Blockchain identity startup Cambridge Blockchain has finished raising $2m in a funding round backed by VC firms Partech Ventures and Digital Currency Group.
The investment comes just over a year after Cambridge Blockchain nabbed the top spot at a blockchain startup competition hosted by Banco Santander’s venture capital arm, which included a $15,000 prize.
CoinDesk reported last week that the Massachusetts-based company was in the process of raising capital.
In interview, CEO Matthew Commons said that the startup plans to use the funding to fuel ongoing technology pilots being conducted with some of its clients. While declining at this time to name the companies involved, he described them as “major financial institutions”.
Commons told CoinDesk:
“We want to get through some pilots and get to commercial deployments by late 2017, so that’s really the goal. In order to do that, there’s salaries, rent, legal expenses, and things like that.”
Focus on compliance
According to Commons, the startup is targeting a major pain point for the financial institutions it hopes to do business with: compliance.
He argued that, today, banks wind up in a position in which they spend time and resources conducting what are essentially redundant checks on customer identity.
“The real problem these institutions have is that they’re spending a lot of money on the know-your-customer check process,” he said. “Sometimes it can be hundreds of millions of dollars for large bank that they spend on compliance.
The CEO cited the European General Data Protection Regulation, a series of regulatory provisions in the EU that will come into force in mid-2018. This will harmonize data protection rules across the economic block, seeking to put control of data back in the hands of the user, while also sharpening the rules for the firms responsible for handling that information.
Commons said that the pending rules have “been one of the big drivers for our technology”.
“They’ve been a big catalyst for what we’re doing,” he went on to say. “These new rules can have penalties for data privacy violations up to 4% of worldwide revenue, so it’s really a big deal.”
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Cambridge Blockchain.
Image via Shutterstock