As the number of Internet users continues to grow, security companies like Authentify Inc. are coming out to protect companies against online fraud. The Chicago-based company formally launched its product at the RSA Conference 2001 held in San Francisco in April. Unlike other online fraud deterrents, Authentify?s service turns the telephone into a security device, which ultimately makes it faster for a user to get online and use a company?s services.
To support its system, Authentify recently raised an $8.55 million Series B financing from a quartet of individual investors: Jim Woodhill, founder and chairman of Authentify; John Moores, founder and former chairman of BMC Software; Louis Woodhill, chief executive of Scalable Software; and Peter Schaeffer, former chief technology officer of Neon Systems.
The security firm plans to conduct another round of funding later this year to include institutional investors. “We don?t have a lead yet but we have spoken to a couple of formal funds,” said Peter Tapling, president and chief executive of Authentify. He added that the deal will aim to bring in between $15 million to $20 million.
Authentify has about 35 employees and is expecting to use the funding to bolster up on internal development, build and expand its sales channel and provide additional marketing. It currently boasts five customers and expects to reach profitability by Q4 of 2002.
Tapling said his company?s service is especially useful in the financial services sector because its results are immediate. Rather than making existing customers, who want to trade online, wait for confirmation numbers to be delivered by mail, Authentify allows companies to get users on their network by picking up the phone and verifying who they are on the spot.
For example, a customer goes to The Vanguard Group?s Web site and punches in the required information, such as their mother?s maiden name. Then working from files that were created when the user signed up for his original account, the computer places a call to the telephone number Vanguard has on record and the user will pick up and state who he is.
However, there doesn?t seem to be any solution for new users or old customers who want to set up online accounts at work but had previously given the company a home number.
Additionally, while the financial services sector is where Authentify?s security system would fit best, Tapling admitted that it is a hard area to break into, especially with adverse market conditions that companies have been dealing with during the last six months.
“Many are saying we are interested in what you are doing, when things loosen up, circle back to us,” he said.
Contact Danielle Fugazy: Danielle.Fugazy@tfn.com