The founders of SEON are on a mission to change the world, specifically to eradicate online fraud and identity theft, and to democratize fraud protection.
The need for online Fraud Protection:
Anyone who runs an online business knows about the dangers of cybercrime. Where online transactions exist, so do massive online fraud and identity thieves.
Digitalization has increased the number of online transactions, and COVID has accelerated that trend. With more and more companies going online, even more customers are paying online. For example, mothers and grandmothers are buying their supermarket shopping online for the first time using their credit cards to do so. But these newcomers are enormously vulnerable. They don’t know what to look for and how to protect themselves from online fraud.
SEON’s founders, Tamas Kadar and Bence Jendruszak, told me that there are vast numbers of bad people out there who will steal those credit card details. The online fraudsters then buy goods and cryptocurrency with them. SEON provides solutions for online companies that will flag up such problems, spotting dubious transactions.
Another part of online fraud protection that they can offer is against identity theft. SEON’s systems work both as a firewall before all these online frauds happen and as a detection service when they are happening, protecting the potential losses.
Finding the need for online fraud protection the hard way
Bence and Tamas were already accustomed to running freelance side hustles in the tech world when they met at Corvinus University in Budapest in 2015. They discovered a mutual desire to provide solutions to problems. To this day, they see it as where both their natural flair and their passion lies.
They studied together and found they also had a mutual interest in cryptocurrency and Digi-finance. It was early days for both these areas back then, and so Bence and Tamas would meet up for drinks together and brainstorm ideas. They wanted to launch a crypto exchange but could see that the market had problems, with transfers taking days to make through the banks and transactions needing ID’s which they could see was hugely risky in terms of online fraud. Tamas and Bence thought that by using credit cards, they could get around both these problems.
They thought their platform would be completely safe but lost thousands in their first week alone to online fraudsters. These customers seemed legit, their emails checked out, but the money would just disappear, and with crypto, it was untraceable. It isn’t the same as a standard bank transaction where you can call your bank and reverse the payment if you have been defrauded. These types of transactions are heaven-sent to silent criminals practicing online fraud and heavily targeted. They cannot be reversed, and resale values are high.
Tamas and Bence looked around for ways to protect their crypto platform and found what was on offer in the market was too slow, too expensive, and not nearly effective enough. They put their problem-solving skills to good use and decided to build the protection themselves, a system with more agile tools, faster implementation. With no one servicing this massive market need, they realized this was an opportunity to solve their own problem and the same issue for others on a grand scale.
The Strengths of SEON
SEON is designed to integrate with the customer’s existing online platform and do so fast so that business continues as usual while fraud rates drop continually. It flags up transactions that look wrong. This, in turn, saves time, cost, and massively reduces the immense business risk from online fraud.
The system uses Machine Learning to detect fraud, identity thefts, and other cyber-crimes. Unlike its competitors, it provides a complete picture of why users are given certain risk classifications. Their wide-scale APIs ensure easy integration and high functionality.
They are unique in their marketplace. Competitors offer no pricing details on websites, while SEON’s are clearly displayed. If people approach their competitors, they have to submit to a tedious series of sales calls. With SEON, people can sign up and instantly access the tools they need.
Users can integrate the tool into their system within minutes by downloading the extension. The tool extracts the data they gather from their customers without the need for databases and feeds it back to SEON.
This ability for customers to instantly self-serve is how the tech world has been going, with Netflix and Spotify leading the game, but within RiskTech, SEON’s solution was an industry first.
The Entrepreneurial Journey
Between 2015 and 2017, Bence and Tamas finished their studies but at the same time were researching, planning, and building. They officially launched SEON in 2017.
They set up in a co-working space and grew from there rapidly, adding more people. They faced many early challenges during the early years. At one point, they were running out of money and perhaps facing the end of the road when they were approached by Eurobet, a massive Italian gambling company. It was a game-changer, and word spread to other crypto platforms, and high-risk merchants were asking to use it. Within that year, they had several large international clients.
They were able to secure an initial funding of €50k in 2017 from Fiedler Capital. They then raised €500k from Portfolion, Fielder and business angels. The next round was for €1m again from Portolion, which meant they were to able a second office in London.
Even before COVID hit, they had already become profitable with top-line revenue growth of between 10-25% a month. Tamas and Bence could see that to service the size of the market that COVID had brought, they needed to scale up further, fast.
The entrepreneurial journey
In early 2021, Tamas and Bence achieve the largest Series A funding round in Hungarian start-up history. The funding was completed working with the team of VCs at Creandum and will enable SEON to spread its wings further afield and on a massive further growth plan. Creandum has an impressive record of Euro tech successes behind them, including Spotify, Klarna, and Bolt.
SEON’s current customers are mainly SME’s and corporations who run online businesses, all of whom are at risk from online fraud. They also service giant corporates such as Air France and Avis and various payment service providers.
At present, 30% of their customers are based in Asia, 40% in Europe, 20% in Latin America, and 10% in the US. The funding will enable increases in all these areas. Tamas and Bence have already opened their first American office in Austin, Texas, which has a massive and growing start-up community. They will continue to focus on Europe but, in time, want to expand further in the US and are also opening a base in Jakarta to give 24/7 support and help their expansion into Asia.
In addition to these already massive plans, Tamas and Bence and their team are also building apps for Shopify stores, enabling them to use the product with one-click integration. There are over 1m Shopify stores, and yet it is a massively under-served market suffering colossal risks of online fraud. The only options available to their owners can cost around $1500 a month, an expense beyond their scope.
The Shopify project is typical of Tamas and Bence’s commitment to a proactive approach to determine solutions to all the problems surrounding online fraud. They are also collecting digital footprints and data points with the eventual aim of making it impossible for these criminals to operate. This part of the business will continue to run out of Budapest.
Their aim from the start was for SEON to run on a product-led growth model like Slack and Dropbox, which was comparatively unheard of in risk tech. It has been this product-led mindset that has been the cornerstone of their success.
Unlike many entrepreneurs, it was not a drive for freedom that caused them to start their own business. Instead, it was the same problem-solving ethos they discovered they had in common at university, which is what they so love about doing what they do.
The correlation is apparent in their five-year plan is to be the go-to solution for any online business. The aim is to do an IPO then too. They are not interested in a corporate take-over. They want to stay involved, providing solutions to credit card companies and service providers so that, one day, online fraud becomes just a distant memory.
Advice for others:
I asked Tamas and Bence what advice they could offer other entrepreneurs early in their journeys, and they were kind enough to provide the following thoughts.
- Be brave enough to take risks, or you have no chance of success. Push forward no matter what people say.
- Persevere. SEON was just a scrappy start-up once, and with luck and persistence, Bence and Tamas have got to where they are.
- Knock on as many doors as possible. It never hurts to have conversations, gain feedback, and keep gaining from other people’s knowledge.
Bence and Tamas say that from the start, they have learned massive amounts. They keep learning, keep absorbing, and that is an enormous part of their secret to success.
Another duo proving that businesses run across countries can be hugely successful is Pentatonic