African Startup Smile Identity Raises $7 million in Series A Funding

The development of the tech ecosystem in Africa in the last few years has been particularly heartwarming. Late last week, Smile Identity, an African-focused identity verification company, announced that it had secured $7 million in its Series A funding round. This is one of the largest investments ever made into an African startup, which makes it all the more newsworthy and encouraging for the African tech scene. 

This latest round brings Smile Identity’s total funding to over $11 million, following the $4 million seed round secured in 2019. It was led by Costanoa Ventures, with participation from nine other venture capitalists. The company has said that it plans to use the fresh funds to improve its services, expand across viable markets, and hire more software engineers and support staff across Africa. 

Who/What Is Smile Identity?

Smile Identity is a US-based startup that provides identity verification and Know-Your-Customer (KYC) compliance tools for Africans. These digital tools help African banks and other financial service providers, and telecommunication companies better engage their customers. 

The startup was founded by Mark Straub and William Bares in 2017 as a way to standardize ID verification across the continent. The idea for the startup was borne after its co-founders noticed the way IndiaStack effectuated ID verification in India. They then partnered with other entrepreneurs in Nairobi and developed a solution that leveraged camera technology to verify darker skin tones. 

Smile Identity works in collaboration with local ID authorities in six African countries – Nigeria, Ghana, South Africa, Kenya, Rwanda, and Uganda. The platform combines ID validation with proprietary face verification and liveness checks. These support non-surveillance. consent-based access and financial inclusion in Africa. 

The startup’s software is used in banking, telecommunications, fintech, and public social welfare programs. Its customers include payments companies like Paystack, Paga, and Chippercash; digital mobile banks like Kudabank and Umbra; and traditional banks like Stanbic IBTC; cryptocurrency exchanges like Binance, Luno, and Paxful; and supply-chain businesses like Twiga. 

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Why Is Their Work Important? 

A World Bank report estimates that 1 billion people in the world do not have official proof of identity. This challenge is worse in Africa where an estimated 500 million people still struggle with proving their identities to gain access to services. 

Africans also spend a lot of time verifying their identities when traveling abroad, even with formal IDs. This was because most face recognition systems are built in the United States and Europe, and are unable to verify darker skin tones. All of this led to an avoidable waste of time and a limitation to Africans’ economic activities. 

Straub and his partners went ahead to develop a de-biased face recognition system that was more accurate for identifying Africans. At first, finding a product-market fit was a challenge as there were no previous, similar innovations in Africa to act as a rule-book. But with continuous replications, the team was able to find the correct mix of cost and technology needed for the African market. 

With the help of various experts in Machine Learning and Computer Vision, Smile Identity has made it a whole lot easier for Africans to get verified and eliminate the bias they faced in verification processes. They continue to build a technology layer that makes Africa’s new and old ID systems accessible to a new generation of African tech companies.