Our investment in Fortiro: B2B software to automate document processing and fraud detection
If you’ve ever had to take out a loan or even apply for an application to government, you know just how many documents are involved in the process. It’s a lot.
The process is tedious and time-consuming, and in many more cases than you’d expect — still manual within most organisations.
The Fortiro (and now the OIF) team know this problem very well, and Fortiro have developed software to solve this for organisations to increase accuracy around fraud detection and reduce processing time. And this is why we are so excited to introduce Fortiro as part of the OIF family — investing $3.5 million and leading their seed round.
Fortiro is a SaaS product that automates document ingestion and detects fraud in payslips and bank statements real time. Fortiro processes over 50,000 documents per month, automating data collection and picking up fraudulent documents for customers including Athena, Latitude, Bank Australia, the Tasmanian Government and others.
The company began when the co-founders could not find a readily available solution to help a big four bank automate and detect fraud in mortgage application documents.
Fortiro solves this with two key products;
1. Document fraud detection that automatically recognises high-risk documents.
2. Document automation (data field extraction) that helps organisations ingest data to run their own analysis to assess fraud.
Fortiro’s document fraud detection is its main product, offering automated detection in seconds at scale. This product analyses documents through three main methods.
· Template recognition: the platform is constantly training itself to recognise standard authentic document templates. A repository of fraudulent templates is also kept and used to detect known fraud.
· Content analysis: using Optical Image Recognition (OCR), the platform reads the document to extract relevant values and validates them against built-in and custom-set rules (rules are fully customisable).
· Digital analysis: the platform investigates the underlying forensic history and metadata of a document to identify fraud that is not visible to the human eye.
The document automation product extracts data from physical documents such as bank statements, payslips and transaction listings — allowing organisations to rapidly, accurately and automatically process applications straight through their systems while gaining insights on transactions.
The platform can also integrate into existing verification systems via an API to make processing more efficient. There are also built-in verification features such as high-risk transaction detection (for example flagging statements like gambling).
The team also has more exciting features on the roadmap, including a specialised offering for government use cases, detection tool tailored for invoices and cross-checking customers between organisations.
In Fortiro, we see three key reasons why they are set build a significant business in the global fraud detection market:
1. High-integrity co-founders who share our values with significant domain expertise.
2. Global problem worth over US$20 billion and set to grow three times before 2030
3. Strong competitive advantage that are already proven through acquiring, retaining, and expanding top-tier customers
It always starts with the founders, and founding team
We have now been working with the Fortiro co-founders, Sean, David, and Amir for more than eight months, and from the moment we met them, we were immediately impressed by their deep domain expertise, genuine passion and hustle!
Sean, David and Amir all met a long time before founding Fortiro and worked together at PwC for a number of years. Co-founder and CEO Sean Quagliani spent nearly 12 years in PwC Australia as a director and product leader, with a demonstrated excellence in leadership, product vision and execution.
Similarly co-founder, COO and CFO David Weber spent over 16 years at PwC, and both Sean and David worked across many different technology risk related projects.
Co-founder and CTO Amir Dastjerdi has over five years of experience at PwC, leading machine learning and Internet of Things projects. He was a big data, machine learning and IoT research fellow at the Melbourne University and also has previous founder experience having started two technology companies.
As we built the relationship with the whole team and learnt more about Sean, Dave and Amir, their ability to execute and particularly after speaking to customers who said “this product has changed my year,” we grew increasingly more confident that Fortiro has a unique and very large opportunity ahead of it.
But let’s take a step back for the moment and place Fortiro in the fraud detection space…
Invoice scams and identity crime cost Australians close to $1 billion each year
According to market research and investment firm UBS, more than two in five homebuyers lied on their mortgage application as they chased the fast-rising property market, with misrepresentation of income the most common factor. Further challenges exist — such as invoice scams and identity crime — which cost Australians close to $1 billion each year.
Internationally, data summarised by Resistance AI shows 17% of bank statements that are used for lending applications are tampered with, 11% of U.K. payslips submitted as part of digital loan applications are altered or forged, 15% of company registration certificates submitted worldwide when opening a bank account are fakes and 9% of utility bills submitted as a proof of address worldwide are forged.
The fraud detection and prevention solutions will be worth over US$60 billion by 2028, and COVID-19 has accelerated this trend. Globally, the percentage of suspected digital fraud attempts against financial services companies increased 149% when comparing the last four months of 2020 with the first four months of 2021.
Fortiro aims to solve this problem with its state-of-art data extraction and fraud recognition technology.
Besides the incredible team, market tailwinds and technology behind it, Fortiro has many competitive advantages going for them.
Fortiro have proven the unique value of their service through overwhelming customer love and loyalty. They have 0 churned customers to date and most of their customers we spoke with during due diligence asked to invest in Fortiro. Most of their original customers have increased their deal size by more than double, despite already high average contract value.
Over the last six months, Fortiro nearly doubled its subscription revenue and is looking to continue its early growth both in the region and by expanding abroad. The team was also shortlisted in the Finnies and Finder Innovation Awards for their work with Athena Home Loans.
The company had unique origins that set it head of its competitors. Starting in at PwC meant they could secure the best clients in Australia like Athena and Latitude from the very beginning. Being highly regarded operators and consultants in the field, the team possesses world-class insights of the problem like no other.
Finally, the team has also proven its applicability across different verticals, recently landing a deal with the Tasmanian government outside their existing focus in finance industry.
We have no doubt that Fortiro has exactly what it takes to solve one of the important problems of the digital age. We could not be more excited to support them on their journey.
Let’s go team! 🚀
PS — Fortiro are hiring! Be sure to check out their latest opportunities here.