Alloy’s $1.35 Billion Valuation and What It Means for NYC Fintech’s Cambrian Explosion
We invested in Alloy in 2015, back when new fintechs were scarce and faced harder roads. This team’s tenacity—and partnership with other on-the-rise innovators—has advanced the entire ecosystem while beginning to transform the broader world of financial services.
Today we’re thrilled to see Alloy, the identity decisioning platform for the financial services industry, officially announce its $100 million Series C led by Lightspeed Venture Partners and join the unicorn club with its now $1.35 billion valuation.
This event is a banner one for the fintech industry here in New York. When Tommy Nicholas, Laura Spiekerman, and Charles Hearn started the company in 2015, they were swimming upstream. It was beyond tough to be a startup selling new-fangled tech into the conservative world of financial institutions. But over the past few years, Alloy has helped to lead a transformation in the degree of trust in disruptive fintech and partnerships.
We’ve been incredibly fortunate to be along for the ride with this resilient, persistent team. We first invested in 2015—one of the first deals we did after Ben Sun and I launched the first Primary fund—in what today’s terms would be a pre-seed deal. This scrappy young team set to work building and stepping into the market to sell. But in those early days, they couldn’t sell much at all. The regulatory and compliance processes that Alloy addressed with their first product were critical processes that banks couldn’t casually shift over to a tiny startup from Bushwick, Brooklyn. When Alloy hadn’t yet proven themselves, how could a bank make a bet on them? But if nobody made a bet on them, how were they ever going to prove themselves?
The Alloy product, which improves an FI’s ability to convert customers by applying a more intelligent, dynamic, and algorithmic approach to the required identity verification processes for new financial services customers, was always impressive. But that is rarely enough in early-stage enterprise selling. Alloy’s sales team started off by going directly to big banks, which were staffed with people who were thrilled to take the time to kick the tires and play around with this shiny new object. By and large, they thought it was pretty darn impressive. But these people had mortgages to pay and 529 plans to fund, and they weren’t going to risk their jobs by pushing their stodgy old institutions into a risky new platform. By early 2017, with just a smattering of small customers, we honestly weren’t sure if the company would make it.
We wrote two more checks to help bridge the company to its Series A, and those were some of the most white-knuckled investment decisions we’ve ever made. But we believed in this team and the value of the product, and had conviction that with time the proper path would emerge. And emerge it did, as Alloy was struggling to come of age at a time that the Cambrian Explosion of fintech companies was occurring. This was Alloy’s breakthrough moment. After month after month of dulling their picks trying to sell to large FIs, Alloy found a groove selling small upstart fintechs who had nothing to lose and were just building their initial infrastructure. And as some of these early customers succeeded themselves and blossomed into larger companies, Alloy was able to build credibility around the incredible results they were achieving for their clients.
It was at the earliest moments of this progress that our friends at ENIAC Ventures had the courage to join us on the journey, leading a full seed round. Slowly but surely, the tide turned, and ultimately the success with fintechs led bigger contracts to fall into place more easily. Alloy broke ground on partnerships with Ally, Key Bank, and, over time, so many more. The Alloy platform now processes an average of nearly 500,000 decisions a day.
While it was a long process getting out of the starting gates, Alloy’s valuation today signals just how quickly fintech companies can build astounding value once they find their groove. This is a groove we’re enjoying across our fintech portfolio, with Vestwell’s Series C, Lili’s Series B, and Orum’s Series B. These companies have each found themselves at a fortuitous moment in time, and they are making the most of it.
As for Alloy, through all the ups and the downs, we have appreciated how thoughtful this team has always been about workplace culture and inclusion. Today, more than half of Alloy's employees are women, and nearly 40% are minorities. Chalk up another data point supporting the diversity drives enterprise value thesis.
And now they can proudly take their elite place amongst NYC’s fintech unicorns. With over 1,000 fintechs in NYC, the vast majority of which have been founded in the past ten years, Alloy has no shortage of customer prospects right in their own backyard now. And as the best of those grow, we’ll be watching closely, hoping to add a few fintech cousins to Alloy’s Primary family.
For now, we offer our heartiest congratulations and heartfelt thanks to team Alloy. It’s been an exciting, if often scary ride. Here’s to continuing the recent and staggering trajectory.