Mobile authentication startup Incognia saw its monthly revenue skyrocket in the last quarter of 2021, jumping four times between Q3 and Q4. In an interview with LABS, the startup’s founder and CEO, André Ferraz, did not reveal exact numbers but said that the company has everything to double the dose as early as the first quarter of 2022 and that the platform’s growth is taking directions not foreseen before.
The COVID-19 pandemic has been especially challenging for Latin America and sectors such as travel, retail, and services. And Incognia is an example of that: it was an ‘involuntary’ spin-off of Ferraz’s first startup, the geolocation-based marketing platform In Loco.
With thousands of stores closed throughout 2020 in Brazil due to social distancing measures to contain COVID-19, In Loco’s core business came to a halt, and 90% of the company’s revenue evaporated. It was up to the team led by Ferraz to find an alternative without forgetting the company’s greatest legacy: mobile location technology.
Launched in March 2020 in the United States as a ‘business unit’ of In Loco, Incognia was, throughout that year, taking the leading role in the company. More than half of the Series B contribution of $20 million received by In Loco in 2019 and led by Valor Capital and Unbox Capital was used for the new office in the US.
The technology previously used to connect retail applications to users as they entered stores was the starting point for Incognia’s development of an authentication solution. Ten years passed between In Loco’s MVP and the launch of Incognia.
Still in 2020, In Loco’s retail unit, called Inloco Media, was sold to Magazine Luiza (one of Brazil‘s largest retailers) for an undisclosed amount. With Incognia as the leading star, Ferraz also decided to change the company’s formal name to Incognia.
In August 2021, with less than a year of operations dedicated only to the new business, Incognia had 40 million active users per day, 100 million monthly. Months earlier, the company had already been making crucial integrations, including other authentication startups, such as the Brazilian idwall and the Argentinean auth0, a platform bought by the US-based Okta for US$ 6.5 million.
For Ferraz, three factors contributed to Incognia’s success: the growth of online fraud (in the US, the startup‘s first target market, losses resulting from online fraud grew by 230% in 2020, to $56 billion); the internationalization strategy, initiated at the time of In Loco, but which helped Incognia to launch with an already diversified revenue; and the moment the market was and still is, with massive growth in mobile devices activities and the need to verify identities in a less invasive and more assertive way (without relying on passwords or biometrics).
“Fraud is on the rise, but most security mechanisms worsen the user experience. If a company starts asking for complex passwords, validating phone or email numbers, or requiring biometrics, [all this] makes the app a more complex service. Added to this is the transition to mobile. A purely mobile solution increases security significantly compared to other authentication methods. And it is a solution that does not require any action from the user,” explained Ferraz.
How Incognia works
Incognia’s mobile location technology is, according to Ferraz, integrated into the company’s customer applications through a mobile SDK, which collects anonymous data from the sensors of mobile devices. Incognia’s technology uses GPS data and Wi-Fi, cellular, and Bluetooth data, making it highly effective in detecting location spoofing. From the strength of location signals and mobile motion sensors, Incognia builds a location fingerprint for each user based on their respective location behavior, which is unique.
All this data is encrypted and does not collect information such as the person’s name or any other civil identity information.
For customers such as banks and finance companies, it is possible to identify a particular location as the one where the final consumer most frequently makes transactions. With this information, they can, for example, launch security mechanisms that restrict or ask, in case of some inconsistency, new forms of verification to the final consumer. “Most importantly, Incognia’s solution does not require any user action, which is essential for anyone who wants to offer a frictionless experience,” said Ferraz.
Incognia’s next plans
Incognia started with about five employees opening the US office amid the arrival of the coronavirus pandemic. “Today, we are coming close to a 100 people staff, and we are hiring people in Brazil and the US. The technology teams are mainly concentrated in Recife (the company’s hometown in Northeast Brazil), while the commercial team is divided between Sao Paulo and San Francisco. But many people are working remotely,” said Ferraz. Most of the open positions are for technology, but there are also positions in the marketing and commercial teams.
This growth in staff is due to the startup‘s bold goals. “For this year, we expect to quadruple monthly revenue compared to December. We will probably come close to doubling-down what we did [in the quarter] until December at the end of this [first] quarter of 2022,” said Ferraz, without revealing exact numbers.
Most of the startup‘s clients are now in the US and Brazil, but gradually the company is also attracting organizations from Asia and Latin America. The financial segment is the main one for Incognia, followed by delivery platforms. Step by step, however, opportunities in the games and social media markets are also emerging. “It’s a big demand, and that’s why we decided, still in 2021, to focus our efforts on enterprises, that is, companies with more than 1 million users,” explained Ferraz.
According to him, customers have come to Incognia through various channels. “A client in Mexico came through another in Brazil [in this case, the neobank will bank], which saw fraud drop by over 90% after using Incognia’s authentication solution. Others from Asia are coming via our content efforts.”
In addition to Valor Capital and Unbox Capital, Incognia also has Prosus (formerly Naspers) as an investor, which, in addition to participating in the Series B round, led the startup‘s $ 5.1 million Series A in 2017 and participated in the platform’s seed round next to Brazil‘s Buscapé, in 2013.