Happy Wednesday - with a new startup to watch!
For those who are new, this series is dedicated to early stage startups that are under the radar – and have a good story to tell. I send it out every other Wednesday (sometimes every week)- and it is seperate from my traditional weekly newsletter. The basic criteria is a company that is not on the spotlight and is NOT actively raising proceeds. There is also no bias – apart from the fact that I like the story. I am not an investor or get any financial compensation to promote startups featured. This is intended for informational purposes only, using my solid base of subscribers to share intel of good people doing cool things.
Since launch, featured startups in aggregate were connected 55 times, to 28 different investors/strategic partners globally.
Finally, if you are a founder and want to be considered for this series - it is very simple:
Please fill out a one-pager, in English, about your company using the topics and themes outlined in the posts.
Reply to this e-mail with your one-pager attached.
I will review and reach out if I need more information.
It will be posted if I believe the startup fills the profile and audience of this newsletter.
Good Luck!!!!!!
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Opinions expressed here are solely my own and does not represent those of people, institutions, organizations that I may or may not be associated with in any capacity, unless explicitly stated.
Summary
VAAS is a Brazil-based Transaction Monitoring SAAS startup that protects Financial institutions such as banks and DeFi platforms from regulatory risk, high-risk transactions, fraud and money laundry.
VAAS aims to differentiate itself from global competitors by specializing in the LATAM market by combining on-chain data (digital assets, crypto) with off-chain data (FIAT payments, CPF/CNPJ).
Founders
Gustavo (CEO), Paulo (CMO), and Daniel (CTO) have been working together for over 10 years. Previously founded Decora, acquired in 2018 for over USD100mm. Decora was a B2B CGI service that created realistic 3D images for retail products. The main problem it solved was speed and scale, as product content could be created 10x faster and 5x cheaper.
Problem
There’s a gap between FIAT transactions such as PIX and Digital Assets transactions such as Crypto, with that bad actors can take advantage. Up until now, no transaction monitoring service would cover both types of transactions, meaning your reputation on one universe would not carry over to the other. This creates opportunities for fraud and money-laundry. Currently, this problem is much bigger in FIAT transactions: R$1,28 trillion are transacted every month in PIX, while only R$40 billion in digital assets are transacted.
Data is the key
Collecting and organizing data to detect crime is at the core of the service. In less than 6 months, VAAS’s data team identified and catalogued over 100 million addresses in all the main blockchains.
Crossing the data chasm
VAAS is being accelerated by SMART, an equity-free acceleration program by B3 (Brazil’s stock exchange). That brought in a off-chain data partnership where VAAS can cross the data from CPF’s (similar to a social security number) and CNPJs (the same but for businesses) with on-chain data to detect crime. One example would be a Politically Exposed Person with relevant funds detected in crypto.
Clients and business model
Wherever there are transactions, there is risk. This means Banks, VASPs (Exchanges), Gambling sites, web3 projects, OTC Services and many other financial services are all potential clients. These clients not only need to follow regulation for their transactions, but also need to worry about losses from fraud and fines for under-reporting money-laundry. A system that connects different data-sets facilitates this work and reduces losses and risk.
Regulation is coming
For Digital Assets in Brazil, regulation exists but how it will actually work is unclear. VAAS’s platform takes in consideration for product development the best practices by regulatory institutions from Europe and North America, which is likely the path LATAM will go with its regulation.
Increasing the Data-Lake
VAAS vision is to be a data conector, bringing in new data sources from other partners such as Cybersecurity companies. The more data can be combined, smarter the alerts for risk become.
The Product
Key Facts
- Over 100M digital assets catalogued
- 15 people in the team
- 9 months operating from Florianópolis
- Funding: Creating relationships with VCs interested in the segment; expected to raise money in Q3/Q4
- Accelerated by SMART, an equity-free acceleration program by B3 (Brazil’s stock exchange)