E-commerce and mobile fraud detection and prevention provider Kount Inc. has received an $80 million growth equity investment from CVC Capital Partners.
The investment marks the first time Boise, Idaho-based Kount has conducted a funding round to support its cloud-based fraud-detection software.
"Historically, we have been self-funded, but this is going to provide us with a lot of opportunity," said Brad Wiskirchen, CEO of Kount.
The funding will help Kount accelerate items "already on our product roadmap," expand into new markets and release products faster, Wiskirchen said. The company also plans to expand its team and boost sales and marketing efforts.
Kount has spent much of the last year strengthening its fraud-prevention platform through partnerships, joining with Emailage to add e-mail analysis to its toolset. It also began working with Ethoca Alerts as a way to better track payment card history to detect suspicious transactions and alert business owners.
Because fraud is expected to shift away from the point of sale because of the implementation of EMV security, "we have actually been talking about the coming e-commerce fraud tsunami for years," Wiskirchen said. The company has been working with MasterCard, PayPal's Braintree, Chase Paymentech and others in helping merchants prepare for the fraud migration to card-not-present transactions, he added.
"Fraudsters are becoming extremely sophisticated and getting very specialized," Wiskirchen said. "They are basically doing everything but getting unionized."
Extra funding to develop prevention tools will help counter current fraud efforts, which include criminals setting up websites to sell data and post best practices on how transfer stolen data to each other, Wiskirchen said. "This is not just cardholder data, it can be trading credentials for online video games, or permanent data like social security numbers."
A deeper dive into fighting the most advanced fraud techniques is what CVC Capital Partners was seeking for its growth fund investment.
CVC Growth Partners, a team CVC formed to target smaller growth-oriented companies, began studying the payments space a year ago for investment opportunities, partly because of the various trends occurring with electronic payments and the EMV migration in the U.S., said Jason Glass, managing director at CVC Growth Partners.
"Sadly, fraud is becoming more aggressive and sophisticated," Glass said. "In trying to understand the market as best as possible, we went through the process and identified Kount as a special company."
It was important to CVC Growth Partners that it supports a company with a product "with a lot of reputation and a lot of depth," Glass added. "In not just trying to solve just one piece of the fraud puzzle, the leading player was Kount."
Kount provides protection for retailers, financial companies and the gaming industry.