After spending three years working on SMS verification at Zenly, Prelude wants to fix SMS onboarding

Date:

Share post:


Prelude is a relatively new a new French startup that focuses on SMS verification; it’s announcing new funding from Singular and Seedcamp on Wednesday. The two founders met when they were working for Zenly, a popular location-sharing app with tens of millions of users that was acquired by Snap (and later shut down). While you might not think much about those verification codes, the Zenly team thought about this topic quite intensely. It turns out that it’s extremely tedious to implement SMS verification codes that work reliably.

“Initially, when I started looking at this problem at Zenly, we only had one provider. And honestly, when I joined the company, I thought it would be a problem that would be fixed in a couple of months and we could move on. As it turns out, I spent most of the three years I stayed at Zenly on this issue, and we built a team around it,” Prelude co-founder and CEO Matias Berny (pictured above on the left) told TechCrunch.

You probably don’t pay for text messages on your personal phone, but telecom providers still charge companies for those text messages. And if you have a massive user base, SMS verification can become an extremely expensive cost center.

In late 2023, the Signal Foundation shared its operating budget for its popular messaging app and service; SMS verification codes alone cost $6 million per year. As a comparison, storage, servers, and bandwidth account for $7 million per year altogether.

You might think that it’s expensive, but — at least — that this is a problem that has already been fixed. A few years ago, Twilio made it easy to send SMS using programmatic calls, after all. Other companies followed suit with SMS verification APIs.

But when you request a verification code, the request is passed around several phone carriers and various intermediaries across multiple countries. This patchwork means that it can take a bit of time before you receive the verification code — when it doesn’t fail completely.

“What we’ve been building at Zenly — and now at Prelude on a larger scale — is really the Skyscanner of phone number verification. We’ll find the best route at any given moment to verify the user’s phone number,” Berny said.

This feature alone can help companies improve their conversion rates. But it can also help companies save money as new customers don’t have to hit the “resend code” button if they didn’t get anything.

“Beyond the smart routing aspect of the product, there are many other problems to solve,” Berny said. Fraud is one of them. “There are fake users who ask for fake codes to validate fake numbers with the aim of receiving a portion of the cost of the SMS,” he added.

According to the Prelude team, these fraudulent intermediaries that generate fake users to create artificial SMS traffic can represent as much as 30% of SMS verification codes. That’s why the startup tries to identify fake, virtual numbers with a variety of signals to stop text messages in the first place.

Prelude also doesn’t charge its customers depending on the number of text messages issued by the startup. It aligns the incentives with its own customers as it charges per verification. That’s also why Prelude supports other messaging services, such as WhatsApp and Viber; it’s more about verification than SMS.

Many popular consumer apps, such as BeReal and Locket, are already using Prelude. Companies in the fintech or crypto industries, such as Alma, Sunday, and Bitstack are also relying on Prelude to verify phone numbers.

The startup has raised $8 million so far with Singular and Seedcamp leading the company’s seed round and various angels also participating. Overall, the company has verified the phone numbers for 100 million different user accounts so far, it said.



Source link

Lisa Holden
Lisa Holden
Lisa Holden is a news writer for LinkDaddy News. She writes health, sport, tech, and more. Some of her favorite topics include the latest trends in fitness and wellness, the best ways to use technology to improve your life, and the latest developments in medical research.

Recent posts

Related articles

Threads adjusts its algorithm to show you more content from accounts you follow

After several complaints about its algorithm, Threads is finally making changes to surface more content from people...

Spotify tests a video feature for audiobooks as it ramps up video expansion

Spotify is enhancing the audiobook experience for premium users through three new experiments: video clips, author pages,...

Candela brings its P-12 electric ferry to Tahoe and adds another $14M to build more

Electric passenger boat startup Candela has topped off its most recent raise with another $14 million, the...

OneRail’s software helps solve the last-mile delivery problem

Last-mile delivery, the very last step of the delivery process, is a common pain point for companies....

Bill to ban social media use by under-16s arrives in Australia’s parliament

Legislation to ban social media for under 16s has been introduced in the Australian parliament. The country’s...

Lighthouse, an analytics provider for the hospitality sector, lights up with $370M at a $1B valuation

Here is yet one more sign of the travel industry’s noticeable boom: a major growth round for...

DOJ: Google must sell Chrome to end monopoly

The United States Department of Justice argued Wednesday that Google should divest its Chrome browser as part...

WhatsApp will finally let you unsubscribe from business marketing spam

WhatsApp Business has grown to over 200 million monthly users over the past few years. That means there...