Banking & Finance  November 30, 2023

Valid8 secures $8.5M in funding to transform accounting

BOULDER — Boulder startup Valid8 Financial Inc., has secured $8.5 million in Series A funding, a campaign led by Silverton Partners.

Valid8 provides artificial-intelligence-powered forensic accounting solutions to accounting and law firms, “enabling them to untangle a web of complex financial transactions in hours instead of weeks,” according to a press statement from the company.

Joining Silverton Partners in the funding was Touchdown Ventures, First Trust, CPA.com and Capital Midwest. The investment comes at a critical time for the company’s growth, as prosecutions and reported losses from fraud are on the rise, according to the Department of Justice and the Federal Trade Commission.

“Prosecutions and civil litigation stemming from fraud and other financial malfeasance are among the most complex cases in our justice system,” Chris McCall, CEO and co-founder of Valid8 Financial, said in a written statement. “Forensic accountants and attorneys require certainty in their investigations, which is why it may take months or even years to uncover the truth behind thousands or millions of financial transactions. Valid8’s unique approach to delivering verified financial intelligence leverages AI to expedite the process while meeting the highest data quality standards for courtroom-ready evidence that expert witnesses can rely on.”

Valid8’s technology provides verified evidence for a variety of financial matters and white-collar crime investigations, including Medicaid fraud, partnership disputes, asset division, high-net-worth divorces, M&A diligence, audit and Chapter 11 bankruptcies, the company said.

The company uses the latest in AI and automation technology to rapidly parse, reconcile, and categorize financial data from numerous sources, including bank transactions, Bitcoin deposits and withdrawals, and even hand-written checks. Valid8’s AI does not make any judgment about fraudulent activity. Instead, it provides visualizations that demonstrate the flow of funds and clarifies which transactions require further evaluation by professional investigators.

“Using Valid8’s software has fundamentally changed how our team works,” said Jason Wright, managing director at Stout, a global investment bank and advisory firm. “Before, it took us significant time to evaluate even a small sample size. With this software, we gain a comprehensive understanding of the entire financial picture in less time. Our team is freed from the tedious review of each and every statement and transaction — time-consuming work that nearly every accountant wishes to avoid.”

Historically, accounting has depended on sample risk assessments and rote reviews of transactions to uncover potential fraud. Valid8’s research shows that investigators spend up to 90% of their time on such tasks before analysis can even begin.

“Valid8’s technology is designed to eliminate sample risk from accounting,” said McCall. “It’s eye-opening to have the complete picture and not be forced to base one’s opinion on a finite portion of a financial history.”

Roger Chen, partner with Silverton Partners, will join the board to support Valid8’s growth.

“Accounting is ripe for innovation,” said Chen. “As digital banking, cryptocurrency exchanges and other financial innovations become more commonplace, accounting needs its own breakthroughs to stay ahead. Valid8’s technology and core commitment to eliminating sample risk represent the future of accounting. Beyond forensic accounting, this technology already has compelling use cases for audit, transaction advisory, M&A due diligence and beyond.”

Valid8 has about 30 employees company wide with about half of them in Boulder. The new funding will allow Valid8 to invest in its engineering and go-to-market teams, primarily at its Boulder headquarters, the company said.

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