A start-up that uses artificial intelligence (AI) to carry out complex background checks needed in today's "sharing economy", has raised $25 million from venture capital firms that have previously invested in the likes of Spotify and Dropbox.
With the rise of on-demand companies such as Uber, background checking has become critical but also needs to be done in a fast way, often from a different part of the world. How can a company based in San Francisco verify a cleaner in London, for example?
This is where Onfido comes in. Its software carries out background checks across numerous databases, checking out credentials in areas including education and driving. A user is then required to scan an official identity document such as a passport, then take a selfie to verify the actual person.
"Background checking companies were built for an offline world. They would do database searches and employers would do identity verification with passports in house. But today we live in an online world where that model doesn't work," Husayn Kassai, CEO and co-founder at Onfido, told CNBC in a phone interview on Wednesday.
"By using machine learning we can identify a person better than humans. We can detect fraudulent patterns on documents to say whether the person is using a fake identity."
In theory, the more background checks the Onfido's system does, the smarter it should become in detecting fraud. That is the basis of artificial intelligence or machine learning.
Investors who participated in the round include Idinvest Partners, Crunchfund and Wellington Partners Venture Capital, an investor in music streaming site Spotify.
The four-year-old British start-up said it has seen 40 percent revenue growth in the U.S. in the past 12 months and is aiming to complete its 10 millionth check this year.
For small- and medium-sized businesses, the start-up offers its service for free but the company can pay per background check. For larger enterprises, Onfido has a subscription service and charges for each background check.
Onfido's customers include French long distance ride sharing start-up BlaBlaCar and house-sharing firm Onefinestay.
Kassai said the $25 million will be used to fund expansion into the U.S, its fastest growing market. Onfido will also double its headcount in the next 12 months from the 96 people it currently employs in its London and San Francisco offices.
"The second part is continuing to develop the technology. We still have a lot to do and trust is the currency of the future. We are going from a world where people know each other and are in one job, to one where they are doing several jobs, and doing things like getting into a car with a stranger," Kassai said.
But Onfido is not alone in the space. Last year, background checking firm Checkr – whose clients include Uber and Handy – raised $30 million, according to TechCrunch. And Onfido will also be up against established background checking firms.
Still, with the number of "sharing economy" start-ups on the rise, there is likely to be enough business to go around.
"The fact we are global and automated is the key differentiator," Kassai told CNBC.
