Israeli startup Transmit Security, co-founded by serial cybersecurity entrepreneur Mickey Boodaei, said Tuesday it has raised a massive $543 million in a series A funding round, giving the seven-year-old bootstrapped company a valuation of $2.2 billion.
The investment round, led by Insight Partners and General Atlantic, with additional investment from Cyberstarts, Geodesic, SYN Ventures, Vintage, and Artisanal Ventures, marks “the largest Series A funding round in cybersecurity history,” the company said in a statement.
Bootstrapping is building a company with nothing but personal savings and cash from sales.
The BindID software launched by the firm is “the first customer authentication service that is completely password-free,” the company said.
Transmit Security will use the funding to increase its market reach and expand its business activities to help enterprises confirm the identity of employees and customers using biometric authentication instead, the statement said.
The Transmit technology builds a network of connected devices for each person such as their smartphone, laptop, desktop and tablet. Users register once and can then use device biometrics from any of their devices across any application or website that uses the Transmit service.
Behind the scenes, or “under the hood,” said CEO and co-founder Boodaei in a text message, “we use advanced cryptography, risk mitigation algorithms, and open standards to provide the best level of security, privacy, and usability that technology can offer.”
BindID requires no customer software or dedicated hardware and can be used across any channel or device. Customers can authenticate and access their accounts using the embedded fingerprint or face scanner in their devices, or use their mobile device to securely and easily access other devices and channels that don’t have an embedded biometric reader, the statement said.
Customers include six of the seven largest financial institutions in the US, two of the largest merchants in the US, and financial organizations, merchants and online service providers in Europe, Asia and Latin America, the company said in the statement.
Organizations lose millions of dollars annually and place themselves and their customers at high risk due to password-based authentication that is inherently unsafe, delivers poor user experience, leaves customers unsatisfied and places brands at risk of jeopardizing their reputations. Research by the company shows 55% of consumers stop using a website because the login process is too complex, while 87.5% find themselves locked out of an online account after too many failed login attempts. Even worse, 92% of consumers will completely abandon a website without completing a purchase instead of going through the steps to recover or reset login credentials.
Outdated and ineffective password-based systems are costing businesses revenue, and Forrester reports the average help desk labor cost to reset a single password is more than $70. In addition to delivering poor user experiences and costing brands millions of dollars in revenue, password breaches pose a major threat to data security. Weak passwords account for more than 80% of all data breaches.
“Passwordless authentication is so much more than ensuring customers can easily and seamlessly access their information, their accounts and make purchases — it’s about revolutionizing the way companies interact with their customers. By eliminating passwords, businesses can immediately reduce churn and cart abandonment and provide superior security for personal data,” said Transmit Security CEO Boodaei in a statement.
“Our customers, whether they are in the retail, banking, financial, telecommunications or automotive sectors, understand that providing an optimized identity experience is a multimillion-dollar challenge,” Boodaei said. “With this latest round of funding from premier partners, we can significantly expand our reach to help rid the world of passwords.”
Boodaei co-founded Transmit Security in 2014 with Rakesh Loonkar, the firm’s president. Boodaei was also the co-founder of cybersecurity firm Imperva, which went public on the Nasdaq in 2011. In 2006, Boodaei joined forces with Loonkar to found Trusteer, a fraud protection software platform that was sold to IBM in 2013 for $1 billion.
Now, they are focusing on making the world passwordless.
“Every time I see a login button on a website, I get anxious. Whenever an app texts me a code that I have to enter, I become frustrated with the process. We’ve all learned to suffer and accept the terrible user experience and poor security that comes with passwords just because that’s the way it has always worked in the past,” said Loonkar.
“Transmit Security is offering application owners a new reality — the ability to go passwordless no matter the size of their organization or number of users. The fact that we have raised a record amount of funding is a clear indication that the world is ready to eliminate passwords and embrace biometric authentication technology so that they can deliver enhanced user experiences combined with significantly heightened levels of security.”