Investment

Investment Notes: First AML

We’re excited to have led the Series B round in First AML, an Auckland headquartered SaaS business designed to manage complex customer onboarding processes.
First AML team

We’re excited to have led the Series B round in First AML, an Auckland headquartered SaaS business designed to manage complex customer onboarding processes.

First AML has three founders - Milan (CEO), Chris (CCO), and Bion (CRO). Chris and Milan went to high school together, and Bion and Chris worked at ANZ together where they built their empathy for the problem. Bion and Chris were trying to pull together complex, high value deals and were frustrated at how they would be slowed down by AML processes, saw how painful a problem it was for the commercial dealmakers in the bank, and thought there must be an opportunity to improve it.

As non-technical founders, they approached this business from the problem forward, not the solution back. They started with a highly manual and unscalable approach (analysts) but took the problem off customers, really understood all the complex edge cases, and have since been automating and scaling through technology.

NZ anti-money laundering startup First AML raises $7.3 million in Series A  - Startup Daily

Bringing customer delight to compliance

First AML wants to own the end-to-end customer onboarding journey for financial and professional services. Its ultimate vision is to be the ‘buy now’ button for the checkouts for the world’s most expensive goods and services, those sold by financial institutions and professional services.

As the name suggests, First AML is currently focussed on the ‘AML’ part of customer onboarding, for now. These are the requirements for service providers to conduct ‘know your customer’ checks and meet anti-money laundering and counter-terrorism financing (AML/CTF) laws. AML is such a point of friction for companies because it is a burden of time and cost and non-core to their business, but also because it has a big impact on the customer experience, NPS, and ultimately revenue.

It is a mistake to think about FirstAML as purely about compliance or regtech, however. To me, it is about facilitating commerce once the purchasing decision has been made.

My startup career began in e-commerce over a decade ago, before Shopify, Stripe or Adyen were a thing. We sweated every pixel of the checkout design and every picosecond of lag, because it made a difference to conversion, and ultimately, revenue and profitability. I believe First AML has the opportunity to build the rails for the smooth and fast checkout experiences that we expect from e-commerce today, for the regulated industries of the future.

“All our entities/people data are in their system now”

Blackbird has been a happy First AML customer for several years now. When we asked our Operations Manager, Daniel Danilov, about First AML, he said:

"We would never get rid of this… They raised their prices recently for us and to be honest, [there] would need to be a pretty compelling and groundbreaking competitor for us to switch. We rely on them heavily - everyone is scared of AML now, and all our entities/people data are in their system now.”

And that is partly what is special about this deal - how intimately connected we are to the customer pain point, our love for the product roadmap and the network effect beginning to emerge in the product and business model.

By virtue of not just providing the technology platform but also the outsourced verification service, First AML ‘owns’ the data. So when First AML runs checks for a client like Blackbird, all of the checks get stored in their central repository. The next time the same investing entity needs to be verified, a retrieval of the record is done rather than asking the same people to provide the same verification data all over again.

As the number of First AML’s customers in each vertical (funds management firms, wealth advisory firms, law firms, accounting firms, real estate firms etc) grows, more verification data is brought into the First AML central repository. Customers pay per client onboarded, but if a record already exists in First AML’s repository, that record can just be retrieved. This means most retrievals are close to pure margin, because First AML still charges for them, but doesn’t need to actually do a manual recheck (unless there are changes such as a change of address etc). Retrievals have grown to now account for 25% of all checks.

As an early customer of First AML, at Blackbird, we have experienced the value of their product first hand. The experience went from slow and cumbersome to one that resulted in our investors thanking us for the experience and referring First AML to other service providers.

People love avoiding AML so much that they recommend First AML any time they are asked for proof of identity, and you are starting to see a network effect within industries. For example, we were First AML’s first Australian venture fund customer. Today, when First AML signs a new Australian venture fund, a good proportion of those clients don’t require verification as they already exist in the First AML system.

So, if you find yourself requiring the services of an investment professional, lawyer, accountant or real estate advisor who asks you to identify yourself or your investment entities, please encourage them to try First AML.