This Startup Secretly Detects Fraud For Fortune 500s

**Jared Friedman** (0:05)
So I'm particularly excited to do this Founder Fireside because we have a first for the Founder Fireside series. We are doing a big announcement on this podcast. We are announcing that Variance is coming out of stealth and announcing their $21 million Series A. And I am really excited to be here with Karine, the co-founder of Variance. Thank you so much for joining us, Karine.

**Karine Mellata** (0:28)
Thank you.

**Jared Friedman** (0:29)
So this is a big day. You're coming out of stealth after building basically in stealth for the past three years, and you built Variance quietly into this big company that powers a lot of the products that everybody knows and uses in their regular life. Can you tell us about what Variance is and about the $21 million Series A you're announcing?

**Karine Mellata** (0:49)
So Variance is building purpose-built AI agents for risk and compliance. We automate content review, fraud reviews, identity reviews at scale. We're powering some of the largest companies in the world, Fortune 500s, marketplaces. We've been working with GoFundMe, for instance, to review all of their fundraisers at scale. Some Fortune 50 for verifying all of their sellers and complex UBO verifications and today coming out of Stealth.

**Jared Friedman** (1:17)
And you guys built in Stealth for a long time, like three years, and you have a lot of customers that you can't even name on this podcast. Why all the secrecy around this?

**Karine Mellata** (1:28)
Variance usually deals with really sensitive data and sensitive issues. And the phrase I like to use is that we're building the systems that are often used by the bad guys, but we're building them for the good guys. So oftentimes it's really hard to market the use cases that customers are using Variance for because those issues are so sensitive. And if we were to market those, then it may create more fraud, it may create more abuse, it may create more bad.

**Jared Friedman** (1:57)
Like your customers are stuck in this constant cat-and-mouse game with the bad guys, and you're their secret weapon. They don't want anyone to know what their secret weapon is.

**Karine Mellata** (2:06)
Exactly. We're in the shadows, I think it's good, it's really impactful for our employees working at the company, really impactful. You get to see that when you work at Variance. But I think even far beyond the Series A will always be a company that's a little bit more in the shadows, and I think that's okay for us.

**Jared Friedman** (2:26)
What's cool about Variance is that even though probably no one who's watching this video has ever actually used the product themselves, they have used many products that under the hood are actually powered by what you've built. Indirectly, they're actually using stuff built on top of Variance like a lot of software infrastructure kind of products. Can you maybe tell people about a specific product that they've used or have probably used that's powered by Variance and how it works?

**Karine Mellata** (2:57)
One of the customers, GoFundMe, is a platform that you can use in order to build your own fundraisers. GoFundMe is effectively a payments platform. GoFundMe actually has some very strict compliance requirements because they are liable for facilitating payments to, let's say, an organization that they shouldn't have done so. Variance is used to verify, for instance, if a fundraiser is going to be built for a military operation, for instance, or if you're building a fundraiser for a crisis that you were not part of, which would be fraudulent, well, GoFundMe sort of has the responsibility to be able to detect this. They're using AI agents, so Variance AI agents, to conduct those investigations, so make sure that the money is going to the person that they say they are, and also make sure that the money is not going to be funneled to sanctioned countries, for instance, or be going to anything that could be a compliance risk for them.

**Jared Friedman** (3:52)
You were telling me earlier about one specific, very concrete form of fraud. What does typical fraud on GoFundMe look like?

**Karine Mellata** (3:59)
Yeah, so GoFundMe is actually very crisis driven. So if there is any sort of large event or any sort of natural disaster, there's usually going to be a spike in fundraisers that occur on GoFundMe. It's really hard for the team to keep up with how many of these fundraisers are actually going to be real fundraisers for that event or possibly fraudulent. One of the example that we saw was, I think recently there was, for instance, the murder of Charlie Kirk. There was a spike of fundraisers for the family of Charlie Kirk. How do you know who's actually related to Charlie Kirk and who's just trying to raise money for their own?