Fraugster, an German-Israeli payments startup that has employed Artificial Intelligence (AI) technology to eliminate payment fraud, has raised $5 million in funding. Earlybird, an international venture capital fund is the new lead investor in the company, alongside existing investors Speedinvest, Seedcamp and an undisclosed Swiss family office.
According to the startup, this latest round of investment will be used to hire new staff to stimulate the international growth of the company, which is used by online merchants and retailers.
Max Laemmle, CEO, Fraugster, explains that the startup was founded because they could see the opportunity to tackle fraud with modern technology. He further noted that existing rule-based systems as well as classical machine learning solutions are expensive and too slow to adapt to new fraud patterns in real-time.
“We have invented a self-learning algorithm that mimics the thought process of a human analyst, but with the scalability of a machine, and gives decisions in as little as 15 milliseconds. One of the reasons why we are so fast is because we’ve invented our own in-memory database technology which has no limitation on scale,” Laemmle said.
With the aim to eliminate fraud and increasing customers’ profits, Fraugster was founded in 2014 by Max Laemmle, who previously co-founded payment gateway company Better Payment, and Chen Zamir, who has spent more than a decade in different analytics and risk management roles including five years at PayPal. Its technology learns from each transaction in real-time and claims to anticipate fraudulent attacks even before they happen.
“We are very excited to be working with Fraugster. Their technology gives online merchants a new weapon in the fight against fraud. As more business continues to move to the internet, Fraugster’s vision of a fraud-free world is one that we should all be working towards,” said Christian Nagel, Earlybird partner.