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I stopped by the NYC Alloy Headquarters for a conversation with Tommy Nicholas, CEO/Co-Founder at Alloy, a company that gives fintechs and banks a command center to control their fraud-fighting, credit, compliance risk, and identity-decisioning needs.
Founded in 2015, Alloy has raised ~$200M from Bessemer, Avenir, Clocktower, Flourish, Lightspeed, Primary, Techstars, and a long list of great fintech investors.
In this episode, we discuss:
Early days of Alloy and how they overcame several tough years and finally hit their stride
“The moment that things are actually pretty far into getting better, tends to be the moment people want to give up the most.”
Tommy opened up about the difficulties Alloy faced for the first four years of the company, with near-closures and heavy demoralization. He also noted that often the moment of wanting to give up comes just before things start to get better, a lesson he continues to share with others. The ability to discern the "right type of demoralizing" from the "wrong type" was essential in their journey. In hindsight, Tommy also acknowledges that some of the initial difficulty in getting large customers to buy their product was due to their lack of commercial knowledge. Once they identified and resolved these issues, the sales process became much smoother, underlining the importance of understanding all aspects of your business for successful scaling.
A deep-dive into the complex world of anti-fraud and how Alloy aggregates multiple solutions into their platform
“Fraud has gotten bolder and fraud has gotten weirder. Over the last four years, it has gotten way bolder and way weirder.”
Alloy has comprehensive insights into the evolving landscape of financial fraud due to its end-to-end facilitation of decision-making processes. Back when they launched in 2015, the primary threat was identity theft, with fraudsters using breached data for fraudulent activities. Companies mitigated this primarily by outsmarting fraudsters or peers, often using machine learning models to identify stolen identities. However, recently fraud has become bolder and weirder, with social media playing a substantial role in financial scams. Fraudsters are also increasingly manipulating victims into committing fraud for them, often blurring the lines between digital and physical channels, highlighting the growing professionalization and audacity in the fraud landscape.
Several Company building lessons in the context of a tough raising environment… and a reminder from Tommy to tech founders that it’s OK to raise a down round or give the money back
Perseverance and patience are key to business success, as evidenced by the journey of Alloy. Despite struggling for their first four years, the company has now become a successful business with over 400 customers, due to persistent effort and belief in their unique solution to a big problem. There are many founders today that are going through similar struggles, and Tommy suggests company leaders should evaluate their motivations and consider options realistically. If their drive is due to external obligations or pressures, not genuine passion for the product or service, it might be best to consider returning investor money or raising a 'down round' (raising investment at a lower valuation).
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Miguel Armaza is Co-Founder & Managing General Partner of Gilgamesh Ventures, a seed-stage investment fund focused on fintech in the Americas. He also hosts and writes the Fintech Leaders podcast and newsletter.
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