Exclusive: Basis Theory launches with $17M to tokenize sensitive data

Basis Theory is coming out of beta and announcing that it has raised $17 million in funding, the company tells Axios exclusively.

• Investors include Bessemer Venture Partners, Kindred Ventures, Conversion Capital, Offline Ventures, Ludlow Ventures, BoxGroup, and Good Friends.

Why it matters: Basis Theory's launch highlights the growing demand for tokenizing sensitive data, which allows customers to process, analyze, and share info in a secure and compliant way.

How it works: Basis Theory helps developers securely use and manage sensitive data by encrypting original values in its platform and giving back tokens, or undecipherable aliases, that then reference those original values.

• This includes sensitive information like personally identifiable information (PII) or credit card and bank data with very specific regulations.
• Using the Basis Theory platform, all data is encrypted in a PCI Level 1 and SOC 2 Type I compliant way, so customers don’t have to worry about heeding regulations around storing and exchanging this information themselves.

That enables developers to think more strategically about using their data, Basis Theory founder Colin Luce tells Axios.

• For e-commerce merchants, that might mean being able to tokenize credit or debit card data and work with multiple payment processors, all without storing financial credentials themselves.
• Fintech companies can use the platform to reduce their PCI compliance exposure or accelerate time to market

• And marketplaces that want to better use data across different merchants on their platforms.

Between the lines: The leadership team at Basis Theory comes from fintech and payments companies like Dwolla, Klarna, and Yodlee, among others — and they have seen firsthand the limitations related to storing and managing sensitive information internally.

• “I was always spending a lot of time, effort, money, and brainpower on where we were storing sensitive data,” founder Brian Billingsley said. “So we were really never able to externalize the value of that data.”