Valid8 Financial, a Boulder, CO- and Seattle, WA-based verified financial intelligence company, just announced the raise of $8.5M in Series A funding. In conjunction with the close, CEO Chris McCall replied to our questions about the company, its solutions, the funding, and future plans.
FinSMEs: Hi Chris, can you tell us a bit more about yourself? What’s your background?
I started my career as an electrical engineer with Boeing and then spent over 20 years working in startups that focused on data storage, data networking and enterprise software.
My co-founder, Tod McDonald, a credentialed CPA and Certified Insolvency & Restructuring Advisor (CIRA), recognized the need for specialized software tailored to forensic accounting investigations. We combined my product management, sales and marketing background with Tod’s financial expertise to build software that supports accounting, legal and government professionals.
FinSMEs: Let’s speak about Valid8 Financial. What is the market problem you want to solve? What is the real opportunity?
We offer an AI-powered forensic accounting solution to accounting and law firms, enabling them to quickly untangle complex financial transactions. One particular case showcased the business need for a solution like Valid8. My co-founder investigated a Ponzi scheme that took his team 18 months of grueling work. He realized there must be a better way to manage these cases.
Prosecutions and civil litigation stemming from fraud and other financial malfeasance are among the most complex cases to build. Investigators and accountants require certainty. Our unique approach to delivering Verified Financial Intelligence leverages AI to expedite the process while meeting the highest standards for courtroom-ready evidence.
Historically, forensic accounting has depended on sample risk assessments and tedious reviews of transactions to uncover potential fraud. Our research shows that professionals typically spend up to 90% of their time performing painstaking reviews and data cleanup. We aim to eliminate this rote work and allow professionals to obtain a complete picture of the financial history. Our software analyzes every piece of financial data in just hours and enables professionals to focus on transactions requiring further evaluation.
Our software has applications beyond fraud cases – think due diligence in M&A activity, asset division or bankruptcy proceedings. There’s a significant market, considering the number of audits, the level of M&A activity and the increasing number of tax prosecutions.
FinSMEs: What are the features differentiating the product from competitors?
Valid8 uses best-in-breed technology for data extraction, but more importantly, it focuses on automating all of the other tasks in the investigative workflow that are required after the data is extracted. That is how we are different. We focus on parsing data without the need for templates, reconciling through our automated matching capability, categorizing through the use of AI, automatically tracing the flow of funds into and out of accounts and between accounts and legal entities, and delivering visualizations and reports to help users communicate a compelling, courtroom-ready narrative in just hours, instead of weeks or months. Additionally, because we match every transaction to the source document, the evidentiary chain of custody is never broken. All transactions and the final reports are Verified Financial Intelligence.
FinSMEs: You just raised a new funding round. Please, tell us more about it.
We’ve just announced an $8.5 million Series A round led by Silverton Partners with Touchdown Ventures, First Trust, CPA.com and Capital Midwest participation. Our investors recognize that Valid8 is the standard-bearer in Verified Financial Intelligence. They see that we’re just scratching the surface of how we can help professionals expedite their work, whether it’s attorneys and forensic accountants looking at a fraud case, a partnership dispute or an asset division.
FinSMEs: Can you share some numbers and achievements of the business?
Since we started the company, over 20,000 cases have been resolved. Our software has been used by over 1,800 accounting firms, law firms and government agencies, and we’ve verified 400 million financial transactions.
FinSMEs: What are your medium-term plans?
The new funding will allow us to further invest in our engineering and go-to-market teams, primarily in Boulder, Colorado. According to the US Department of Justice and the Federal Trade Commission, fraud prosecutions and reported losses are increasing. Experts like Gartner predict more M&A activity next year, fueled by technology like AI. And, of course, there are countless audits, bankruptcies and asset divisions every year. As companies are challenged to increase performance while facing resource constraints, Valid8 can be a superpower to the accountants and attorneys on the front lines of such investigations and deals. It’s an ideal time to expand our reach.
FinSMEs
30/11/2023