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There are a lot less boring things than managing your passwords.
There are a bunch of companies out there to help you try and do this. And there are also a number of companies that want to go one step further and eliminate the password completely.
Such a company, Stytch, just raised $ 30 million in a Series A funding round as it rolls out of beta with its first API passwordless authentication platform.
The round caught our attention for several reasons.
On the one hand, it is the same startup which, a few months earlier, announced that it had raised a funding round of $ 6.25 million led by Benchmark with participation from Index Ventures and a number of angel investors, including Plaid co-founder William Hockey. This round would have valued the new company at $ 200 million (although this has never been confirmed), and was actually lifted last summer around the time of Stych’s founding, but was not announced. than this year. Other angel investors who have backed the company include Figma co-founder and CEO Dylan Field, Very Good Security co-founder Mahmoud Abdelkader, startup advisor Elad Gil and former Stripe employee and Cocoon co-founder Amber Feng.
It’s also worth noting that Stytch was founded by two former Plaid employees, Reed McGinley-Stempel (CEO) and Julianna Lamb (CTO), who created user authentication features that “millions” use to log their bank accounts to apps like Venmo, Coinbase, and Robinhood. The company was founded on the premise that passwords are no longer secure and make businesses easy targets for hackers and put them at risk of account takeovers.
Lamb says that when she and McGinley-Stempel worked together at Plaid on user authentication, they realized how frustrating it is to create registration and login flows.
“In addition to being complicated, building it in-house is resource intensive and prone to errors,” she told TechCrunch. “The other thing that got us really frustrated was that the core elements that all businesses use for authentication had some really big security and conversion issues. We were struck by the fact that the web has improved in many ways over the past decades, but authentication is still stuck in the 1990s. ”
Thrive Capital led Series A, which also included participation from Coatue Management and existing backers Benchmark and Index. The company declined to reveal its new valuation, although sources only say it is “north of $ 200 million.”
Stytch says it simplifies the authentication process by giving developers and users the “tools and infrastructure to incorporate passwordless authentication methods into modern applications.”
Specifically, the team creates “simple” APIs and SDKs (software development kits) that, according to the founders, allow “any business to improve user onboarding and retention by removing passwords from their application, while improving safety and saving significant engineering time. “
Image credits: Stytch
In its first year of operation, Stytch released its product in beta to over 350 developers who added password-less features such as magic email links, SMS and WhatsApp passcodes. and one-click user invitations in their user onboarding and authentication flows. As mentioned above, Stytch launched the beta this week to make all features available to the public in conjunction with the funding announcement.
“What we’ve found is that it makes more sense to be more flexible with developers,” Lamb told TechCrunch. “What even surprised us about the API-first approach is that we now also have a handful of Fortune 500 companies using the product and the main reasoning from their point of view was ease of configuration. on the platform. It took them an hour rather than the several months they sometimes spend with other vendors. There’s also the direct API part where it’s just a much more flexible way of thinking about flows working during integration or connection.
Almost 65% of users reuse passwords across multiple accounts, which can pose a major security threat and breaches, according to research conducted by Google. Also, many people have trouble remembering passwords and the password reset process can be so frustrating that many users just abandon the account.
This can have a negative impact on businesses that rely on e-commerce sites, which lose customers because of this frustration.
Thrive’s Gaurav Ahuja, who sits on the Stytch board with the roundtable, believes the startup’s product is uniquely designed to improve signup conversion and user retention, and its customizable front-end tools help businesses get started ‘fast’.
He said his company had spoken to many developers who had used it and had seen “how impressed they were with the company’s best API docs and upload speed.”
“Over the past few years, we’ve found that most authentication systems are both outdated and pose a security risk to users, ”Ahuja told TechCrunch via email. “Stytch is tackling these two problems head-on. “
The new capital will be used to roll out more authentication options, including biometrics, WebAuthn, OAuth logins, QR codes, and push notification login. The company also plans to launch additional user infrastructure features and develop advanced session management and fraud detection solutions. Stytch also aims to hire 20 people by the end of the year.
Stytch is not the only company to kill the password. Boston-based Transmit Security in June raised a massive $ 543 million Series A funding in what was considered the largest Series A investment in cybersecurity history and one of the highest valuations. high for a bootstrap company. Microsoft has announced plans to make Windows 10 password-less, and Apple recently previewed Passkeys in iCloud Keychain, a password-less authentication method powered by WebAuth.
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