Argentine startup that fights digital fraud raises US$12 million, prepares to enter Brazilian market

RIO DE JANEIRO, BRAZIL – Brazil has recently seen cases of large-scale data leaks. There have also been frauds on a small but numerous scale. For example, criminals steal cell phones, delete bank accounts, and take all the money, even without passwords.

VU security provides robust identity verification for its users, which allows a more holistic authentication paradigm. Through the combination of traditional cybersecurity controls with geolocation, biometrics, and user behavior analysis based on machine learning, VU enables a continuous authentication process where the user is seen as a whole, rather than a set of credentials.

The pandemic has intensified the use of the digital environment – and the perception that digital security has become more vulnerable. According to a survey by the Brazilian Banking Federation (Febraban), 91% of respondents estimate that crime has increased greatly (46%) or increasingly (45%) during the pandemic.

On the other hand, only 5% think they have decreased (4%) or decreased a lot (1%). 86% of Brazilians are very or somewhat afraid of being victims of fraud, scams, or personal data breaches.

VU Security is one of the startups working to improve digital identification and prevent fraud. The Argentine company differentiates itself by offering simple but protected digital experiences.

The idea won a new investment of R$60 million (US$12 million), and part of the funds will be used for VU Security’s entry into the Brazilian market. InfoMoney’s entrepreneurial brand Do Zero Ao Topo interviewed Gastón Gené, COO of VU Security. The COO talked about the cybersecurity market in Latin America and the Argentine startup’s next steps.

THE POTENTIAL OF CYBERSECURITY

VU Security was founded in Argentina in 2007. The idea for the company came about when founder Sebastián Stranieri took his grandmother to a bank for a life test. The time he had to spend to prove that his grandmother was still alive prompted him to invest in a digital identity verification solution.

Since then, the market has completely changed. “We’ve seen a progressive increase in smartphone use and digitization of businesses. Institutions that offer fraud-prone services, such as banks and government agencies, have gone online. But even companies that haven’t given much thought to cybersecurity, such as those in education, healthcare, and tourism, have gone digital. There are many needs to be met, and this creates opportunities for our business,” Gené says to InfoMoney.

The global cybersecurity market is estimated at US$203 billion this year and is expected to reach US$248 billion by 2023, according to Statista estimates. “Latin America has a lot of opportunities in digital protection. It’s a rather backward market with fewer competing companies compared to regions like the United States,” Gené added.

The more than 130 companies served by VU Security buy security modules – such as biometrics, geolocation, document recognition, and user behavior analysis. These application programming interfaces (APIs) can be selected and combined as needed.

For example, for a bank aiming for a high account opening conversion rate, it is important to have biometrics that ensures a good user experience while enabling effective identification. A credit solution, on the other hand, may require additional layers of security.

“Organizations have moved from the physical to the digital world without paying attention to identity verification and fraud prevention. Our offering accelerates the implementation of these measures and saves time and even money – because a single attack can bring operations to a halt,” Gené says. “We have complementary products, and a company would have to add multiple solutions to get to the same offering. Our goal is to make the process flexible because we see other cybersecurity companies with rigid processes.”

VU Security serves more than 350 million users connected to nearly 200 customers in 27 countries, including Banco Santander, Argentine software unicorn Globant, and department store chain Falabella.

INVESTMENT AND ENTRY INTO THE BRAZILIAN MARKET

The startup is based in Argentina and Spain. It will also open an operations center in the United States. The next stop will be Brazil. “We have been in exploration for two years, learning the market, hiring, and waiting for more confident partners. We will have an important office in the country, with Brazilian staff,” says Gené.

These expansion partners are institutions such as the Inter-American Development Bank (IDB), companies such as Globant and Telefónica, and funds such as Agre Partners, Bridge One (Gomer, Involves, Mandaê), and NXTP Ventures (Amaro, CargoX, Nuvemshop). These institutions led the R$60 million Series B investment in VU Security. The Argentine startup had already received a seed investment of US$1 million and a Series A investment of US$4.3 million.

“We are confident that the brand will grow in the country and has the potential to become a leader in the domestic market. VU’s metrics are exemplary for a B2B tech company: extremely high growth, almost no-churn, and an extremely efficient sales model in attracting and retaining enterprise customers,” João Brandão, partner and founder of Bridge One, wrote in a statement.

The new contribution will be used for research and development, marketing, and sales, including the conquest of Brazilian customers. Here, the Argentine company will face competition from Digital Access, IDWall, and Incognia.

VU Security has a total of 130 employees, including 10 in Brazil. It already serves domestic customers but does not disclose their names. The plan is to triple the Brazilian team in the next 12 months.

“Brazil is the most important market in Latin America and one of the most important in the world. We will invest heavily and seek the best Brazilian talent to serve companies of different categories with a plug-and-play cybersecurity offering,” Gené says.

In three years, VU Security estimates that its growth in Brazil will increase tenfold, and 25% of its revenue will be generated in that country. The remaining 75% will be split equally between the U.S., Europe, and the rest of Latin America.

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