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PayPal acquires AI-based fraud detection startup Simility for $120M

Sohini Mitter
posted on 22nd June 2018
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Simility's early investors Accel India, Trinity Ventures and others will exit the startup following the completion of the deal later this year. 

Global payments major PayPal is acquiring fraud detection startup Simility in an all-cash deal worth $120 million. California-based Simility offers AI and machine learning-based tools to online merchants to help prevent fraudulent transactions. It becomes PayPal’s fourth acquisition in the last 12 months.

PayPal has announced that it will make Simility’s risk management tools available to its 237 million global merchants after the deal is completed in the third quarter of this year. Merchants can then customise the tools through their present account management dashboards as per the needs of their businesses.

Simility co-founders (L-R) Uttam Phalnikar, Rahul Pangam and Kedar Samant

PayPal had participated in Simility’s Series A round back in 2017. Prior to the acquisition, it owned about three percent in it. Simility is valued at around $53 million, according to PitchBook data, and it counts Accel India and Trinity Ventures as its other investors. Following PayPal’s acquisition, they will make an exit.

Bill Ready, Chief Operating Officer of PayPal, said in a statement,

“Digital commerce has exploded, and fraudsters have taken note, adapting and developing new methods to carry out their crimes.... Until now, merchants haven’t been able to configure solutions to manage the unique complexities of their businesses. Together with Simility, we will be able to put more control in the hands of our merchants to fight fraud while helping make commerce experiences faster and more secure.”

Simility’s “best-in-class” fraud tools that are powered by machine learning algorithms will adapt and evolve with each transaction. “It will enhance payment experiences for merchants and their customers by helping to reduce fraudulent payment activity and, in some cases, verifying transactions that may have otherwise failed,” PayPal stated.

Founded in 2014, Simility offers real-time risk and fraud decisioning solutions to global digital businesses. By combining AI and big data analytics, it helps businesses orchestrate decisions to reduce friction, improve trust and solve complex fraud problems. Most of its enterprise clients are consumer brands or financial services providers or payment processors.

Rahul Pangam, Co-founder & CEO, Simility, said,

“Our vision for Simility was to create an adaptive risk management platform that empowers organisations operating in a digital world to manage an evolving fraud... We are excited to enter the next phase of our growth with PayPal and to help drive the next generation of payment and commerce solutions.”

One of Simility’s earliest backers, Accel India, which had led both seed and Series A rounds in the startup, wrote on its official blog, It’s always rewarding to see our companies grow in impact and importance and today is no different. With this acquisition, PayPal is paving the way for Simility to fast-track its product building efforts alongside their own world-renowned fraud prevention teams, and is enabling them to automate risk management and transaction security.”

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