Incognia was born from a sale to Magalu — and is already worth US$ 115 million

In 2020, André Ferraz had to sell the media arm of his startup, InLoco, to Magazine Luiza.

The startup’s service essentially consisted of using geolocation to refer customers to physical stores with online advertising. With the pandemic, and stores closed, there was nowhere to take customers and revenue dropped by more than 90%

When selling the company, André kept his proprietary geolocation technology and decided to focus on Incognia, a recently launched vertical that proposed to use geolocation data to prevent fraud.

“Incognia still didn’t make anything,” André told the Brazil Journal. “The company literally went back to zero and we had to rebuild it all over again.”

The rebuild seems to be working. Incognia has just been valued at $115 million (post-money) in a round led by Point72 Ventures, the VC manager of Steven Cohen, the investor who made his fortune with his hedge fund SAC Capital and owns the New York Mets. The startup raised $15.5 million in capitalization.

Today’s valuation is already higher than InLoco’s Series B in 2019, just before the sale of the media vertical to Magalu. In that round, the startup had been valued at $75 million.

Incognia — which uses Wi-Fi and Bluetooth sensors to capture data with greater precision than GPS — only actually started operating in October 2020, when it closed with its first client, the BMG bank.

The startup has helped the bank increase its approval rate for new customers opening digital accounts.

“Part of the process of approving a new account is looking up the person’s information in the credit bureaus. And one of those pieces of information that is usually outdated is the address,” said André. “With geolocation we can see the person’s actual address, which increases the opening of accounts.”

But this is the simplest of the three solutions the startup has today.

Incognia also attacks so-called transactional fraud – when a hacker breaks into a customer’s bank account – and prevents improper transfers when a cell phone is stolen.

In the first case, the startup can identify if a transaction is being made in locations that the user normally does — if the place is weird, it blocks the transaction.

As for mitigating cell phone theft, Incognia is able to create dynamic limits according to location: if the person is making a PIX from home, the limit will be higher than a PIX made on the street, for example.

“Geolocation as a form of digital identity is 17x more accurate than Face ID, according to our internal research,” said André. “It is very accurate because each person has a unique behavior in terms of geolocation.”

André also says that the digital identity by geolocation also reduces the frictions of the process, since the user does not have to do anything to validate his identity.

Still, he says the two products are complementary.

“We compete, but at the same time we are complementary to facial biometrics companies. We are usually used first, and if it doesn’t work (because the customer turned off the GPS, for example), they trigger the other solutions,” said the founder.

Incognia serves 25 customers in four countries — Brazil, USA, Mexico and India — including companies such as iFood, WillBank, NextDoor and FortBrasil.

O annual recurring revenue (ARR) should hit $10 million in “one or two quarters,” said André, with 30% of revenue coming from outside Brazil. The goal is to reach 50% by the end of the year.

According to him, the company is still burning cash, but with an ARR of US$ 10 million, it should already reach breakeven. “Our unit economics is very healthy, with a very high margin. As we are now purely software, we have a much higher margin than the media business we sell.”

Source: Brazil Journal