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Bot defense startup DataDome today announced that it raised $35 million in a series B round led by Elephant. The company says itll use the funds, which brings its total raised to nearly $40 million, to invest in R&D as it looks to expand its customer base.
While consumer spending in the U.S. dipped last month year-over-year, on the whole, the pandemic has supercharged ecommerce. According todata from IBMs U.S. Retail Index, business closures and shelter-in-place orders accelerated the shift to digital shopping by five years, with online shopping projected to grow nearly 20% in 2020. But the surge has also coincided with a rise in bot attacks. Seventy-one percent of companies report having experienced an increase in the number of successful bot attacks, with ecommerce seeing the largest increase of any segment.
New York-based DataDome, which was cofounded by Benjamin Fabre and Fabien Grenier, provides an AI-powered software-as-a-service solution that secures marketplaces against web scraping, account takeover, and payment fraud. The companys bot detection engine processes more than a trillion pieces of data every day, from 25 worldwide points of presence.
DataDome is the third company cofounded by Benjamin Fabre and Fabien Grenier. Their latest success was TrendyBuzz, a social media monitoring company, acquired by Linkfluence in 2014, a spokesperson told VentureBeat via email. Benjamin and Fabien soon realized that similar techniques were being used at an alarming rate by hackers to build bad bots and attack digital commerce businesses. Compounding the matter, there was a lack of easily deployable solutions to combat these attacks.
DataDomes bot prevention software compares requests to a website, mobile app, or API with an in-memory pattern database, using a blend of AI to decide whether access to pages should be granted or not. The companys algorithms which are fine-tuned to individual attack vectors analyze billions of requests daily and update continuously in order to identify and prevent familiar and zero-day threats.
DataDome detects and classifies attacks in a dashboard for monitoring, analysis, and remediation. For more granular needs, it offers a custom rules function that allows users to block human traffic from countries theyre not selling to, for example. DataDome also sends real-time notifications via email or Slack whenever a site comes under attack. And because the platform enriches requests to websites, apps, and APIs with ID tags in real time, DataDome enables customers get daily or weekly bot traffic email reports and monitor for false positives.
We collect and process hundreds of billions of signals in real time every day including HTTP information, user mouse movements, mobile app touch events to create huge datasets, the spokesperson said. Supervised, unsupervised, and semi-supervised models are used and stacked up to detect bots from the very first request. Datasets are analyzed per request, per session, per IP, at different time scales on one or multiple customers traffic.
Uptick in attacks
According to Gartner, by 2024, more than 60% of online retailers will rely exclusively on machine learning for online fraud detection. Its CEO Fabrian Geniers assertion that the recent uptick in attacks makes apparent the need for solutions like DataDome. DataDomes own research found a 47% increase of bot fraud attacks against businesses over the past 6 months, with the majority originating from abroad.
Indeed, respondents to a MIT and Darktrace said that traditional security solutions cant anticipate new AI-driven attacks while 96% said theyre adopting defensive AI to remedy this. Here, defensive AI refers to self-learning algorithms that understand normal user, device, and system patterns in an organization and detect unusual activity without relying on historical data. For example, given a strain of ransomware an enterprise hasnt encountered in the past, defensive AI can identify the novel and abnormal patterns of behavior and stop the ransomware even if it isnt associated with publicly known compromise indicators.
According to Grenier, DataDomes annual recurring revenue currently stands at $15 million, and he expects it to increase 100% over the next 12 months.
We owe our current hypergrowth to our over 150 customers like Axel Springer, AngelList Talent, Australia Post, and Foot Locker who have placed their trust in us to protect them from malicious bot traffic and online fraud, Grenier said. With its expertise in both e-commerce and software-as-a-service, Elephant is an ideal partner as we continue to scale aggressively, particularly in the US, in order to serve even more e- commerce businesses and fulfil our mission to free the internet of fraudulent traffic.
Beyond Elephant, existing investor ISAI also participated in DataDomes round.
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