NS8, a Las Vegas-based startup focused on online fraud detection and prevention for SMBs (small-and-medium-sized businesses), announced this morning the close of a $123 million Series A.
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Lightspeed Venture Partners and Paris-based AXA Venture Partners (AVP) co-led the round, which also included participation from Edison Partners and Sorenson Ventures. The financing brings the company’s total raised to nearly $158 million–including just over $10 million across two convertible notes–since its 2016 inception. NS8 declined to reveal at which valuation the new capital was raised, but its $16 million seed round in March 2019 was raised at a $100 million pre-money valuation, according to Crunchbase.
Even by today’s standards, $123 million for a Series A is massive. I hopped on the phone with CEO and co-founder Adam Rogas to understand more about what NS8 does and how it was able to raise such a large sum (in the midst of a global pandemic).
He told me that the COVID-19 pandemic, as we all know, has accelerated the adoption of e-commerce. That in turn has led to increased demand for NS8’s offerings.
But even before the pandemic, NS8–which operates as a software-as-a-service business–saw its annual recurring revenue climb by 200 percent year over year in 2019.
It was also refreshingly profitable in 2019 and has continued that trend into 2020 so far, according to Rogas.
“With the planned expansion ahead, we expect that we may teeter back and forth between profitability and growth,” he told Crunchbase News. “The market opportunity was already tremendous, but we’re seeing increased demand of about five to six times as a result of ecommerce adoption accelerating due to global events, particularly in sectors such as food delivery and groceries.”
NS8 says it combines behavioral analytics, real-time scoring, and global monitoring to help online businesses minimize risk. Its patented scoring technology provides data about the type, quality and trustworthiness of transactions. It looks for things like chargeback risks, fraud risks around payment and even advertising risk, Rogas said.
Plans for growth
Looking ahead, the company plans to use part of its new capital to continue growing its team. It currently has about 225 employees, up from about 50 this time last year.
Besides its headquarters in Las Vegas, NS8 also has a presence in Miami, Amsterdam, Singapore, Melbourne, Australia, and San Ramon, California. It plans to open an office in San Francisco later this year.
The company also will put its new funds toward accelerating product development and expanding its global reach. Currently, NS8 partners with companies such as Shopify, Magento and BigCommerce to help merchants selling on their platforms. Over time, it wants to reach more partners, ultimately expanding its user base to enterprises as a natural evolution, according to Rogas.
Lightspeed Venture Partners’ Bradley Twohig noted in a written statement that NS8’s platform “allows its partners and their merchants to stand up a full-service fraud prevention hub, in a matter of a day, across almost every ecommerce platform. “
NS8 is another example of a SaaSy and profitable startup, a group that has only grown over time, which I wrote about here earlier this year.
Illustration: Li-Anne Dias