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Andrew North is the co-founder and CEO of Sumsub, which he founded with his twin brothers Jacob and Peter in 2015. Andrew defines the company’s strategy and operations and leads Sumsub’s mission to create a world free of money laundering and digital fraud. Andrei was born in Israel and graduated from St. Petersburg State University with a degree in theoretical physics.
In an exclusive interview with Andrew, he stated…
Winston Churchill is often quoted, but there is a fantastic phrase we should all respect in the business world. We live with what we’re given. We create life through what we give. Whatever you do, it’s important to take care of the man on the left and the woman on the right. Give me that. From the beginning, our decision was focused on helping people, which gives us unprecedented satisfaction.
It’s about making life better by giving people what they need.
The main problems in raising funds are related to the terms of the transactions. These terms should never limit the work of your company and should always be to the benefit of both parties. Another challenge for us is to find investors who can support our business culture. You see, to work together effectively, you have to love each other.
Read on to find out more about Andrew North and his journey.
Tell me about your personal experience and why you started your business.
Andrew North: Before I started Sumsub, my twin brothers and I were working on a slightly different project. We have developed a software that allows us to detect changes made by graphic editors. It proved to be a very useful tool for the future.
We started applying it to cases of insurance fraud. It turned out to be a pretty common trick: The scammers bought a car in perfect condition and then filed claims by photoshopping photos of the car and faking damage that wasn’t there. Because everything is done on the internet, the insurance companies could not see the falsification of evidence. After all, it has become an easy way for crooks to make money.
Although we initially targeted insurance fraud, similar cases have surfaced in all sectors. So we continued the search. Where can we use our solution? At one point, our partners put us in touch with various police departments and we were suddenly involved in assisting police investigations. So we provided the police with various forensic tools; at the climax, it was probably time to unlock the fake satellite images! As a result, this decision has received a lot of attention from law enforcement agencies around the world. Needless to say, we were happy to take advantage of this opportunity to catch more bad guys.
Gradually we realised that government organisations were involved in all major projects, and we did not want to go down that route. We wanted to grow quickly and make significant strides, but we could not do so through such complex, inflexible and slow-moving government institutions. Let’s go to the modern world of business.
Around the same time, my good friends at Cryptopay were under pressure to develop their compliance processes and protect against fraud, which was an ongoing problem for their encryption portfolio. They happened to offer us a task – we had to build a solution based on our software, which worked on the recognition of graphic editors.
We took advantage of this opportunity, added the necessary functionality like face matching, AML data, and other rich features, and we ended up with a solution that works well. It was so good that four other companies we know in the industry quickly adopted our decision.
As you can see, time has helped us a lot. Around the same time, the carpool industry began to explode worldwide and fraud was a major problem, especially in Eastern Europe. As a result, more and more industries have turned to us for audit, fraud prevention and compliance. We started working with blockchain and had several projects in Asia, like BlueWhale in South Korea. We started by expanding from Europe to Asia and then to the whole world.
What is your current core product and can you tell a previous story about your current core product?
Andrew North: What began as a basic identity verification framework has evolved into a powerful system often referred to as a cockpit. It is the perfect tool to control everything from a simple dashboard, without any technical assistant.
In addition to members of the support and legal teams, compliance officers can set up the necessary controls – be it KYB, KYC, transaction tracking, etc. And not only that: Sumsub’s solution allows users to create the stages of each journey, customize them for different user groups, change the look and feel, and A/B test; it’s all there. This has given us a competitive advantage in the market.
How much money have you raised in total so far? When was the last funding cycle?
Andrew North: Our funding is about $7 million. Our roundtable discussion was led by Flint Capital and Ilya Perekopsky, vice president of Telegram. While we can’t disclose the exact amount, we can say it was close to $1 million.
We recently raised $6 million as part of a Series A led by MetaQuotes, a leading developer of financial trading software.
What internal decision-making processes determined the start of fundraising and what were the logistics of this? And how many investors did you meet, how did you meet them, and which channels served you best?
Andrew North: Well, like any other business, our fundraising is tied to our expansion plans. Once we have cemented the idea, we begin to assess our burn rates. When we find that our funds are not sufficient to cover our future expenses, we look for help.
We raise money mainly through networking. Some of our potential investors came to us because they heard our name in a recommendation or came across an online article about us. We can also find potential investors through our colleagues and look for them ourselves.
We also had the opportunity to connect with investors from South Korea.
What are the main challenges and obstacles you have faced in fundraising? If you had to start over, what would you do differently?
Andrew North: The main problems in raising funds are related to the terms of the transactions. These terms should never limit the work of your company and should always be to the benefit of both parties. Another challenge for us is to find investors who can support our business culture. You see, to work together effectively, you have to love each other.
What are the milestones for the next cycle? And what are your goals for the future?
Andrew North: Overall, we are satisfied with our growth rate and the quality of our products, but we have even higher goals. We are looking to expand in the Americas and hope to increase the share of business in these regions to 40%. Not only in terms of revenue, but also in terms of establishing themselves in the communities, knowing the market, potentially attracting new team members and seeking out potential investors. This takes the globalization of our business to a new level.
We have big plans for the job afterwards and look forward to meeting many new team members.
How did you engage users and what strategy did you use to grow your business from the beginning to now?
Andrew North: First and foremost, we are a B2B company, so our driving force will always be our expertise.
We pay special attention to content projects and make sure we reach the right audience. Achieving concrete results and demonstrating our deep understanding of compliance and fraud prevention is ideal for reaching a relevant audience that likes our approach and wants to integrate it into their business.
Frankly, we’re still using the same methods and tools we’ve been using for years. The only difference is that we see more events offline for obvious reasons; everything is digitally driven.
Which software was the best marketing tool for the growth of your start-up and why?
Andrew North: I hope it’s not a cliché, but in terms of the tools that helped us the most, Google Analytics, Google Search Console and Google Data Studio were invaluable. There are many marketing tools available, and we’ve tested some of them. We use a few as well, but Google’s tools have proven most effective. After all, Google is the world’s leading search engine and the majority of our audience uses it.
By the way, we just started testing Naver, which we now want to integrate into our marketing strategy. There is still much to do, moving forward!
What do most startups get wrong with marketing in general?
Andrew North: Not counting expenses is probably the most common business mistake. Companies continue to operate without knowing the acquisition costs of their customers, and that is unwise. At some point they realize that the customer is costing them more than they are paying.
How do you plan to expand globally?
Andrew North: I would say that we are very well represented in our home regions of Israel and the UK, although we have a number of clients in the United States, Australia, New Zealand, Singapore, Hong Kong and South Korea. We are already reasonably global, but it would be good to further strengthen our current presence in America and Asia.
What are the most common mistakes companies make in their global expansion?
Andrew North: It’s hard to say because I can only answer from personal experience. Our company started in the right place, at the right time, with a question that gave us a place in the market. We have not encountered any obstacles on the road to global expansion.
How do you deal with the COWID 19 epidemic to ensure the survival of your business?
Andrew North: COVID-19 had less impact on us, despite a significant drop in demand at the beginning of the pandemic. In particular, we were affected by the temporary closure of the transport sector; we have several clients operating in this sector, including Uber. So we wanted to feel the downside, and we did. However, several financial companies contacted us shortly after the outbreak of the pandemic; the growth was simply explosive. In August 2020, we saw an increase of 300% over August 2019. The number of inspections has increased by 600%.
COVID-19 has put more companies online. This has increased our potential client base and we have started working in new industries, such as education.
What is the best advice you have ever received? What advice can you give to someone who wants to do things similar to you or in a similar direction?
Andrew North: Winston Churchill is often quoted, but there is a fantastic phrase we should all respect in the business world. We live with what we’re given. We create life through what we give. Whatever you do, it’s important to take care of the man on the left and the woman on the right. Give me that. From the beginning, our decision was focused on helping people, which gives us unprecedented satisfaction.
It’s about making life better by giving people what they need.
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