Arkose Labs Raises $22M For Anti-Fraud Platform After 400% Revenue Growth in 2019

Arkose Labs, a startup focused on online fraud and abuse prevention, has raised $22 million in a Series B financing led by Microsoft’s venture fund, M12.

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Existing backers PayPal and USVP also put money in the round, which brings its total raised to $36.5 million, according to Crunchbase data.

Kevin Gosschalk and Matthew Ford co-founded the company in Brisbane, Australia, in 2015. They launched commercially in 2017 when they moved Arkose Lab’s headquarters to San Francisco.

Their self-described mission “is to bankrupt the business model of fraud.” Its telemetry-based decision engine aims to identify potential bad actors and challenge them in a way “that frustrates their efforts and diminishes their ROI, without accidentally creating friction for legitimate users.”

Essentially, Arkose Labs claims it has designed the fastest-learning fraud defense platform on the market. It works to protect from activities such as account takeover, fake account abuse, scraping, spam and gift card abuse.

“Our platform takes a zero-tolerance approach to cyber attacks and our team is committed to putting a stop to the global fraud epidemic,” Gosschalk, who serves as the startup’s CEO, said.

Growing customers, revenue

Arkose Labs detected and stopped over 500 million attacks in 2019, and says it reduced fraud by 50 to 90 percent. While it is not currently profitable, it did see a 400 percent increase in revenue while doubling its customer base in 2019. Meanwhile, headcount climbed 40 percent to 70 employees today compared to 50 in 2018.

Customers include Microsoft (naturally), GitHub, Electronic Arts, Match.com, Singapore Airlines, Roblox and Twilio. The company also counts a number of Fortune 50 companies in the financial services, ecommerce, media, gaming and emerging technology sectors as its customers.

Arkose plans to use its new capital for platform development, new hires and global expansion. In particular, it’s planning to expand into the EMEA (Europe and Middle East) region, as well as building partner-led go-to-market strategies for the Asia-Pacific region and Latin America.

As for why they relocated from Australia (where they still have offices) to begin with, the co-founders said: “We moved due to that being where the market is. Australians visit the same top websites as Americans, which really are primarily US businesses. So strangely enough, to protect Australians from fraud online, we needed to be in the US to sell to the brands they use.”

M12 has been busy in 2020 so far, making nine new known investments since the beginning of the year, according to Crunchbase data. Most recently, it led a $300 million Series B in Atlanta-based digital assets startup Bakkt.

Illustration: Li-Anne Dias