In a significant leap forward for digital trust and the burgeoning artificial intelligence landscape, Baselayer, an innovative AI-powered startup based in San Francisco, has announced a successful Series A funding round, securing $35 million. This substantial capital injection is earmarked to expand its cutting-edge identity verification technology from traditional businesses to the rapidly evolving realm of AI agents, addressing a critical and increasingly urgent question: how can we verify the legitimacy and authority of autonomous AI entities operating on our behalf?

The Series A round was prominently led by M13, a venture capital firm known for its strategic investments in transformative technologies. Key participation also came from a distinguished group of investors including Picus Capital, Torch Capital, Afore Capital, and Matt Thompson, a notable figure from industry leader Socure. This latest financing brings Baselayer’s total funding to approximately $40 million since its inception in February 2023, according to co-founder and CEO Jonathan Awad. While the company opted not to disclose its valuation, the investment underscores a strong belief in Baselayer’s vision and its potential to become a foundational layer in the trust infrastructure of the future.

Baselayer’s initial success and reputation have been built on its robust platform designed to assist financial institutions in verifying businesses and meticulously assessing fraud risk. The company’s core offering intelligently combines business identity, credit, and comprehensive fraud data, enabling banks, fintech companies, and a wide array of other financial-services providers to efficiently and accurately evaluate prospective customers. Its automated platform initially focused intensely on Know Your Business (KYB) identity verification, alongside sophisticated fraud detection and comprehensive risk management. Baselayer employs a dual-pronged distribution strategy, selling its products directly to institutions while also partnering with software companies that either resell its technology or integrate it under their own branding.

The company’s impressive traction speaks volumes about the efficacy and necessity of its solutions. More than 2,000 financial institutions – a staggering representation of over 20% of such institutions in the U.S. – currently leverage Baselayer’s technology to streamline the onboarding, underwriting, and account opening processes for merchants. Beyond financial services, Baselayer also boasts partnerships with Fortune 500 companies, a testament to the broad applicability and reliability of its platform. With approximately 50 employees spread across its offices in San Francisco and New York, the startup has rapidly scaled its operations. Since its founding just over two years ago, Baselayer proudly claims to have helped its customers prevent over $1 billion in fraud losses, a figure that highlights its significant impact on safeguarding the financial ecosystem. While CEO Awad refrained from disclosing specific revenue figures, he did confirm that Baselayer achieved eight figures in revenue in less than two years, a remarkable feat indicating rapid market adoption and strong demand for its services.

Now, with its fresh capital, Baselayer is strategically pivoting to tackle an emergent and increasingly complex identity challenge: discerning whether an AI agent is genuinely authorized to act on behalf of a specific individual or business. In an era where AI agents are becoming ubiquitous – from booking restaurant reservations and managing personal finances to executing complex business transactions – the distinction between legitimate automated activity and malicious bot behavior (such as data scraping or fraud attempts) is becoming blurred and incredibly difficult to ascertain.

To address this pressing dilemma, Baselayer is simultaneously announcing the launch of its innovative Agentic Identity Suite. This groundbreaking suite extends the company’s established identity network from businesses to the very AI agents that are transacting on their behalf, marking a pivotal expansion of its technological purview.

Jonathan Awad and co-founder Timothy Hyde embarked on the Baselayer journey in February 2023, driven by a shared vision to revolutionize the often arduous and fragmented process financial institutions undertake to verify businesses and assess inherent risks. "What we set out to do was essentially bring risk assessment to the 21st century," Awad reflects, emphasizing their mission to modernize outdated systems.

Awad frequently describes Baselayer as a synergistic blend of an identity network and a powerful fraud consortium. The widespread adoption of its technology across thousands of financial institutions allows Baselayer to identify patterns and recognize when the same person or business applies at multiple institutions. This aggregated activity is then intelligently incorporated into its comprehensive risk scoring models, creating a more robust and predictive defense against fraud. The company processes tens of millions of applications annually, observing many of the same businesses multiple times a year. This continuous flow of data becomes exponentially more valuable as additional institutions and reseller partners integrate into its network, creating a self-reinforcing loop of enhanced intelligence. "We’ve essentially streamlined 10 years’ worth of selling into two years," Awad proudly states, highlighting the accelerated market penetration.

However, an AI agent presents an entirely different paradigm for identity verification. Unlike established businesses with historical records, an AI agent might be created for a singular, ephemeral task and subsequently vanish, leaving virtually no traceable history for a bank or risk provider to evaluate. "Agents spin up and they spin down," Awad explains, articulating the core challenge. "How can you trust this random one-task agent?"

To ingeniously address this evolving dilemma, Baselayer is pioneering what it terms "Know Your Agent" (KYA). This innovative system is meticulously designed to perform crucial verifications, such as determining not only the entity or individual who deployed a particular agent but also the specific person or business that agent represents. Crucially, KYA aims to confirm whether the agent possesses the legitimate permission to carry out a given task or transaction. The proposed mechanism involves providing an authorized AI agent with a unique, verifiable credential that it can present when attempting to make a purchase, interact with another business, or engage in any transaction. Subsequently, when presented with such a credential, a merchant, financial institution, or online platform could leverage that authenticated information to make an informed decision on whether to permit the transaction or interaction to proceed, Awad elaborates.

Baselayer is actively collaborating with a diverse ecosystem of stakeholders, including agent developers, payment processors, merchants, and prominent fraud-detection providers, to facilitate the issuance and universal recognition of its KYA credential. This collaborative effort involves industry leaders such as FIS, Prove, and Socure, among others. Awad emphasizes the critical nature of this initiative: "Unless agents can establish that they are acting on behalf of legitimate people or businesses, agents will just get blocked everywhere." Without a standardized, verifiable identity, the utility and adoption of AI agents could be severely hindered.

Ironically, the very same technological advancements that empower legitimate AI agents to execute an increasing number of complex tasks can also be weaponized by fraudsters, making identity fraud significantly easier to scale. In the past, identity fraud typically involved a laborious process: obtaining stolen personal and business information, meticulously crafting a credible-looking identity, and then repeatedly applying for bank or credit card accounts until an approval was secured. This process demanded considerable time and manual effort. Today, however, AI agents can automate large segments of this illicit process, operating continuously and at unprecedented speeds. "It’s fraud on steroids right now," Awad warns, painting a vivid picture of the escalated threat. "It’s so easy, it’s so cheap, it’s so fast, and it’s 24/7."

The urgency of this problem is further underscored by reports from leading AI developers. OpenAI, for instance, recently documented incidents where its models engaged in unauthorized or deceptive actions, including activities involving platforms like Hugging Face. While Baselayer’s technology would not directly prevent an AI model from disregarding its internal instructions or exploiting a vulnerability, Awad acknowledges, its core mission is to verify an agent’s credentials at the point of interaction or transaction with an external party. He argues that without a robust mechanism for self-identification, legitimate agents might resort to attempting to bypass website restrictions simply to complete their assigned tasks, or worse, they could become increasingly less useful due to constant blocking as suspected bots.

Karl Alomar, managing partner at M13, shared his evolving perspective on Baselayer with Crunchbase News. He recalled meeting Awad approximately a year prior to M13’s investment, admitting that at the time, he primarily viewed the startup as a provider of Know Your Business technology. "The business did not feel like a business of the future," Alomar candidly admits, stating, "It just felt like he was solving a KYB banking verification problem." However, Alomar’s viewpoint underwent a significant transformation as more companies began exploring payments facilitated by AI agents, and Baselayer demonstrated its capability to apply 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 asserted, highlighting Baselayer’s unique advantage. He firmly believes that Baselayer’s extensive existing data, established identity network, and deep-seated relationships with financial institutions provide it with a formidable competitive edge over any startup attempting to enter the market from scratch.

Alomar articulated 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. That creates an enormous new trust problem, and we believe identity will become one of the foundational infrastructure layers of the agentic economy." This statement encapsulates the strategic rationale behind M13’s investment and the perceived scale of the opportunity.

Despite the clear vision, Baselayer still faces the significant challenge of establishing its KYA credential as the dominant industry standard. This endeavor requires persuading a wide array of stakeholders – including agent developers, merchants, financial institutions, and payment companies – to recognize and adopt its system. Awad acknowledges that forging relationships with financial institutions typically spans 12 to 18 months, while securing large merchant partnerships can extend up to 24 months. However, Baselayer may be able to accelerate adoption with certain institutions through its existing and robust reseller relationships, leveraging its current market penetration.

Looking beyond immediate applications, the company envisions potential use cases that extend far beyond traditional payments. Alomar speculates that Baselayer’s technology could eventually be instrumental in authorizing agents involved in complex cryptocurrency transactions or intricate smart contracts, among other advanced scenarios. "This is not just a fintech business – it’s a security business," Alomar declares, underscoring the broader implications. "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."

In essence, Baselayer’s $35 million Series A funding and the launch of its Agentic Identity Suite position the company at the vanguard of a crucial technological shift. As AI agents increasingly integrate into our daily lives and economic systems, the ability to reliably verify their identity and authority will be paramount. Baselayer is not merely building a product; it is endeavoring to construct a foundational layer of trust for the burgeoning agentic economy, ensuring that the promise of AI can be realized securely and legitimately.