Why Authbridge Waited 16 Years To Raise Its First Funding Round Ajay Trehan, founder, Authbridge, explains the process behind building an authentication and background verification business raking in revenue in excess of INR 100 crore per year
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After failing in his first two business ventures, engineer-turned-entrepreneur Ajay Trehan discovered tremendous scope in a business which he landed upon by accident, per se. Trehan started his second business venture back in 2003 called CoreBPO, where he was outsourcing BPO services to clients abroad. A lot of his international clients inquired about the background check process that the company uses for hiring people. Being unable to find companies providing an external reference check in India at that time, Trehan got in touch with some people working in HR for reference and learned that indeed there was an immense business opportunity.
"The demand for authentication is huge in India. At present this is a $2 billion industry and only about $100 million of it is being catered to," Trehan informed. After devoting some time for thorough research, he set up Authbridge in 2005. Since then, the company has captured a significant portion of the market.
Trehan explained that while companies were doing background checks, the whole process was still tedious as it was manual. What Authbridge did was find out a way to digitise track records and identification details. Authbridge started as a product first company.
"Earlier, the verification was very manual and hence the process was weak. Understanding this, we started off by developing tech which helps us digitise these track records by screening data in-house and integrate it with whatever data the government provides us. Further, lot of companies have given us their ex-employee data with their consent as well which was then stored in large depositories. With this, data of a personal identification data of an employee and their employment history could be verified within few seconds. Similarly, we built another product where litigation and criminal records of employees could be mined and compiled for over a decade," Trehan said.
The company, although established in 2005, grew at a much rapid pace during the pandemic. Even though Authbridge offered a convenient alternative to the manual way of background verification, many companies still went the other route as it was the more preferred way to do background verifications in India. However, during the pandemic, when almost all physical services were discontinued, the switch to a digitised background check process became not a luxury but a necessity. Trehan explains that since the company had developed extensive databases during their time in operation, the digital push helped them gain significant market. In fact, the customer acquisition for Authbridge was highest in 2021.
Year 2021 also saw investor interest peak for the company. The company remained bootstrapped till 2021 but secured a $7 million Series B funding in December. Trehan said the decision to raise funds was on pause for a while as the company was growing organically and they were investing back whatever they made into the business. However, 2021 saw them raise money as the demand for their services grew exponentially. The raised funds are being diverted to strengthen their product, better the sales process and enhance tech.
"I believe the key to build a successful startup operating in our field, one needs to strengthen their processes and be profitable from the start. Raising investments can be delayed to attain a significant valuation later on when the business' money making ability is unquestionable," he said. The entrepreneur adds that this is one of the many lessons he has learned from his prior experiences. "I have had three startups before Authbridge. Out of the three, two didn't do well. Over time you understand why. So when the next time you go in to business, you are wiser," he adds.
The future prospects for the authentication business is exceptional, according to Trehan. While the company's competition is also evolving given the lucrativeness of the business, Trehan believes the heavy-handed approach that Authbridge has taken towards enhancing tech is second to none and thus the company will continue its momentum by doubling its business year-on-year in terms of revenue.