Fraud detection startup Ravelin secures $20M Series C

Ravelin, the London-based company using machine learning to help companies fight fraud when accepting online payments, has raised $20 million in new funding.

The Series C round is led by Draper Esprit, with participation from existing investors Amadeus Capital Partners, BlackFin Tech and Passion Capital. Ravelin disclosed $10 million in Series B funding in September 2018.

Launched in 2016, Ravelin utilises machine learning and graph network technologies to help online businesses reduce losses to fraud and improve acceptance rates of orders. The idea is to do away with cruder, rule-based systems and use machine learning to negate false positives and give merchants more confidence accepting customers/transactions.

With regards to product-market fit, Ravelin says it first found success with large-scale food and cab-ride marketplaces, but has since expanded into travel, ticketing, entertainment, gaming, gambling and retail. In addition to identifying card fraud, Ravelin also works with clients to find compromised accounts (referred to as “account takeover”), spot incentive abuse and tackle supplier fraud in marketplaces.

Account takeover is where fraudsters use credentials that have been exposed in data breaches to take over an individual’s online account for their own use or to sell on the dark web. “We have a product that helps secure accounts in the first place, identify at risk accounts and help the merchant reclaim the account for the original user,” explains Ravelin’s chief marketing officer Gerry Carr. “It’s a complex problem and due to the ease that it can be done, a fast growing issue.”

Incentive abuse sees users re-using and/or sharing vouchers and sign-up incentives to defraud a merchant. To prevent this, Ravelin is able to map out the network of users and their associated voucher codes to spot if a voucher is already used by another user and block it.

Supplier fraud typically affects marketplaces where the customer, the courier or the product supplier is working to defraud the marketplace. “There are many ways this can happen,” says Carr, “a simple example might be a supplier uses a fake account to place an order with cash delivery. In this scenario the marketplace advances the restaurant the payment. Once they receive the payment, the restaurant cancels the order and keeps the payment. We can help a marketplace identify anomalous activity in the network and put a stop to fraudulent behaviour.”

Ravelin is also developing “Ravelin Accept,” a product aimed at helping businesses navigate PDS2 and confidently accept rather than reject more transactions. PSD2 means there will be a lot more authentication required for transactions.

“This risks a lot of failed transactions as consumers struggle with the step-up authentication and merchants are unsure about how to get exemptions to the secure authentication,” explains Carr. “Ravelin Accept will have built-in intelligence about how the major issuers like to manage transactions. It will route a transaction to an exemption to authentication where possible, and where it is not, [it] will manage that step-up dynamically to give it the best chance of acceptance. The hard deadline of PSD2 at the end of this year should see significant demand for Ravelin Accept to help with acceptance rates.”

Meanwhile, Ravelin says it will use its Series C round to further invest in these innovations, and to reach more markets and industries globally.

Comments Draper Esprit’s Vinoth Jayakumar: “Our model is to invest in innovation over the long term. Ravelin perfectly aligns with that thesis. The team at Ravelin are world-class and continue to work to push the boundaries of their products… What got us really excited was the range of problems they solve for clients and the suite of products they are developing.”