Verafin Makes Clear Case For Financial Crime-Busting Software

Financial crime is no laughing matter, and it’s certainly not victimless. According to a 2018 Refinitiv survey on the subject, respondents spent approximately US$1.28 trillion preventing and reacting to instances of financial crime.

Verafin, a major financial crime software company, has announced it has completed an equity and debt recapitalization valued at C$515 million. The deal is a best of both worlds situation for Verafin, which now has growth funding while remaining independent.

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The new round of funding was led by Spectrum Equity and Information Venture Partners. They were joined by Northleaf Capital Partners, BDC Capital and Teralys Capital, which are coming aboard for the first time. This is Spectrum Equity’s second time funding Verafin, after providing early venture capital in 2009. IVP has also previously participated in funding, spurring Verafin’s growth equity round in 2014.

The company’s financial crime software solution has been adopted by more than 3,000 financial institutions. In February, it reported its software had been used to monitor approximately 1 billion transactions per week during the previous 12 months. Notably, its cloud-based, inter-agency approach has also helped flag more than 100,000 high risk customers that were previously unidentified.

During 2018, Verafin also completed two proof of concept investigations that examined crime ring activity in the United States. These pilots have led to the creation of an alert system that provides customers with alerts about crime ring activity and enables investigation and collaboration between and among banks and other financial institutions.

Verafin’s financial star has been on the rise. In February 2019, the company announced C$100 million in recurring annual revenue (an 87% increase since 2017). And customer satisfaction continues to be a core pillar of Verafin’s business, with 97% of customers choosing to renew service agreements each year.

The company has also caught the eye of some of the financial service industry’s biggest names signing more than 25 institutions with more than USD$5 billion in assets in the past 18 months, including United Bank, which signed its contract in early 2019.

The new funding from established partners and new backers alike will allow Verafin to continue on its fast trajectory.

“We are very excited to begin this new phase of Verafin’s journey,” said Verafin CEO Jamie King. “This financing round with our long-term partners Spectrum Equity and IVP allows Verafin to accelerate our investments in product innovation and customer success, and continue our progress in market penetration of larger financial institutions.”