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Verid Secures $13.2 Million

Security startup Verid Inc. has pulled in $13.2 million in Series C funding to boost its service for tackling online identity fraudsters.

The round, led by Fidelity Ventures and CIBC Capital Partners, also included Palisades Capital. The Series C dwarfed Verids previous round of $3 million, which was completed in February 2004, and it brings the startup’s total funding to just over $20 million.

Verid provides a service designed to check that users of online banking or e-commerce sites are who they say they are. Rather than the traditional approach of relying on user names and passwords, Verid asks its clients’ customers a series of questions. Most of these are of a personal nature, such as, "What color was your grandma's Studebaker?" or questions about relatives' names. The idea is to add additional layers of security and prevent identity fraud.

The service is run by the Fort Lauderdale, Fla.-based firm from its own data center. Using software that it developed itself, Verid links up with its customers’ Web portals to verify end-user details, which are transferred via encrypted HTTPS links. Questions are pre-configured according to the customer’s wishes and checked for effectiveness with unnamed third parties. (This is, after all, the world of enterprise security.)

Kevin Watson, Verid’s CEO, says high-profile security snafus have done the startup's strategy no harm at all. Breaches at LexisNexis and ChoicePoint have clearly shown prospective buyers the necessity of verifying identity (see LexisNexis Begins Mailing Notifications, ChoicePoint Appoints Independent Exec, and Don't Be a Data Privacy Dunce).

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