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introduction is a relatively new French startup focused on SMS verification; It’s announcing new funding from Singular and Seedcamp on Wednesday. The two founders met while working at Zenly, a popular location-sharing app with tens of millions of users that was acquired (and later shut down) by Snap. Although you may not think much about these verification codes, the Zenly team has thought about this topic very extensively. It turns out that it is very tedious to implement SMS verification codes that work reliably.
“Initially, when I started looking at this problem at Zenly, we only had one provider. Honestly, when I joined the company, I thought it would be a problem that would be solved in a couple of months and we could move on.” As it turned out, I spent most of my three years in Zenly is on this issue, and we’ve built a team around it,” Prelude co-founder and CEO Matthias Bernie (pictured above left) told TechCrunch.
You may not pay for text messages on your personal phone, but telecom providers still charge companies for those text messages. And if you have a huge user base, SMS verification can become a very expensive cost center.
In late 2023, she established the Signal Foundation subscriber And its operating budget for the famous messaging application and service; SMS verification codes alone cost $6 million annually. For comparison, storage, servers and bandwidth cost $7 million per year completely.
You may think it’s expensive, but – at least – this is a problem that has already been solved. a few years ago, Twilio It made it easier to send SMS using automated calls, after all. Other companies have followed suit with SMS verification APIs.
But when you request a verification code, the request is passed through many different phone companies and intermediaries across multiple countries. This patching means that it may take some time before you receive a verification code – when it wouldn’t fail completely.
“What we’ve been building at Zenly — and now in Prelude more broadly — is actually Skyscanner for phone number verification. We’ll find the best way at any given moment to verify a user’s phone number,” Bernie said.
This feature alone can help businesses improve their conversion rates. But it can also help businesses save money as new customers don’t have to hit the “resend code” button if they don’t get anything.
“Besides intelligent product routing, there are many other issues to solve,” Bernie said. Fraud is one of them. He added: “There are fake users who request fake codes to verify the authenticity of fake numbers in order to obtain part of the cost of SMS messages.”
According to the Prelude team, these fraudulent brokers who generate fake users to generate artificial SMS traffic can account for up to 30% of SMS verification codes. That’s why the startup is trying to identify fake virtual numbers using a variety of signals to stop text messages in the first place.
Prelude also does not charge its customers based on the number of text messages issued by the startup. It aligns incentives with its clients as it charges a fee for each verification. This is 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, already use Prelude. Companies in the fintech or cryptocurrency space, such as Alma, Sunday, and Bitstack, also rely on Prelude to verify phone numbers.
The startup has raised $8 million to date with Singular and Seedcamp leading the company’s seed round and several angels also participating. Overall, the company said it has verified the phone numbers of 100 million different user accounts so far.
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