Criminals thrive during times of uncertainty. The last two years have provided ample evidence of this axiom. Within days of the pandemic breaking out, the FBI warned that cyber crooks were leveraging the health crisis to launch ransomware attacks against unsuspecting victims. Online thugs launched similar sleazy scams this year on the back of the Ukraine crisis. In short, financial fraud always grows in tandem with crises. However, so does the opportunity for entrepreneurs creating solutions to prevent individuals and businesses from suffering.

Fraud-detection startup SEON is the latest regulation technology, or regtech, firm to prove that point. The London-based Anglo-Hungarian firm has just announced the close of a $94m in a Series B round. Silicon Valley-based IVP led the raise.

Other investors includes existing investors Creandum and PortfoLion, as well as, angel investors including founders and senior executives from the likes of Aiven, Coinbase, DataDog, DoorDash, Figma, G2, GitHub, Public, Slack, Supercell, UiPath, Veriff and Wise. SEON declined to share its valuation.

The fraud-busting company will use the cash injection to grow its presence in North America, Latin America and in the Asia-Pacific.

Tamas Kadar, CEO and co-founder of SEON, tells Verdict that the business tripled its annual recurring revenue last year, and that it now count the likes of Revolut, NuBank, Afterpay, Patreon, Sorare and mollie among its customers.

The biggest part of that growth, he tells Verdict, has been due the acceleration of online shopping. As we’ve reported in the past, more consumers turned to ecommerce platforms during the coronavirus crisis. Platforms like Amazon boomed as a result. Companies facilitating purchases on those platforms also grew. The explosion of the buy-now-pay-later industry is just one example of this.

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While this has clearly provided customers with more options, it has also created challenges. Advocacy groups have, for instance, warned that the lack of regulation in these exploding sectors could put people’s financial health at risk. Kadar warns that the flourishing fintech sector has also raised the risk of fraud.

“The pandemic has created a shift in the power battle against fraudsters due to the growing number of digital payment and customer engagement methods,” he says. “Customers’ expect rapid services, so businesses are having to balance this with risk better than ever or risk losing customers, and the fraudsters know this.”

Research firm GlobalData warned that the shift from offline to online shopping would raise the risk. Analysts wrote that”the industry is not ready for the fraud risks that come with that shift.”

SEON not alone in fighting fraud

Unsurprisingly, SEON is not the only fraud-fighting startup to top up its coffers on the back of the rising threatscape. Other recent funding rounds include and Bureau. The cybersecurity sector has enjoyed a similar boon during the pandemic. Both sectors – the fraud-prevention and cybersecurity sectors – are part of the bigger regtech boom.

In short, the regtech industry wants to automate companies’ compliance challenges. Apart from cybersecurity companies and fraud-fighting firms, regtech ventures also includes businesses like risk assessment, digital verification and legaltech ventures.

Demand for these services has grown since the 2008 recession. The financial meltdown in the noughties forced lawmakers around the world to introduce stricter rules against financial institutions. The Dodd-Frank bill in the States, and the EU’s second Payment Services Directive, or PSD2, are both examples of the tougher policing of the industry.

As a result of these tougher rules, the cost of compliance skyrocketed. The crises of the past two years have done nothing to slow down the growth of the sector.

Regtech companies raised around $18.9bn in 2021, more than doubling the $7.8bn raised in 2020, according to a recent report from FinTech Global.

A new study from Juniper Research estimates that the global spend on regtech solutions will exceed $204bn, meaning it would account for over 50% of all regulatory compliance spend for the first time. The study estimated that $68bn will be spent on regtech solutions in 2022.

GlobalData is the parent company of Verdict and its sister publications.