Stytch raises $30 million from Thrive Capital to improve security with passwordless authentication
According to a study conducted by Google, nearly 65 percent of users reuse passwords across accounts, posing significant security threats and breach liabilities. The traditional password-focused approach is deeply flawed in terms of security and usability.
While creating unique passwords for different profiles is best practice, passwords are often forgotten and users are more likely to leave behind their accounts rather than undergo the onerous password reset process. Studies show that 45 percent of customers will abandon their transactions rather than reset their passwords. In an effort to increase customer retention, businesses are looking to utilize alternative authentication methods to minimize user friction when transacting online.
Enter Stytch, a Vancouver, Canada-based tech startup that provides user infrastructure for modern applications. Stytch is addressing this issue by simplifying the authentication process, building the tools and infrastructure for developers to incorporate passwordless authentication methods into modern applications. Unlike the traditional passwords used by most web applications, Stytch improves security and user experience with passwordless authentication.
Today, Stytch announced it has raised $30 million in a Series A funding round led by Thrive Capital, with participation from Coatue Management and existing investors Benchmark and Index Ventures. Thrive Capital’s investment was led by Gaurav Ahuja, who will join Benchmark’s Chetan Puttagunta on Stytch’s board of directors.
Stytch will use the new capital infusion to roll out more authentication options, including mobile biometrics, WebAuthn, OAuth logins, QR codes, and push notification login, and launch additional user infrastructure features to continue to onboard and engage users through a simple, low-friction process. The company will also use the funding to build out session management and advanced fraud detection solutions
Stytch is one of the many tech startups in the password-free security authentication world. Another player in this space is LoginID is a security startup that protects user identity by providing users secure control over personal information through a compliant decentralized network.
We covered LoginID early this year after the San Mateo/Toronto based-based tech startup secured $6 million in seed funding to accelerate the adoption of a passwordless world. LoginID provides APIs and SDKs for enterprises to integrate FIDO-certified biometric authentication in as little as 15 minutes.
Commenting on the investment, Gaurav Ahuja, partner at Thrive Capital said: “Over the past several years we’ve seen that most authentication systems are both outdated and pose a security risk to users. Stytch is addressing both of these issues head on.”
Ahuja added, “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. The product is specifically designed for improving signup conversion and user retention, providing front-end tools to get started quickly. We’re excited to be part of the Stytch story and come onboard to support Reed, Julianna, and the team as they grow.”
Founded in 2020 by Julianna Lamb, Reed McGinley-Stempel, Stytch is building a developer platform with the tools and infrastructure to enable companies to incorporate passwordless authentication options into apps and websites. Their APIs and SDKs can improve user onboarding and retention by removing passwords from their applications and replacing them with more secure and low-friction authentication options including email magic links, one-click user invitations, biometrics, and SMS and Whatsapp passcodes.