Visa and ConsenSys back fraud detection platform Sardine’s $52 million raise

Quick Take

  • Fraud detection platform Sardine has raised $51.5 million in a Series B round. Investors include Visa, ConsenSys, a16z and ING Ventures. 
  • This new raise comes only seven months after a $19.5 million Series A round, also led by a16z. 

Fraud detection platform Sardine announced it has closed a $51.5 million Series B round led by Andreessen Horowitz (a16z), just seven months after announcing its last fundraise. 

Other investors include ING Ventures, ConsenSys, Cross River Digital Ventures, Visa, Eric Schmidt and Google Ventures, according to a company release on Tuesday. 

Soups Ranjan, Sardine's CEO and co-founder, previously headed up risk for Coinbase and worked as Revolut’s head of crypto before starting Sardine in early 2020. During his tenure at these companies, he realized that not every fintech or crypto entrepreneur wants to become an “overnight expert in fraud and compliance,” he told The Block in an interview.  

Sardine wants to remove this burden for fintechs by handling compliance and fraud flows, enabling startups to focus on growth. 

“Every company will be a fintech company, if fraud doesn't kill them first,” Ranjan said. “But we want to be there to actually prevent that from happening.” 

Attracting crypto players

Since founding, the startup has secured over 135 customers, according to Ranjan. This includes big-name players in the crypto ecosystem such as FTX, Blockchain.com and Brave. 

Most of these customers have come inbound to Sardine because fraud rates are typically very high in these new finance industries, Ranjan said. 

“We like to say that as you need money to move faster, it just attracts faster fraud,” Ranjan said. “Faster payments lead to faster fraud. So, the more savvy the fintech or crypto entrepreneur, they quicky realize if they don’t solve for fraud at the time of launch then their company won’t survive. That’s one of the main reasons we’ve been successful in this space.” 

Sardine provides two key product offerings. The first is an application programming interface (API) that companies can leverage to solve for fraud and know-your-customer checks at the time of account opening or whenever money moves. The second is a payments platform, which enable individuals to buy crypto and NFTs using bank transfers and bank cards. 

Conversion rates for buying crypto in the US with a card is only around 50% to 55% because bank algorithms are not granular enough to tell the difference between a valid card use and when someone has stolen it for crypto purchases, Ranjan said. Sardine’s fraud detection algorithm is helping to improve this payments flow. 

“The conversion rate, typically in NFT marketplaces you would see is around 80 to 85%,” Ranjan said. "We were actually able to hit 98%, with no consequent increase to fraud, because we were able to convince some of these partners to turn off their fraud algorithms.” 

Sardine recently launched their direct fiat to NFT checkout product and first partnered with NFT platform Autograph for their Tom Brady signature experience launch. 

Raising in a bear market

The Series B raise comes just months after the February announcement of a $19.5 million Series A raise, which was also led by A16z.  The new raise was oversubscribed by six times, Ranjan said. He declined to comment on the startup’s valuation. 

The team decided to raise so quickly after the Series A based on inbound interest and the coming market downturn, Ranjan said. 

“Given that we foresaw the market downturn coming, we realized it's better to have more cash on the balance sheet and have a long runway so we can continue to continue to gain market share,” Ranjan said. 

“We've crossed pretty comfortably over 100 customers now,” said Alex Kushnir, Sardine’s head of commercial development. “And once you get to that point, you get a lot of confidence in terms of what the roadmap should be on the product — and so we just want to accelerate right now.” 

With most of Sardine’s customers coming from inbound enquiries, the new funds will be used to up the ante on marketing as well as scaling sales and expanding internationally, Ranjan said. 

The team are also cooking up a risk insights platform, which will provide traditional finance players with insights into what’s happening downstream once they load money into a fintech wallet or connect to a crypto exchange, Ranjan said. He expects to announce more details shortly. 

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