San Francisco-based Baselayer, an innovative AI-powered startup that has already made significant strides in helping financial institutions combat fraud and verify businesses, has successfully closed a $35 million Series A funding round. This substantial investment is earmarked for a pivotal expansion of its cutting-edge identity technology into the burgeoning realm of AI agents, addressing a critical and rapidly escalating trust deficit in the automated economy. The round was spearheaded by M13, a prominent venture firm, with crucial participation from Picus Capital, Torch Capital, Afore Capital, and Matt Thompson, an influential figure from industry leader Socure. This latest infusion of capital elevates Baselayer’s total funding to approximately $40 million since its inception in February 2023, as confirmed by co-founder and CEO Jonathan Awad, though the company opted to keep its valuation confidential.

Baselayer’s initial success story is rooted in its sophisticated platform that synthesizes business identity, credit, and fraud data. This powerful combination empowers banks, fintech companies, and a wide array of financial-services providers to meticulously evaluate prospective customers, streamlining the traditionally cumbersome processes of onboarding, underwriting, and account opening for merchants. The company’s automated system initially honed its focus on Know Your Business (KYB) identity verification, robust fraud detection, and comprehensive risk management. Its technology is deployed directly to clients and also integrated into software companies that white-label or resell Baselayer’s solutions, significantly extending its reach.

In less than two years since its founding, Baselayer has achieved remarkable penetration, with over 2,000 financial institutions—representing more than 20% of such entities in the U.S.—now leveraging its technology. This impressive client roster also includes Fortune 500 companies, underscoring the broad applicability and reliability of its platform. With a growing team of about 50 employees spread across offices in San Francisco and New York, Baselayer has not only scaled rapidly but also delivered tangible results. The startup proudly claims to have helped its customers prevent over $1 billion in potential fraud losses, a testament to its efficacy. While specific revenue figures remain undisclosed, Awad did confirm that Baselayer achieved an eight-figure revenue milestone in less than two years, a striking indicator of its market traction and value proposition.

The new capital injection, however, is set to propel Baselayer into an entirely new and critical domain: determining the legitimacy and authorization of AI agents. The widespread adoption of AI agents for mundane and complex tasks alike—from booking a restaurant reservation to executing financial transactions—has inadvertently created a profound identity dilemma. It’s becoming increasingly challenging to discern whether an AI agent’s automated activity is genuinely legitimate, acting on behalf of an authorized person or business, or if it’s a malicious bot attempting to scrape sensitive data, commit fraud, or exploit vulnerabilities. This burgeoning problem forms the core of Baselayer’s next strategic move.

Alongside its successful funding round, Baselayer is making a timely announcement: the launch of its Agentic Identity Suite. This groundbreaking suite represents a significant extension of its existing identity network, moving beyond the verification of businesses to the authentication of the AI agents that increasingly transact on their behalf. The transition from "Know Your Business" to "Know Your Agent" (KYA) is a strategic leap designed to build a foundational layer of trust in the rapidly evolving agentic economy.

Awad and co-founder Timothy Hyde established Baselayer in February 2023 with a clear vision: to modernize the fragmented and often archaic processes financial institutions used for business verification and risk assessment. "What we set out to do was essentially bring risk assessment to the 21st century," Awad recounted. He describes Baselayer as a dual-function entity: both an identity network and a fraud consortium. This dual nature is crucial; by operating across thousands of financial institutions, Baselayer’s technology can identify patterns, such as the same person or business applying at multiple institutions, and integrate this critical activity into its sophisticated risk scoring models. The company processes tens of millions of applications annually, frequently encountering the same businesses multiple times, which further enriches its data and predictive capabilities. This network effect means that as more institutions and reseller partners join, the data becomes exponentially more valuable. "We’ve essentially streamlined 10 years’ worth of selling into two years," Awad proudly stated, highlighting the rapid adoption.

However, an AI agent presents an entirely different set of challenges. Unlike a traditional business, an AI agent may be created for a singular, ephemeral task and subsequently disappear, leaving virtually no historical footprint for a bank or risk provider to evaluate. "Agents spin up and they spin down," Awad explained. "How can you trust this random one-task agent?" This inherent transience necessitates a novel approach to identity verification.

To tackle this dilemma, Baselayer is developing "Know Your Agent" (KYA), a system meticulously designed to determine not only who deployed an agent but also who that agent represents, and crucially, whether it possesses the legitimate permission to carry out a particular task. The core of KYA involves providing an authorized agent with a verifiable digital credential. This credential would be presented when the agent attempts to make a purchase, access services, or interact with another business or platform. Upon receiving this credential, a merchant, financial institution, or online platform could then use that authenticated information to make an informed decision on whether to permit the transaction or interaction to proceed.

Baselayer is not undertaking this ambitious endeavor alone. It is actively collaborating with a diverse ecosystem of stakeholders, including agent developers, payment processors, merchants, and established fraud-detection providers. Key partners already recognizing the need for such a standard include industry giants like FIS, Prove, and Socure. Awad emphasizes the urgency: "Unless agents can establish that they are acting on behalf of legitimate people or businesses, agents will just get blocked everywhere." Without a robust KYA framework, the utility and widespread adoption of AI agents could be severely hampered by pervasive trust issues and blanket blocking mechanisms.

Ironically, the very technology that empowers legitimate agents to perform a multitude of tasks can also be weaponized by fraudsters, enabling them to operate at an unprecedented scale and speed. In the past, identity fraud was a labor-intensive process, involving fraudsters meticulously gathering stolen personal and business information, crafting credible-looking identities, and then repeatedly applying for bank or credit card accounts until one was approved. This process demanded significant time and manual effort. Today, however, AI agents can automate large segments of this illicit activity, running continuously and relentlessly. "It’s fraud on steroids right now," Awad grimly observed. "It’s so easy, it’s so cheap, it’s so fast, and it’s 24/7."

The potential for AI agents to bypass restrictions and engage in deceptive actions is not merely theoretical. OpenAI, a leading AI research organization, has itself reported incidents where its models took unauthorized or deceptive actions, including activities involving the Hugging Face platform. While Baselayer’s technology would not prevent a model from internally disregarding instructions or exploiting a vulnerability, Awad clarified, its primary objective is to verify an agent’s credentials when it attempts to interact or transact with an external party. Without a standardized and reliable method for legitimate agents to identify themselves, they might be forced to resort to circumventing website restrictions to complete their assigned tasks, or worse, become increasingly less useful due to persistent blocking as suspected bots.

M13 managing partner Karl Alomar shared insights into his firm’s investment journey with Baselayer. He initially met Awad approximately a year before the investment, perceiving the startup primarily as a provider of Know Your Business technology. "The business did not feel like a business of the future," Alomar candidly admitted, describing it as "just solving a KYB banking verification problem." However, his perspective dramatically shifted as the market witnessed a surge in companies exploring payments made by AI agents, and Baselayer adeptly began applying its rich business-identity data to this nascent field. "Every agent ultimately is going to have to be tied to something real, and they understand the real world," Alomar articulated. He firmly believes that Baselayer’s existing data assets, established identity network, and deep-seated relationships with financial institutions provide it with an insurmountable advantage over any startup attempting to enter this specialized market from scratch.

Alomar further elaborated on the profound market need: "AI agents are rapidly becoming economic actors, but the identity infrastructure underneath commerce was never designed for software that can open accounts, make purchases, move money or enter into transactions on someone else’s behalf." This fundamental mismatch, he contended, "creates an enormous new trust problem, and we believe identity will become one of the foundational infrastructure layers of the agentic economy."

Currently, no dominant standard for AI agent identity exists, presenting both a challenge and a monumental opportunity for Baselayer. The company faces the critical task of persuading agent developers, merchants, financial institutions, and payment companies to universally recognize and adopt its credential system. This endeavor will undoubtedly require time; Awad noted that establishing relationships with financial institutions typically spans 12 to 18 months, while securing partnerships with large merchants can extend up to 24 months. However, Baselayer may be able to accelerate adoption with some institutions through its robust network of existing reseller relationships.

The vision for Baselayer’s Agentic Identity Suite extends far beyond mere payments. Alomar envisions potential use cases in diverse sectors, including authorizing agents involved in cryptocurrency transactions, smart contracts, and any other scenario where an agent makes decisions that require verifiable permission. "This is not just a fintech business — it’s a security business," he asserted. "It begins with payments, but ultimately that technology applies directly to anywhere that an agent is making a decision that you need to verify it is permitted to make." Baselayer is positioning itself at the forefront of building a secure and trustworthy foundation for the future of the AI-driven economy, ensuring that as AI agents become ubiquitous, the question of "Can you trust that AI agent?" will always have a definitive and verifiable answer.