in revenue since its launch in 2022, as per a statement.

Effectiv has helped organisations process over $27 billion in financial products and currently processes over $100 million daily, the statement said. Its clients include BHG Money, Cardless, Pomelo, Usalliance Financial, Peapack-Gladstone Bank, among others.

“With a clear vision to combat the escalating challenge of AI-generated fraud, such as deep-fakes and voice synthesizing, the company has decided to utilise the newly acquired funds to develop innovative models tailored to counter these emerging threats,” Ravi Sandepudi, cofounder and CEO, Effectiv, said in a statement. The company is considering expanding its offerings to other geographies, it added.

In the past year, Effectiv said it has seen a rise in fraud with real-time payments. Banks are currently ready to adopt FedNow, an instant payment service launched by the Federal Reserve in the US. Accordingly, Effectiv is preparing to release DeviceAI, a new device biometrics technology, to analyse and flag suspicious user behavior on a device.

“While mechanisms such as one-time passwords or voice authentication were functional in the past, we are repeatedly seeing that they are easily compromised and no longer sufficient. For instance, a customer's voice can now be forged in a few seconds with off-the-shelf AI. Therefore, taking a holistic evaluation approach is necessary,” Ritesh Arora, cofounder and COO, said.

Better Tomorrow Ventures, a pre-seed and seed-stage fund, couldn’t agree more with Effecitv’s expansion of new solutions and its long-term vision in helping organizations prevent fraud. “Effectiv is an expert not only in the fraud space but also in machine learning and AI. This combination makes them the most formidable team in the industry to tackle this problem,” Sheel Mohnot, cofounder of Better Tomorrow Ventures, said.

“Ravi and the team have been helping companies detect and prevent fraud for decades. With Effectiv, they have figured out how to do this from nearly all angles in a truly scalable, adaptable, and economical way. They understand how AI can be used to fight fraud in this age of AI-assisted bad actors,” said Dinesh Katiyar, who led the investment for Accel.

Accel had led Effectiv’s pre-seed round in 2021 and was joined by REV Venture Partners, BHG VC, and angel investors. So far, the company has raised about $9 million in funding. Effectiv was founded by Sandepudi, Arora, Anupam Tarsauliya and Jonathan Doering who all met at Simility, a fraud detection software company that was acquired by PayPal in 2018. Prior to Simility and PayPal, the founding team members worked in companies such as Google and Walmart.