Yoti finally takes on outside investment after £110m start-up run

After launching with some £110million in funding from its serial multi-millionaire founders over the past eight years, UK digital identity company Yoti has finally opted for outside investment.

[Yoti is one of a number of fast-growing bootstrapped companies that are now looking for investment. Sifted members can see the rest here.]

It’s a sign, says co-founder and CEO Robin Tombs, that the digital identity market has become hot, with a number of competitors having recently raised big rounds, such as Estonian Veriff ($100 Million Series C Round) and the American competitor Jumio (150 million dollars last year).

Digital ID has become a hot area in part because it is considered essential for many other hot areas – it will be crucial, for example, for proving identity in the metaverse and for Web3 applications. Companies like Yoti are already working with game companies to verify the ages of gamers who come to their platforms, and Tombs says their role will grow as these platforms grow into places where people attend concerts. and watch e-sports.

“It’s a business whose time has come. Many Web3 issues come down to identity and interoperability, which we can help with,” says Tombs.

Robin Tombs CEO of Yoti

Started beginnings

We are far from 2014 when Tombs and Noel Hayden founded Yoti.

“We couldn’t tell if it would be two, three, four, five years. Not the kind of thing VCs want to hear.

“2014 was too early to go to VCs and predict when consumer online identity would take off,” Tombs told Sifted. “We had a hunch that one day people would want to own their digital identity, much like you have a passport, but we couldn’t tell if it would be two, three, four, five years. Not the kind of thing VCs want to hear. That’s part of why we were primed.

Yoti was lucky to be able to start at this point, thanks to the fact that Tombs and Hayden sold Gamesys, the online games company they founded, to £2 billion in 2021netting the founders an estimated total of £500m.

Yoti is raising a much smaller sum than many of its competitors – just £8-10m from a number of wealthy tech entrepreneurs. Later in the year, he plans to raise a larger Series B funding round – likely between £40m and £60m – from venture capitalists.

“We call it a pre-Series B round because it was odd to call something that has already received £110m investment a seed round,” Tombs said.

The money, especially from the biggest Series B round, will be used to help Yoti expand overseas. The 450-person company is primarily known in the UK but wants to establish a presence in the US, Canada and Australia, where it will need a larger team.

How it works

Yoti uses a combination of facial biometrics and encrypted codes on your mobile phone to create a robust way to prove your identity online. It has a very big ambition to one day become the default digital identity provider for hundreds of millions of people.

In the short term, it sells a number of small business-to-business services, such as electronic signatures for documents and age verification.

He is working with Asda, Sainsbury’s and Morissons to install automatic age verification systems at self-checkouts. People buying restricted items such as alcohol or paracetamol can simply look at the camera, which will estimate their age, without a human attendant having to come.

Putting Yoti technology in everyday situations such as supermarkets and real estate agents like Connells is part of the outreach strategy, says Tombs.

“It took us seven years to gain some confidence in the UK. Trust is a combination of frequency and brand recognition; it happens gradually,” says Tombs. “You go to Asda and use Yoti age verification to buy your paracetamol. Then your son or daughter wants to play Fortnite and you use that to verify their age. And you use Yoti to sign a contract with Connells It all adds up and one day you say, ‘I’m just going to get the app ‘because I use it so often.’

Tombs says age-verification software has now gotten to the point where it’s comfortably more accurate than humans, and is generally able to accurately estimate age within the 4-6 year range. But it took years to get there, training the AI ​​on millions of faces. Even as recently as 2018, accuracy wasn’t where it should be on darker skin tones, Tombs said; only in the last year or so has this improved to the point where it can be deployed commercially.

“It took us three years to put it in beta testing and then another year in beta to make sure it worked,” says Tombs. During all this time, the company did not make a penny of income.

Now commercial work is coming, with contracts ranging from £1,000 for a small business to £500,000 for a large deployment. Revenues have increased nearly sixfold to £665,000 in 2021, and Tombs expects them to quadruple again this year.

[Yoti is one of a number of fast-growing bootstrapped companies that are now looking for investment. Sifted members can see the rest here.]

About Nereida Nystrom

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