Another post-password authentication startup has attracted millions in funding from venture capital: Stytch has announced that it has raised $30 million in a Series A funding round led by Thrive Capital. Other funds participating in the round included Coatue Management and existing investors Benchmark and Index Ventures.
The company was founded in June of 2020 by two former employees of Plaid, the financial services IT infrastructure giant. Reed McGinley-Stempel, the company’s CEO and co-founder, was formerly a Product Manager at Plaid, while co-founder and CTO Julianna Lamb served as a Plaid engineer.
Together, the co-founders have been working to build a platform allowing developers to implement simplified, passwordless authentication into their apps, via APIs and SDKs. At the moment, the Stytch team is focused on authentication mechanisms based on things like SMS and Whatsapp passcodes and “magic links”, but the company says that it will use the funding to develop further authentication options based on WebAuthn, OAuth, QR codes, and mobile biometrics.
Commenting in a statement, Thrive Capital Partner Gaurav Ahuja asserted that recent years have demonstrated “the most authentication systems are both outdated and pose a security risk to users,” adding that Stytch’s solutions can tangibly address this issue.
“We talked to many developers using the product and saw firsthand how impressed they were with the best-in-class API docs and speed to go live,” he said. “The product is specifically designed for improving signup conversion and user retention, providing front end tools to get started quickly.”
In addition to ramping up its R&D efforts, Stytch said it will also use the funding to expand its team, with a hiring goal of 20 new team members by the year’s end. Thrive’s Ahuja, meanwhile, will join the company’s board of directors, alongside Benchmark’s Chetan Puttagunta.