Insights & Analyses

Money Moves: Trends for Investing in Identity in 2020

In advance of our inaugural Investing in Identity Digital Forum—where we’ll unite with investors, prospecting startup founders, and market analysts— the OWI team is here to whet your appetite with some DealBook highlights from the first half of the year. Study up here on some of the most significant identity deal trends and highlights before diving into the Forum next week to learn more about funding in the growing, dynamic identity industry.

Cybersecurity has seen unprecedented levels of deal-making, with identity management, verification, and authentication companies becoming a crown jewel for VCs. As the enterprise shifts to cloud-based data centers and security, digital identity solutions promise big money—really big money (we’re talking $7B in 2019). Now, COVID-19 has caused a seismic acceleration of online identity verification and digital account opening, with VCs eyeing the next wave of darlings doubling down on digital transformation

So far, OWI has tracked 82 deals in 2020. We’ve synthesized just a few of the many highlights of the first half of the year, reopening the insights shared in our weekly DealBook:

Largest deals

The single largest deal we tracked through the first half of the year was Visa’s acquisition of Plaid in January to the tune of $5.3 billion. As a platform that integrates transactions and personal data like phone numbers and bank accounts, Visa’s acquisition of Plaid at roughly twice its final valuation represents a seismic deal in the identity sector.

Meanwhile, the largest divestiture tracked was the February sale of RSA by Dell Technologies to a consortium of investors. Outside of M&A, the most significant fundraising was Dun & Bradstreet’s recent IPO to raise $1 billion and AppsFlyer’s $210 million funding round, also in January.

Average deal size

OWI has seen an average deal size of $162 million across all deals tracked year-to-date. Excluding M&A and IPOs to look at funding rounds only, deals have averaged $41 million in the first half of the year.

Most active investors

In terms of most deals by count, we clocked in a tie between Index Ventures and Y Combinators at four deals apiece. As for deal size, Visa comes out as the top investor solely for its important acquisition of Plaid. The largest funder based on deal participation, however, is Accel, having participated in $372 million worth of deals across three funding rounds: ForgeRock, Privitar, and SentinelOne.

If you are interested in learning more about investing trends and market intelligence, contact us.

We are identity nerds. We love this stuff.

Our Analyst Take: Investor Trends

To nobody’s surprise, the COVID-19 pandemic impacted some of the investment trends we’ve seen over the first half of the year, particularly since March when lockdowns spread across much of the world:

  • Digital onboarding – Since March we’ve seen a steady and marked sequence of deals related to automated onboarding and digital identity verification: Onfido in April ($100 million), PXL Vision in May ($4.8 million), Vetty in June ($4 million), and Global Data Consortium in July ($3.5 million).
  • Telehealth – We also saw notable funding rounds for telehealth companies like Medici ($24 million) and Alan (EUR 50 million), both in April, as people around the world sought new ways of accessing services like medical care from home lockdown.
  • Remote access – In May, Secret Double Octopus had a $15 million funding round, to meet a “rapidly growing need” for remote-access security, especially as more enterprise employees began working from home during the coronavirus pandemic.

As noted above, identity investment has been active, raising a collective $7 billion in 2019. With this activity from the first half of 2020, are we simply seeing a continuation of that investor interest, or do you think the COVID-19 pandemic—and the need for more secure, remote solutions—has meaningfully accelerated identity investment?

If identity investor topics and highlights like these have piqued your interest, don’t miss the Investor Forum next week—view the agenda and apply to attend now. We’ll continue this particular conversation in the session on “Identity Investments During a Black Swan Event.” You can expect to dive deeper into investing trends directly from those leading the charge and gain further insider insight into digital identity use cases, startups, and business models poised to disrupt the data economy.