Editor’s note: IdRamp is the first Iowa company to receive investment from Idea Fund of La Crosse, a Wisconsin-based venture capital firm. The firm announced a new fund this spring that would expand its geography to Iowa. Read more about the new fund and Idea Fund in this story.
While Mike Vesey built his other companies over the years, he noticed the lack of security around identity verification processes. But he said the market opportunities for companies like IdRamp didn’t appear until data breaches and impersonation attacks became more frequent.
Vesey said using traditional passwords or variations of them for all the different sites and services businesses use creates more data that bad actors can buy or steal. Trying to keep them all organized also makes user interactions more complicated instead of less, he said.
“The only thing that I can ask of you that I know you can provide every single time I need to know is yourself,” Vesey said.
Partnerships with CLEAR, identity security company Idemia, Experian, Equifax and others provide a range of sources IdRamp can reference to check an identity before giving access to information or systems.
Vesey said he has seen identity verification orchestration gain traction in the health care and financial services industries and he believes IdRamp and other solutions will emerge as the standard for secure identity management.
“[Identity verification will drive] a fundamental authentication flow in every digital interaction that we have in the next five years,” he said. “That’s ambitious but that’s what we have to get to or we’re just going to continue reading about breaches.”
Vesey shares more about the company’s fundraising journey and the Idea Fund investment below. His responses have been edited for length and clarity.
How did you connect with Idea Fund and why were you interested in working with them?
This is not my first rodeo, I’ve been through three different startups. This one I bootstrapped myself since 2019, but when I started seeing the market indicators that I thought meant it was time to go we just went looking for a relationship. I never say we went looking for money because money’s easy. In my opinion money is the easiest part of the variable. It’s always the relationships and finding people that will work for you and make the investment more valuable, and that’s what I really found in Idea Fund. I really liked their team. From an organizational perspective, we were probably a little beyond their typical portfolio company. We had been in the market for a couple years. We started having some traction, we have a couple flagship customers that we use. Really flying under the radar here in Des Moines as much as we try to get in with organizations, we really haven’t found a good fit in Des Moines from a customer or sponsorship perspective. Idea Fund seemed like a great fit just because of the chemistry I had with Jonathon personally and then some of the others on the team that were involved, especially in health care. We saw the writing on the wall, probably a year ago, that health care was going to be an important vertical because of the breaches that they were experiencing.
What are some of the indicators you were watching to determine the right time to start fundraising for IdRamp?
It’s always hard. The more you do this, I guess that the game unfolds a little slower. My first one in ‘96, we had to go get money immediately. We were living on second mortgages and you can only do that for so long. This one, we intentionally kept the organization very small. We were an organization of four people for quite a while and that was because we didn’t want a big burn rate. I didn’t want to be in that position where we had to go get capital, so we were very fortunate that we could keep the wheels on with modest investment from me. As far as the market, every market is different, every startup has different indicators they’re looking for. In our case, we knew that the identity layer on the internet was fundamentally broken. We did this amazing thing in the late 90s, we built the internet, and it was this happy place. It was all unicorns and rainbows and everybody was doing fun things, and then the bad guys started coming in and so we kept complicating the usability to stay ahead of the bad actors.
With your past experience, can you share what informed your decision to bootstrap IdRamp?
When you get to a certain age, you start seeing these patterns repeat, and so, I could see the pattern, I knew what was coming. I also knew that the market was too early to try to externally fund it. If we would have taken money in 2019, we would have burned through that money on marketing exercises, and really gotten very little traction, very little adoption. It took Microsoft to be where they’re at, it took the industry to understand that these identity breaches are really expensive. I could look at it and say, “Gosh, if we had done this earlier, we could have saved these organizations billions of dollars, but the reality was, they weren’t going to adopt until the pain was real enough. The pain had to be there, and now we’re seeing it every day. Really I bootstrapped it because money would have been really expensive and I didn’t know the best place to spend it. We didn’t have any verticals that were saying ‘We’re absolutely ready, let’s go.’ The time is right now to go out and add a little fuel to the fire.
How will the investment from Idea Fund help advance IdRamp’s progress?
Obviously, it helps with a lot of human cost to grow the team. We started a direct marketing campaign going after a lot of the health care providers to let them know what we’ve done. We’ve got a couple of really big success stories that we can talk about now, so we’re trying to parlay that more in the health care industry. The funding allows us to form partnerships. These partnerships are not cheap; they’re expensive to get into. We’ve signed up two or three partnerships since closing this round and it’s giving us the operating capital freedom that we need to to really grow and market the way that we need to. We’ve always done a really effective job building technical tools largely because that’s where my DNA is. But when it comes to making the product a household name, that’s all a function of money, so that’s what we’re trying to do right now.