I recently got a chance to talk to Rakesh Antala. Co-founder and CEO of Crederity. Most recently, he was Partner & COO of Intivia, a healthcare services startup serving organizations across the United States. In 2004 he started looking for a totally innovative idea with a business plan that he wanted to run through a formal VC process. This is how Crederity was found. Crederity was incubated in the Wharton School of Business, and was also a Wharton Business Plan Competition semi-finalist in 2004-2005. Now it is looking to grow in India. Rakesh is being advised by MVP to take this to the next level. We talked about MVP earlier here.
The name captures what they do nicely. I think it stands for credentials + identity. They are in the business of verifying your credentials and thus identity from the source. When you think of identity, things like single sign-on or digital certification comes to mind. Crederity provides similar services for credentials. Individuals could obtain a Crederity certificate that they can use to differentiate and build trust. On the flip side businesses could avail their services for reference or background checks. So the goal is identity/credential verification and fraud/inconsistency detection.
Say you want to verify someone’s degree from a university. The best way to do so would be to get the information from the university or the school. How about an address? Best way to verify that would be to contact local utility companies or ask your neighbors. But they cannot say how good you sing or dance. Rakesh puts it “you cannot verify something that no one can verify”.
Their goal is to be able to verify such data points at lowest costs. Obviously this is a little tough in India where important records like birth certificates are often not easily available. They could verify someone in US almost real time. They already aggregate billions of records and now they are building back end operations in India. Verifying something in India could mean sending a person to a rural town and this drives up the cost. But this initial cost could very well become a moat for their business.
Can they be held accountable incase they misrepresented someone? I think their own credibility is really important. They are FCRA compliant in US. Their disclaimer is “our information served is based on information received and verified from the source”. What if the error was in their systems? I think they need to be cautious scaling this in India.
- 52% of job seekers admit to making some sort of false claim on their resumes; 42%admit to making major false claims -Career Directors International
- 45% of all resumes contain one major fabrication - The Society for Human Resource Management (SHRM)
- The accepted estimate for replacement cost of a bad hire is 1.5 to 3.5 times the salary of the job in question -MICA Consulting Partners
- 25% of the MBA degrees it verifies on resumes are false -National Credit Verification Service
- 57% of hiring managers report that they have caught a lie on a candidate’s application - CareerBuilder.com
- 18% of applicants lied about their past employment - CareerBuilder.com
In response to bad economy conditions, Rakesh tells me that temp hiring has increased by 30% as market is going south. This makes Crederity and background check more important than ever.
In a world where your supplier can be half way across the globe, it is very important to break the barrier of unknown via auditing and background checks. Crederity now has 35+ clients. Some very well known clients like Nike and Sasken are using them. For tutorsource, anyone who signs up to be a tutor, they check the identity, if the person is listed as a sex offender etc. They are working with sites like Naukri and SimplyMarry where applicants can avail their services. They are looking to verify lender’s identity for DhanaX. These are all very very interesting deployment of their services.
Crederity charges Rs 899 to Rs 1299 for identify verification and reference checks. Also they have other packages depending on number of credentials they have to verify. Crederity makes enough money to keep them going. They are also talking about potential funding.
Overall, I see a sound business model with a true need in marketplace. There are similar companies trying to fill the niche for various B2B segments. Panjiva is one such company that I really like. Read more here. I think such B2B plays has lot more potential in US. But India has a great need for both. As I said earlier, Crederity doing all the heavy lifting will create barriers of entry for other players. I would also like to see them do much more with credit and financial side of things in India. I don’t know how yet. I know that it is credit bureau’s job but it seems there is a huge gap when you want to evaluate how much credit worth an individual is. May be they can come up with something when working with banks and lending sites. If they create a neutral network of systems including manual runs to verify information @ low cost, they could use it for interesting problems.
Like always, please let us know what do you think of this business ?