The Israeli [startup] Forter has completed a fundraising round of $15 million from Sequoia Capital and the American venture capital firm New Enterprise Associates (NEA), and launched a development center in Israel. The launching ceremony was attended by senior managing partner of Sequoia Capital, Doug Leone, and NEA’s [managing general partner], Peter Barris. The investment by NEA — one of the major and long-standing venture capital firms in Silicon Valley — is the first one made by the firm in Israel.
Forter was established in 2013 by Michael Reitblat (who serves as the company’s CEO), Alon Shemesh (chief analyst) and Liron Damri (COO). The three are veterans of the Israeli Fraud Sciences. The company, acquired by eBay in 2008 for $169 million, dealt with online fraud detection in e-commerce websites. The startup currently has a workforce of 40 employees, based in its Tel Aviv offices, and it plans to open offices shortly in Silicon Valley.
Forter has developed an automated system that checks every transaction carried out in e-commerce websites, and automatically provides an approve-or-decline answer for any such transaction, based on analysis of the relevant data. A three-layered fraud detection mechanism examines the buyer’s identity in every transaction: The first layer tracks the whereabouts of the surfer, and even identifies the device he is using; the second layer validates his proclaimed identity; and the third layer analyzes, in real time, the buyer’s behavior while surfing the website. The combination of these three layers provides a profile of the buyer.
It is estimated that fraud in e-commerce transactions currently amounts to $5 billion in terms of the losses sustained by online merchants. The holiday sales season, which is about to get underway internationally, is expected to generate a total transaction volume of $315 billion, according to eMarketer. However, the season, which can prove highly profitable for online merchants, may likewise be money-spinning for the various Web fraudsters, it has been noted by Forter.
“Over the last year, our system handled transactions worth hundreds of millions of dollars, allowing many [online] merchants to operate with confidence, without having to worry about potential fraud,” said Forter CEO Michael Reitblat. “Our technology makes it possible for them to sell a lot more, and at a faster rate, without any difficulties.” Shmil [Shmuel] Levy, a partner at Sequoia Capital Israel and the first investor in the company, said: “The system developed by Forter was gladly adopted by quite a number of companies, having proved successful in reducing [online] fraud. The fraud incidents encountered by [online] merchants have been cut down to zero.”
NEA sets its eyes on Israel
NEA is one of the major venture capital firms in Silicon Valley. It has been active for 37 years now, and it manages at present some $14 billion through 14 different funds. NEA also invested in Groupon, Adi Tatarko’s Houzz and others.
Talking to the Israeli daily Calcalist, Ravi Viswanathan, general partner at NEA, said: “We have been watching Israel lately, and we are very much interested in the [local] market. We are a global company that is keen on companies dealing with global problems, and e-commerce scams are one of those.”
According to Viswanathan, Forter is making its first steps in the market, and it has yet to find new customers. Still, he believes that the solutions developed by the company provide relative advantages, which would help it grow. “Online shopping in the upcoming sales season will step up the company’s activity. We are going to visit Israel often, and I am sure that we will have a lot of activity here,” he added.
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