Axios Pro Exclusive Content

Exclusive: Incognia raises $31M to battle Gen AI fraud

headshot
Jan 31, 2024
Illustration of a siren light with a location pin inside.

Illustration: Gabriella Turrisi/Axios

Incognia, a startup using precise location mapping to detect fraud, raised $31 million in Series B funding led by Bessemer Venture Partners.

Why it matters: Incognia plans to combat all kinds of fraud, including that stemming from Generative AI — the new bogeyman of the space.

Context: Companies have started using Gen AI to combat bad financial behavior, and scammers have been using Gen AI to clone voices to hack into bank accounts. Facial recognition, too, is now a jumpable obstacle.

  • "That is the primary driver for us to want to launch this more quickly," says Incognia CEO André Ferraz. "The rise of deep fakes will completely change the fraud prevention storyboard."

How it works: After receiving permission from the end user, Incognia pinpoints their physical location within 10 feet of accuracy using a mix of GPS, WiFi, IP address, Bluetooth, and device sensors.

  • "By mapping all of these different signals, we make it a lot harder for an attacker to use, for example, Gen AI to recreate this environment, because they'd need physical access," Ferraz says.
  • Founded in Brazil, Incognia is now focusing on U.S. expansion, where customers include NextDoor.

Zooming in: Incognia uses location data to determine whether the behavior of the person behind the screen is suspicious.

  • Based on internal data, Ferraz says most scammers use multiple devices, whereas about 85% of legitimate users open accounts from their home or a trusted location.
  • Incognia uses its data and tech to detect whether one user is logging on to multiple phones simultaneously to create new bank accounts.
  • By checking that location with the user's stored address, Incognia says it can more quickly detect instances of fraud.

Background: This is a comeback for Incognia.

  • Launched in 2016 as a company that pushed location-based ads to consumers, Incognia saw revenue fall to near zero as pandemic lockdowns began in 2020. "Everything crashed and burned," says Ferraz.
  • Incognia sold that business, once valued as high as $91 million, for $5 million. The company used that capital to seed its new fraud prevention strategy in 2020.
  • Today, Incognia is valued at about $181 million, and revenue is over eight digits, says Ferraz.
  • Early Incognia investors, including UnBox Capital and Valor Capital, remain investors after the initial sale, following a cap table reset.

The big picture: "We think the fraud prevention market is going to be much larger than even analysts estimate right now," says Bessemer Venture Partners' Charles Birnbaum.

  • Bessemer has put capital behind several companies in the space, including Alloy, Forter, Carefull, and Shift Technology.
  • "We think there's room for many different vendors to succeed," he says. "I view it much more like the cybersecurity market, where you don't use one cybersecurity vendor to protect you from all types of attacks."
  • Other investors in the round include FJ Labs, Point72 Ventures, Prosus, and Valor Capital.

The bottom line: Fraud prevention is an evolving digital arms race, with multiple companies looking to find patterns of bad behavior in different data.

Go deeper