Fraugster, a software company that uses artificial intelligence (AI) to prevent fraud for online retailers, has raised $14 million in a Series B funding round that saw participation from HSB Ventures, the venture capital arm of global reinsurer Munich Re.
Munich Re announced in April that it had agreed to re/insure Fraugster’s Fraud Free product, which takes over the full liability of transactions to provide retailers with financial protection.
The latest round of funding was led by CommerzVentures, the venture capital subsidiary of Commerzbank, as well as existing Fraugster investors Earlybird, Speedinvest, Seedcamp and Rancilio Cube.
Fraugster said that it plans to use the funds to continue its expansion into new markets, including the U.S, Asia and Europe, where retailers are facing an accelerating battle against fraud.
By monitoring thousands of data points, Fraugster’s technology is able to instantaneously analyse and cross-check information to determine whether a transaction is genuine and protect online merchants from the $30 billion of losses attributed to fraudulent transactions every year.
“Our technology is constantly improving and adapting to new fraud trends as they emerge around the world,” said Fraugster’s Founder and Chief Executive Officer (CEO) Max Laemmle. “We are protecting our clients from the risk of fraud and also giving them a significant revenue uplift because we’re reducing the number of genuine transactions that are erroneously blocked.”
Michael Berger, Business Development Manager at Munich Re, also commented: “The partnership between Fraugster and Munich Re’s Special Enterprise Risk Team provides security for the mitigation of a costly risk online merchants face.”
“It is costly because of two reasons,” he explained. “First, failing to detect fraudulent transactions causes direct costs for merchants. Second, too restrictive risk management based on blocking too many good transactions reduces a merchant’s revenue. We are convinced that Fraugster’s AI empowered technology mitigates this risk in an optimal way.”
Stefan Tirtey, managing partner at CommerzVentures, added: “Fraud is a huge problem for e-commerce. Fraugster helps merchants to concentrate on selling, while reducing fraud and increasing conversion rates.”