Riskified Seeded to Help Online Sellers Stop Blocking Good Buye

Tel Aviv startup Riskified Ltd. believes these companies are throwing money away–its independent study found that 80% of the supposedly high-risk orders are from legitimate customers who appear high risk to typical fraud detection systems and are blocked by them.

The 10-employee company uses proxy detection, device finger printing, data enrichment through the social graph and entity linkage to classify transactions. “If someone has an IP location in France, a credit card in the U.K. and they are shipping to New York, this might be a red flag, but it could be a legitimate sale to someone who used to live in the U.K., now lives in France and is spending some time in the U.S.,” said chief executive and co-founder of Riskified, Eido Gal. “We read the full story.”

The company’s systems analyze declined transactions, filter out those from good prospective customers, and guarantee the transactions, so merchants will not face charge-backs in case of a problem.

Most of Riskified’s analysis is done through the company’s automated system, but it is supplemented by a team of human fraud detection and financial experts.

Riskified competes with services from large security providers like RSA and younger tech ventures like ThreatMetrix, Sift Science and Signifyd, among others.

Eyal Kishon, founder and managing partner at company investor Genesis Partners, says Riskified appealed to his firm, in part, because it was tackling the old problem of merchant fraud online from a new angle. “I have been declined many times when trying to buy something online from the U.S., simply because I am from Israel,” he said. “Riskified asks, ‘What are we missing? What should we not be declining?’”

Riskified raised $1.65 million in a recent seed round led by Genesis Partners, joined by Formation 8, Founder Collective, Entree Capital, Accelerator Group and T5 Capital. The company has already used some of its funding to hire analysts and technical staff, Mr. Kishon noted.

The investor expects the company to use its seed money over the next year to grow its business, especially in the U.S. market, where e-commerce is sophisticated, and online stores may want to sell their virtual or physical goods to an international market. He believes the company has strong prospects with sellers of digital goods because the perception and risk of fraud is especially high in that market, due to the fact that digital goods (movies, games, or software) are delivered to buyers immediately.