Mergers and acquisition activity took off in the fraud space in June with PayPal’s $120 million acquisition of Simility and Twitter’s buyout of Smyte. Meanwhile, fraud detection startup CashShield closed a $20 million Series B funding round.
PayPal’s all-cash deal to acquire Simility is expected to close at the end of the third quarter, after which PayPal will offer Simility’s anti-fraud solution to merchant clients. The deal is also expected to improve the results generated by Simility’s machine-learning based solution by allowing it to train on a larger real world data set.
“We have one of the largest data sets about how online fraud happens,” PayPal COO Bill Ready told Reuters in an interview. He also said, “We are buying a company that provides great tools that merchants can use on their own.”
The Reuters article also noted that since separating from eBay in 2015, PayPal has sought to transform leverage partnerships and acquisitions to transform from payment services providers mostly for eBay to offering a suite of digital financial services to small and medium size merchants. This includes PayPal’s May acquisition of Swedish payments company iZettle for $2.2 billion, its largest ever acquisition.
Twitter joined the M&A field in June by acquiring for an undisclosed sum Smyte, a startup that offered tools to stop online abuse, harassment, and spam, and protect user accounts. Smyte was only in business for three years before being acquired, but managed to get a decent number of well-known American tech startups as clients, including Indiegogo, Meetup and Zendesk. In fact, about-fraud.com was in the process of adding Smyte to our providers page before the company entered acquisition talks.
Smyte promptly dumped all its customers the day after it closed the deal with Twitter, something about-fraud.com will address in a later article. The company’s website has been replaced with a short note mentioning the company’s shutdown “effective immediately.”
Meanwhile, Singapore-based online fraud detection startup CashShield announced it had raised $20 million in Series B funding. CashShield said it intends to use the money to expand its international sales teams and continue developing its anti-fraud solution. The round was led by Singapore’s sovereign wealth fund Temasek Holdings, and included previous investors GGV Capital and Nest co-founder Tony Fadell among others.
CashShield has raised a total of $25.5 million in investment since it was founded in 2008 and has major clients in Europe, the U.S. and Asia, including Alibaba. The company says it’s solution combines machine learning with Wall Street high-frequency trading techniques to provide a fully automated anti-fraud solution. CashShield has claimed that it protects over 10 million online accounts and $500 million in transactions every month.
“Most of the large enterprises are trying to create the perfect defense,” CashShield CEO Justin Lie told Venturebeat. “We try to prevent the stolen data from being monetized. If you can’t sell it, it decreases the incentive to break in.”
Lie did not provide any more details on how CashShield prevents criminals from monetizing stolen data.