Canada-based passwordless authentication company Stytch raised $30m in Series A funding led by Thrive Capital.
The round saw participation from Coatue Management and existing investors Benchmark and Index Ventures. In conjunction with the funding, Thrive Capital’s Gaurav Ahuja and Benchmark’s Chetan Puttagunta will join Stytch’s board of directors.
The funding comes just months after it raised a $6.25m seed round led by Benchmark with participation from Index Ventures and a number of angels including Plaid co-founder William Hockey. That round was actually raised last summer around the time of Stytch’s founding but only announced this year. Other angels that have backed the company include Figma co-founder and CEO Dylan Field, Very Good Security co-founder Mahmoud Abdelkader, startup advisor Elad Gil and early Stripe employee and Cocoon co-founder Amber Feng.
The company intends to use the funds to roll out more authentication options, including mobile biometrics, WebAuthn, OAuth logins, QR codes, and push notification login, to launch additional user infrastructure features to continue to onboard and engage users, and to build out session management and advanced fraud detection solutions.
Unlike the traditional passwords used by most web applications, Stytch improves security and user experience with passwordless authentication. Led by y two former Plaid employees, Reed McGinley-Stempel, CEO, and Julianna Lamb, CTO, Stytch is building a developer platform with the tools and infrastructure to enable companies to incorporate passwordless authentication options into apps and websites.
Its APIs and SDKs can improve user onboarding and retention by removing passwords from their applications and replacing them with more secure and low-friction authentication options including email magic links, one-click user invitations, biometrics, and SMS and Whatsapp passcodes.
Over the past year, Stytch’s developer experience and flexible API-first approach have attracted more than 350 companies of all sizes and a handful of Fortune 500 firms. This week, the company launched out of beta to make all of the features publicly available.
Given that nearly 65% of users reuse passwords across accounts, it can pose major security threats and breach liabilities, according to a study conducted by Google. In addition, many people struggle with remembering passwords and the password reset process can be so frustrating that many users just give up on the account. This can negatively impact businesses that rely on e-commerce sites.
Commenting on the investment, Thrive Capital partner Gaurav Ahuja said, “Over the past several years we’ve seen that most authentication systems are both outdated and pose a security risk to users. Stytch is addressing both of these issues head-on.”
Ahuja added, “We talked to many developers using the product and saw firsthand how impressed they were with the best-in-class API docs and speed to go live. The product is specifically designed for improving signup conversion and user retention, providing front-end tools to get started quickly. We’re excited to be part of the Stytch story and come onboard to support Reed, Julianna, and the team as they grow.”
Stytch is not the only company out to kill the password. Boston-based Transmit Security in June raised a massive $543m in Series A funding in what was believed to be the largest Series A investment in cybersecurity history and one of the highest valuations for a bootstrapped company. Microsoft has announced plans to make Windows 10 password-free, and Apple recently previewed Passkeys in iCloud Keychain, a method of passwordless authentication powered by WebAuth.
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