Maxine Most is warning that the surging identity verification (IDV) market could prove to be a mixed blessing for many technology providers. Most is the Principal Analyst for Acuity Market Intelligence, and has previously described the recent flurry of IDV investment as a Tornado that is lifting every player in the market.
Of course, many tornados end up being natural disasters for those caught in their path. With that in mind, Most is using another environmental metaphor to highlight the potential consequences for IDV providers that fail to navigate a rapidly shifting landscape. She specifically argues that the IDV Tornado is a response to an IDV Rogue Wave, a massive tidal event that was triggered by the COVID-19 pandemic.
In that regard, COVID-19 serves as the epicenter of the Wave in the same way that an earthquake in the ocean can create a tidal wave that hits the shore. The results can be just as destructive. The Rogue Wave lifts everything on the surface of the water, but its power can be uncontrollable, and much of the detritus that gets picked up will eventually be dashed on the rocks when the wave inevitably crashes.
In IDV terms, that means that many IDV developers are simply not prepared to deal with the rising current, largely because they do not have the infrastructure in place to scale as a company. As it stands, annual revenue and transaction growth is up 100 to 500 percent for many of the players in the IDV market, and companies that were producing revenues of around $5 million have boosted those numbers to $20 million in a matter of months. Many of those players lack the technology and the operational and marketing expertise to stay afloat in those deeper waters, and are likely to flounder since their recent growth reflects a broader shift in the market rather than their own internal know-how.
Most ultimately suggests that many of the businesses that have been riding the IDV investment wave will come apart just as quickly as they were built. The upshot is that those that survive the perilous waters will be well positioned to grow to $100 million operations. Investors have injected more than $3 billion into the IDV market in 2021 alone, with companies like Jumio ($150 million), AnyVision ($235 million), and Socure ($100 million) leading the latest charge.
Source: Acuity Market Intelligence
November 19, 2021 – by Eric Weiss