While you may think you are impervious to fraudulent calls attempting to steal your information, fraudsters have upped their game. With their recent ANI (automatic number identification) strategy that changes their number to appear similar to yours, their strategies are only becoming more intelligent and a bigger threat. If you don’t want to always be on your feet you need Next Caller. Your identity is one of the most precious things you have, and it’s worth protecting with Next Caller.
AlleyWatch chatted with Sam Espinosa about the Startup and their most recent round of funding.
Who were your investors and how much did you raise?
$5 million led by VC fund Crystal Towers – Series A. The Series A brought our total raise amount to $11M.
Tell us about your product or service.
Next Caller ensures positive customer experience by protecting the phone channel from fraud with real-time verification technology. Our API recognizes and identifies ANI spoofing by analyzing the carrier-level metadata of every call, then delivering a threat-level analysis in milliseconds. This allows our clients to take action when fraudulent calls are detected, and to “green-light” real customers to give them the call experience that they deserve. We are the fastest, most accurate solution on the market.
What inspired you to start the company?
Actually, where we started isn’t quiet where we are today. Originally, Next Caller was created to reinvent Caller ID (which had become an obsolete technology once mobile phones dominated the market over landlines). But, advancing Caller ID isn’t enough if a criminal can simply manipulate their phone number and trick a business into thinking they are a real customer. This is referred to as “Spoofing.” We leveraged our experience revolutionizing the Caller ID industry to stop phone fraud before it starts. We monitor every call that comes into a business before it gets to an agent, and send an alert whenever a call is manipulated by a fraudster. This allows businesses to fight criminals instantly, and make life a lot easier on customers.
95% of Fraud, when it originates online involves the phone at some point in the process. Further, nearly all phone fraud involves call spoofing (the criminal NEEDS anonymity). Suffice it to say, spoofing is a fundamental tactic for criminals, so it’s absolutely necessary for businesses to detect it if they want to stop the fraud itself. Industry standard fraud detection technology is expensive, and relies on a combination of methods including biometrics, phone number “reputation scores,” et al., all of which are susceptible to gaming and are ineffective against spoofing itself. These shortcomings often lead to a preponderance of false positives and false negatives, which when combined with high program costs, severely limit scalability, sustainability, and ROI. In addition to avoiding these pitfalls and offering compelling ROI, Next Caller also has the industries highest authentication rate. This means Next Caller ensures a more positive customer experience by automatically authenticating 80% of real customers, without compromising security.
What market you are targeting and how big is it?
Our serviceable market is considerable. There are over 50B calls placed annually in the United States alone, and any organization or business that deals directly with consumers is vulnerable or susceptible to phone fraud. Our market includes banks and financial institutions, government agencies, and retail, travel, insurance, telecommunication, and healthcare companies. Current fraud trends further signal a growing need for our services. In 2017, rates of account takeover and fraud involving the contact center have doubled.
What’s your business model?
Our business model works on a per-call basis, with pricing that accommodates scaling to any size call volume. Our clients can integrate our service seamlessly into their existing system, even if they have other security measures already in place.
How is cryptocurrency affected by mobile spoofing?
Basically the same way that any other currency is affected. If thieves unlock your account – for cryptocurrencies like Bitcoin that’s usually an account securing data or passwords – they can steal the private cryptographic key to unlock a specific bitcoin address – in other words, use the Bitcoin. A lot of the data accounts might use the phone channel – texting or calling – as a part of 2-factor authentication.
Bitcoin is actually pretty similar to cash when you steal it… the transaction is irreversible. And there’s the added bonus of not having to carry around bags of money. You’d think that cryptocurrency would be traceable, but if you trust a ‘tumbler,’ then it’s completely untraceable. The ‘tumbler’ is the middle man between the traceable ‘dirty’ Bitcoin and the ‘clean’ Bitcoin at the address you want to transfer it to. So you’ll send the ‘dirty’ money to the ‘tumbler’ and then he’ll exchange it with the other money in his pool – so the addresses and keys change – and then he’ll transfer it to whatever ‘clean’ address(es) you want. You’ll probably get the money in random amounts over a period of time and to different addresses, and then you’re good. So all in all, mobile spoofing just helps to steal money – and cryptocurrencies are especially good to steal for fraudsters because they’re virtually untraceable and irreversible.
What was the funding process like?
We were lucky, in that we closed our round with an existing investor. Trust is paramount in a business, so we were thrilled to partner with Tikhon Bernstam and Crystal Towers, a group we were already be working with. In general, though, it can be difficult to deal with the constant slog of nos, or even worse, the maybes, so I’d recommend always getting to an answer as quickly as possible.
What are the biggest challenges that you faced while raising capital?
Fundraising is a full time job, but so is managing a team. To even attempt to do both successfully, you’re forced to learn to really trim the fat. Keep your meetings short, get to an answer quickly, and strip everything out of your life (and your business) that isn’t really important.
What factors about your business led your investors to write the check?
Seed stage companies are often judged on the quality of the team, and their “stick-to-it-iveness,” but as you grow, investors focus more on quantifiable metrics, past performance, and reasonable projections. During our raise, investors appreciated that we had been able to close deals with Fortune 100 companies; it’s easy to get your early adopters, but successfully navigating RFPs and passing due diligence with publicly traded companies shows you can play in the big leagues.
What are the milestones you plan to achieve in the next six months?
We are projecting profitability next quarter.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Don’t get discouraged. It can be really easy to get 10, 20, or 100 no’s from people, and feel like you should just quit. But, try to remember that the investors writing checks aren’t always going to be your users (at least for SaaS or B2B companies). So try to ignore overly general criticism about your idea, and focus on the objective criticism about your metrics, communication skills, and other improvements you should be making anyway.
Where do you see the company going now over the near term?
Over the next year, Next Caller will focus our resources on R&D to better identify and protect against new phone fraud techniques. In the process, we plan to expand our suite of services to include features and functionality that enhance capabilities and overall performance. This includes a push large financial institutions – banks, insurance companies, etc., some of which are only beginning to feel the effects of the accelerating “spoof” problem.
What’s your favorite restaurant in the city?
After living in New York for 10 years, there’s really no way I could answer this question honestly. At least give me a cuisine? No? Ok I’ll do my best. I’d eat at Malatesta Trattoria anyday. It’s a bustling Italian spot in the West Village, with East Village prices!