With a new funding round, a Northern Virginia company offering an increasingly relevant digital service has gained unicorn status. And if it continues to grow as fast as its leadership expects, it could have huge implications for the success of its early employees, and the region.
Online identity verifier ID.me closed a $100 million Series C investment round, with a valuation at $1.5 billion.
The round was led by Greenwich, Connecticut-based Viking Global Investors, with participation from CapitalG, Google parent Alphabet’s independent growth fund that was invested in the likes of the now-public Lyft and Airbnb; Morgan Stanley; Lead Edge Capital; WndrCo; and Willoughby Capital. Other investors include former U.S. Secretary 0f Commerce Penny Pritzker, who invested via her firm PSP Partners; Marcelo Claure, CEO of SoftBank Group International; Alexa Von Tobel, founder of the Northwestern Mutual-acquired LearnVest; and Dan Rosensweig, CEO of Chegg. Additionally, BoxGroup and Moonshots are returning investors.
The McLean, Virginia-based company also raised a $19 million Series B led by FTV Capital in 2017, for a total of $39.8 million in equity financing ahead of this new raise.
The Series C vaults the company into a new echelon for a tech company. Not only has it reached the unicorn status of being valued at more than $1 billion, but leadership is talking of going public in the next two to three years.
Having Viking, a well-known name on Wall Street, as the lead “is a great signal to the public markets that we are coming,” CEO Blake Hall told Technical.ly.
ID.me’s digital wallet technology allows users to prove their identity quickly online. The company describes its work in the digital verification space as akin to Visa or PayPal in the digital payments space: Credentials for one person can transfer easily to different platforms, so they can avoid creating a new password for every site they visit. It’s government-certified, so think of it like a digital driver’s license.
“As our economy kind of explodes in terms of digitization, you’re really looking at the password problem on steroids,” Hall said. “It has never made sense for passwords to only work at the organization that you signed up for. Like Visa, we have a consumer-centric model, where you create one secure and trusted login, and then you can use our secure digital identity network to take your identity anywhere that you want it to be.”
The product is used by commercial brands, government agencies and individuals, and it counts 39 million users. Groups such as veterans, students and teachers who are verified can earn discounts through ID.me’s shopping platform, too.
ID.me has seen big growth amid the pandemic as consumers shift more of their activities online, from shopping to banking to healthcare. In the past year it’s become the identity verification vendor for 19 states (and 11 more coming soon) when issuing unemployment benefits, a process that ID.me data says has seen a significant amount of fraud. It also works with federal agencies such as the Department of Veteran Affairs, Department of Social Security and Department of the Treasury.
That has put the company into a position to become a major employer in the region, as well. Back in November, ID.me announced a massive hiring push, with plans to bring on more than 1,000 new employees in the Northern Virginia area by the end of 2021. (Check out its dozens of currently open roles.) The company is expected to reach 1,000 employees total by the end of Q2, adding between 150 and 200 new people per month. It’s on pace to close 2021 with over 2,000 employees. And many will be based in the DMV region, where ID.me has offices in McLean. It is also opening offices in Tampa Bay for member support and operations staff.
This new funding will support a buildout of its network on both the consumer and client side, as well as to fuel hiring, Hall said.
While most employees are virtual now, some functions dealing with personal data are onsite. But the company values its office culture — and the place where it’s headquartered matters to its CEO.
“We’re going to grow a ton here in the local D.C. area,” said Hall, an Army vet who founded the company in 2010. The DMV region as the choice for headquarters “was more about the talent pool in that, rather than compete with everyone in Silicon Valley or Boston or New York, we like to be a bigger fish in a smaller pond, if you will, because it means you can retain talent and really transform a city. Our goal is to IPO and to make a lot of our product managers and engineers millionaires who can then start their own companies, become angel investors.”
He hopes ID.me can be akin to the PayPal of D.C., referring to the famous alumni who founded and led the Silicon Valley payments company — Elon Musk, Peter Thiel, Reid Hoffman — and went on to found another generation of powerhouse companies. He also hopes it can build a local legacy where LivingSocial failed: The coupon-based social network was once a crown jewel of the #dctech scene, raising over $928 million in nine rounds. But then came the decline and a recurring pattern of layoffs before it was eventually acquired by Groupon in 2016.
“One IPO can really transform the local market,” he said, “and I think a lot of folks were hoping that LivingSocial would do that, but certainly, the way that we would love to pay it forward is to be that really large, $10 billion-plus IPO for the D.C. market that really transforms the seed and Series A and entrepreneurial talent that can really go out and do their own thing.”
As for that $1.5 billion valuation, Hall says the company is “just getting started.”
“If you think about what Apple and Google have with their app stores, they have four things: They have identity, they have a trusted device, they have payments, and then they have distributions, that developers can have people download their apps,” he said. ID.me will have all of those soon, he said, with the addition of a payments function, plus the benefit of being on the cloud, separate from a specific operating system. “We really are creating an app store, where once you’re logged into ID.me, you can open up these federal agencies as apps without being challenged for login. And that is just transformational,” in terms of removing friction.
While the first 10 years of building the company were a “slog,” Hall is explicit now about his expectations for ID.me’s growth: “I think the business can be worth over a trillion dollars,” he said. It’s past the “chicken-egg problem” of having enough users to bring on merchants and vice versa, so the company can move faster in picking up more of both.
“If we’re not worth more than $100 billion, I will be super disappointed in a few years,” Hall said. “The way I personally feel is maybe the way an Ironman athlete feels when they finish the swim and get onto the bike. I think a lot of folks look at financing and they think, ‘Oh, they must be partying,’ and it’s like, ‘No, I still gotta do the bike and the marathon’ because these people expect their money back many times over and we’ve got a lot of work to do.”
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