BankTechCybersecurity

Beyond Identity secures $75 million for passwordless identity platform

Financial institutions are at increased risk of account takeovers as more people work remotely

Beyond Identity, a passwordless identity management provider, announced Tuesday it has raised $75 million in a Series B round. 

The financing comes less than 8 months after the New York-based company came out of stealth by announcing a $30 million Series A fundraise. Existing backers New Enterprise Associates (NEA), James “Jim” Clark, and Koch Disruptive Technologies (KDT) doubled down on their investment by participating in the new round.

Tech industry heavyweights Clark (who founded Netscape and Silicon Graphics) and Tom “TJ” Jermoluk (former GP at Kleiner Perkins and former Netscape president) joined forces in 2019 to form a company that would eliminate passwords “and radically change the way the world logs in, without requiring organizations to radically change their technology stack or processes,” they told me at the time of their Series A raise in April.

Beyond Identity claims that its advanced identity platform increases both usability and security while lowering cost and complexity and removing friction for users.

The premise behind Beyond Identity stems from a belief that not only have passwords historically been horrible to remember, but dangerous as well.

As such, the company’s self-described mission is to help enterprises replace passwords with what it describes as “fundamentally secure” X.509-based certificates and “enabled continuous, risk-based authentication.” This year, it’s seen a surge in demand, according to executives, and currently supports customers whose workforce countries range in size from less than 100 to hundreds of thousands of employees.

About one-third of its client base currently includes financial institutions or work in ancillary industries, estimates CMO Patrick McBride.

I talked with CEO Thomas (TJ) Jermoluk and McBride about the company’s plans for the capital and why they believe their offering is unique and valuable to financial institutions.

They said the pandemic leading to an increased number of people working remotely havs only exacerbated the problem of passwords being a security risk.

“Passwords are so repeatedly exposed that they have become a commodity for criminals. The result has been an exponential rise in account takeover fraud that is costing companies billions annually,”  Jermoluk said. “The pandemic no question has pushed the urgency of companies needing to support a fully remote workforce, which has led to a lot of security exposures. The black hats have been out in full force. Companies and CISOs are struggling mightily with how to rapidly keep up.”

Beyond Identity is also working with businesses who wish to deploy its platform “to tens of millions of their end-user customers” after seeing the benefits internally, he added. 

Banks and financial institutions are “fantastic” examples of organizations expanding from using the platform internally to large external accounts as well, according to Jermoluk.

“The pressure that fintechs and financial services companies are under to protect user accounts is great,” McBride told FinLedger.

“Whether it’s traditional banking or taking over wallets, passwords just aren’t cutting it. Account takeovers are a huge issue for this market, and all the bandaids are not enough.”

The company says it has advanced its reach over the past few months – expanding its Beyond Identity Authenticator to all major operating systems.

Long term, the startup has patents pending with the goal of creating an extended “Chain of Trust™” that includes user and device identity and a real-time snapshot of the device’s security posture “all in an immutable package that is signed by a provably secure certificate.”

The company plans to use its new capital to expand internationally (it’s first eyeing the European market), develop its B2C capabilities and grow from 70 to more than 200 over the next year, according to Jermoluk.

“They are very security and privacy-conscious there [in Europe], even more so than in the United States,” he told FinLedger. “So we feel that’s an excellent first market to get into before eventually going worldwide.”

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