Identify theft is an all-too common occurrence as anyone who is the victim of such crimes can attest to. In fact, it was up 68% from 2020 to 2021, according to the ITRC (The Idenity Theft Research Center). It’s costly too. Financial services businesses are victimised along with consumers, costing the industry $56 billion in 2021, according to a study by Javelin Strategy and Research.
One company helping financial institutions to better deal with identity fraud is SentiLink. Founded in 2017, by founders Naftali Harris, CEO and Maxwell Blumenfeld, COO, this founder’s journey is based on my interview with CEO Harris.
SentiLink Co-Founder and CEO Naftali Harris.
“My co-founder Max and I were both early employees at the online lender Affirm. I was the first data scientist and later built and led the Risk Decisioning team, responsible for all of the code and models around approvals and declines. Max led Risk Operations,” says Harris.
The San Francisco, California-based SentiLink positions itself as a technology company that helps detect and block synthetic identities by searching for statistical anomalies through real-time application programming interfaces and risk analyst tools. Synthetic identity fraud occurs when someone uses a combination of real and fake personal information to create an identity and commit fraud.
SentilLink identifies the links between the data that enables business clients to identify fake people and other connected fraudulent applications. But what separates SentiLink from other identity fraud services, according to Harris, is its focus on combining algorithmic systems with human intervention.
Harris came upon the idea for SentiLink while working at Affirm. “The real origin story for the company is one day, we're looking through applications for credit at a firm, and we came across something really peculiar, which was 12 applications for credit, all with the same name, all with the same date of birth, and 12 different social security numbers,” says Harris. So Harris and his team manually investigated the 12 applications and found they decided to apply for credit on the same night and they were all looking for credit to buy expensive luxury goods. It was a form of synthetic fraud that would not have been detected without a human discovering it.
He had learned from Affirm’s founder and former PayPal co-founder Max Levchin that the best way of building risk systems is you need to actually make something technical and build an automated system. But you really can't do a good job of that, unless you have people that are reviewing cases, manually understanding what is really happening.
“This is so important to us at SentiLink that we have that same group of risk analysts, manually reviewing transactions. Every person that joins our company, we teach them how to review fraud cases and put them through a training programme. And every Thursday, we have the entire company spend an hour or so doing practices together,” says Harris. That includes everyone from engineers, analysts and sales to legal, customer success and accounting.
Today, the company is growing fast with 75 or so employees that serve over 200 financial institutions in the US. That includes banks, credit unions and non-bank lenders. They have a top of the market focus and serve 5 of the top 10 credit unions and six of the top 15 banks, as well as many fintechs. Every day, the company prevents over 5,000 cases of ID theft.
“We process over a million identity verifications a day, for a wide variety of contexts. So things like people opening up new checking or savings accounts, people getting credit cards, purchase finance of all different sorts, unsecured personal loans, auto loans, other kinds of equipment financing. There's just a long list of different use cases where people are trying to prove who they are, even do some stuff in tenant screening,” says Harris.
That growth trajectory has allowed the company to attract some $85 million in venture funding to date, with its latest $70 million Series B round in August of 2021 led by Craft Ventures. Other investors include Andreesen Horowitz, Nyca Partners, 9Yards Capital, Felicis, Goldcrest Investment, Max Levchin and others. Levchin not only helped Harris and Blumenfeld launch the company with seed funding, but participated in further investment rounds.
Harris grew up in LA. and had what he describes as a good childhood. But he always had an independent streak and decided to apply for college in 11th grade without graduating and is grateful to his parents for allowing him to do so. He applied to several colleges and was accepted at the academically rigorous University of Chicago and attended despite never finishing high school.
“The school means a lot to me and I'm really proud to have just won the Chicago Alumni Award for career achievement. I’m incredibly grateful for them for taking a chance on me by admitting me and incredibly grateful for the education that I got there,” says Harris.
While he grew up in what would be considered a conventional household, be believes he may have inherited his independent nature from his grandfather. “My grandfather was a businessman and photographer for Life magazine. He took photos in China during the Chinese Civil War and published a book about it. Later, he became a businessman building underwater lights that you can use in submarines, or oil rigs and connectors,” says Harris
Harris got his first taste of startup life when he took an internship at IT consulting company Kaggle, when the founder wrote him a letter. He was deciding between the establish LinkedIn or Kaggle and went with Kaggle after getting the letter, a copy of which he still has today. After Kaggle, he attended Stanford for his Master’s Degree in Statistics. After graduating he spent a year at Twitter before joining Affirm in 2014, where he recruited his former college friend, Max Blumenfeld, to join him. The pair then left Affirm in 2017 to form SentiLink.
As for the future? “I want to solve identity verification in the United States. There are too many victims of identity theft. There are too many stories that go the other way where people could not access financial products that they deserved. And it does not have to be this way,” concludes Harris.
