Baselayer, a B2B platform utilizing proprietary Graph AI technology to fight fraud and optimize business onboarding, today emerged from stealth with a $6.5 million seed round and an experienced team of compliance and machine learning experts. The company has secured more than 20 customers, including Rho and a top-five loan infrastructure system, and reports that it reaches more than 25 million potential business accounts.
The seed round, which Baselayer said was five times oversubscribed, included Torch Capital, Gilgamesh Ventures, Afore Capital, Founder Collective, Picus Capital and financial industry executives Eric Woodward, former president of Early Warning Services; Jason Mikula; executives from Stripe, Brex, Valley Bank, Airbase, and 15 other Fintech founders.
The banking industry has long faced challenges in verifying small businesses during 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 the 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 more than one month for the manual review process to unfold, they said 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 said it is 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 claims its technology 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 six months since its launch, Baselayer has been integrated into clients and systems ranging from traditional bank providers to small business fintechs, including LoanPro, which manages loans for over 25 million accounts across 700+ banks and lenders.
