With a 5x oversubscribed round, Baselayer has created a custom AI-based knowledge graph to simplify and secure the business verification process, reduce financial ecosystem fraud, and accelerate small business performance
NEW YORK–(BUSINESS WIRE)–Baselayer, a B2B platform utilizing proprietary Graph AI technology to fight fraud and optimize business onboarding, today announced its official emergence from stealth with a $6.5 million seed round and an experienced team of compliance and machine learning experts. Securing almost 30 customers in under 6 months, including Rho and one of the top-five loan infrastructure systems, Baselayer has expanded its total reach to over 25 million potential business accounts.
The seed round, which was 5x oversubscribed, included Torch Capital, Afore Capital, Founder Collective, Picus Capital, Gilgamesh Ventures and notable financial industry executives including Eric Woodward, former President of Early Warning Services, Jason Mikula, executives from Stripe, Brex, Valley Bank, Airbase, and 15 other fintech founders. Despite fintech funding hitting its lowest level in seven years during Q1 2024, the significant interest in this funding round underscores the market’s urgent need for innovative solutions that combat evolving fraud tactics while simplifying small businesses’ access to essential banking services.
The banking industry has long faced challenges in verifying small businesses during Know Your Business (KYB) reviews, resulting in lengthy manual processes that can span days or weeks. This undertaking has become even more challenging with the advancement of fraud strategies and increasing prevalence of fraud, which cost global banks $500 billion in 2023. Fraud poses an escalating threat to the revenue and growth of both traditional banks and fintechs, complicating efforts to quickly validate the legitimacy of business customers.
“For a new or small business, waiting days or weeks to have access to a bank account can be devastating,” said Jonathan Awad, CEO and Co-Founder of Baselayer. “Without a bank account, it’s impossible to run a business, and as fraud has gotten more sophisticated, it’s become even more difficult for banks to verify small or new companies. We saw this problem firsthand, so we built our own solution that provides all banks, lenders, and payments companies on our platform access to fraud sharing on businesses that does not exist anywhere else in the market. Baselayer can now identify, assess and predict the risk of all potential business customers in real-time, eliminating the friction that has previously existed in the KYB process to provide more security to the banking system than ever before.”
Awad and Baselayer Co-Founder and CTO, Timothy Hyde, found themselves unable to secure a business banking account in the wake of multiple bank failures in early 2023. They quickly identified they were not the only new company experiencing the issue, which left them unable to pay bills or vendors. With no solution besides waiting over a month for the manual review process to unfold, they decided to build one themselves. In particular, they saw an opportunity to utilize artificial intelligence generated knowledge graphs, in which Hyde had expertise after previously building and selling a machine learning company to a Fortune 500 company.
Baselayer is now transforming the critical problem of data sharing between financial institutions, which the U.S. Treasury Department recently outlined as severely lacking, as one of the only solutions in the market with an infrastructure to surpass the legacy credit bureaus, pool data, and allow for real-time alerts. Baselayer can predict and differentiate legitimate from fraudulent patterns, enabling financial institutions and government agencies to swiftly verify the legitimacy and assess the risk of new business customers in seconds.
“All consumers will ultimately be businesses,” said Eric Woodward, former President of Early Warning and creator of Zelle Risk. “This underscores the importance of banks and providers being able to quickly and accurately assess and verify the identities and risks of small businesses at scale. While there have been tremendous innovations in consumer verifications, there has not been a comparable solution in the market to secure and simplify the KYB process, which Baselayer is now uniquely providing.”
In just six months since launch, Baselayer is already integrated into clients and systems ranging from traditional bank providers to small business fintechs, including one of the top-five loan infrastructure systems, which manages loans for over 25 million accounts across almost one thousand unique banks and lenders. Rho, the powerful business banking platform with award-winning customer support and built-in spend management, is an early adopter of Baselayer.
“Working with Baselayer has been a game changer for us,” said George Remennik, Acting Chief Compliance Officer, Rho. “Baselayer helps us accurately verify business applicants and get new Rho customers up and running on our platform significantly faster, while also supporting the integrity of our world-class compliance operations.”
With the funding, Baselayer plans to double down on investing and scaling its platform as well as refining and building out new features in its GenAI model.
About Baselayer:
Baselayer is an innovative B2B platform utilizing proprietary artificial intelligence technology to reduce fraud, automate business onboarding for SMBs, and increase security throughout the entire banking system. Its platform transforms the silo of data sharing that has previously existed across financial institutions to elevate levels of customer confidence and provide an enhanced sense of security to all banks across the country.
Industry veterans and entrepreneurs Jonathan Awad and Timothy Hyde co-founded Baselayer in 2023, after seeing firsthand the complexities in verifying businesses across the financial system and an opportunity to revolutionize the process through customized AI models. Baselayer is backed by Torch Capital, Afore Capital, Founder Collective, Picus Capital, and angel investors including executives from Early Warning, Brex, and Stripe. To learn more, visit www.baselayerhq.com.
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Libbie Wilcox
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