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Start-up of the Week: Prelude & the art called fraud-resistant SMS verification services

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Using Prelude, a business can send verification messages at scale without paying for spam or added mark-up, while cutting down costs by 40% with the smartest SMS API

SMS onboarding has become a new feature of the 21st century way of “Doing Business,” where sending text messages over smartphones is seen as a mechanism to help new customers or employees get started with a product or service.

SMS can be used to send welcome messages, promotions, and other offers to customers. It can also be used to remind customers of appointments, confirm orders, and provide delivery notices. SMS can help build relationships with customers and reduce user abandonment. SMS can also be used to speed up the onboarding process for new hires. SMS-driven pre-boarding can help companies save time and accelerate the onboarding process by one to two days.

Against the backdrop, today’s episode of International Finance’s “Start-up of the Week” will talk about a relatively new French venture named Prelude, whose operation focuses on SMS verification. The start-up hit the headlines in November 2024 as it announced new funding from Singular (Paris-based venture capital firm) and Seedcamp (European seed-stage venture capital fund).

What Prelude Is All About?

Prelude founder and CEO Matias Berny and co-founder Quentin Le Bras met each other working for Zenly, a popular location-sharing app with tens of millions of users that was acquired by Snap (and got shut down in 2023). These two individuals were part of the Zenly team that worked extensively on SMS verification codes and how to make them more reliable.

While users typically don’t pay for text messages on their smartphones, telecom providers still charge businesses for those messages. If a company has a large user base, SMS verification can become a significant expense. Prelude is addressing this issue by offering a powerful and easy-to-use API that allows users to send One-Time Password (OTP) codes worldwide through the most suitable channel based on the user’s context.

“Businesses typically see a 20-30% increase in conversion compared with their previous provider, while saving 30-40% monthly. Prelude also detects and prevents fraud using algorithms trained on tens of millions of data points,” the venture narrated.

“What we’ve been building at Zenly — and now at Prelude on a larger scale — is really the Skyscanner of phone number verification. We’ll find the best route at any given moment to verify the user’s phone number,” Berny told TechCrunch recently.

Using Prelude, a business can send verification messages at scale without paying for spam or added mark-up, while cutting down costs by 40% with the smartest SMS API. With just one setup, Prelude claims to open the door of businesses to over 20 leading global and local text-message providers, offering a network of more than 1000 routes across 230 countries, while blocking 99% of spam and fraud using algorithms trained on tens of millions of data points. Prelude uses four channels to reach 99.99% deliverability and 95% conversion rate worldwide.

“Beyond the smart routing aspect of the product, there are many other problems to solve. Fraud is one of them. There are fake users who ask for fake codes to validate fake numbers with the aim of receiving a portion of the cost of the SMS,” Berny continued.

According to the start-up, fraudulent intermediaries that generate fake users to create artificial SMS traffic can represent as much as 30% of SMS verification codes. That’s why Prelude tries to identify fake, virtual numbers with a variety of signals to stop text messages in the first place.

Prelude doesn’t charge its customers depending on the number of text messages issued by the start-up, aligning the incentives with its own customers as it charges per verification.

“That’s also why Prelude supports other messaging services, such as WhatsApp and Viber; it’s more about verification than SMS. Many popular consumer apps, such as BeReal and Locket, are already using Prelude. Companies in the fintech or crypto industries, such as Alma, Sunday, and Bitstack are also relying on Prelude to verify phone numbers,” TechCrunch reported.

Here Are The Technologies

Prelude’s flagship technology is its anti-fraud system, which helps its clients save their phone number verification budget with the most effective protection against fake traffic and IRSF (International Revenue Share Fraud). Prelude uses four layers of protection, while using a cross-signal risk scoring to identify spam with the best accuracy.

The anti-fraud system uses four elements: Heuristics (which effectively reduces fraud through basic rules, thereby blocking 70% of the attacks), AI Models (to back up heuristics), Data Provider (which helps to enrich the start-up’s analysis with commercial databases for more precise fraud detection) and Cooperation (where Prelude shares its knowledge across its client base).

The start-up’s granular approach enables its clients to connect with real users, even in countries that are significantly affected by fake or fraudulent traffic. Through the “Look-up API,” these businesses “can check the risk-scoring of any number with a simple endpoint.” They can also save their phone number verification budgets with the most effective protection against fake traffic and IRSF. Behind its minimalist API, Prelude acts as a real-time broker and selects the optimal route based on the business’ user’s context and history. It also prevents fraud transparently, without requiring any additional configuration.

The anti-fraud system also comes equipped with a dashboard, and an analytics platform tailored for product people and enhances the client business’ acquisition strategy with analytics, measure improvements and achieve optimal conversion rates. This dashboard is made purely on the philosophy of “Of and For the Clients,” as the businesses, using the tool, can take control of their acquisitions with instantaneous, real-time data visualisation, empowering their users and delving deeply into metrics for strategic insights.

The businesses can see the whole authentication lifecycle information on retries, channels and pricing transparency, effortlessly managing their routes and channels per-country basis. The tool integrates crucial acquisition metrics for the clients including acquisition analytics, by country, platform and application version, transparent prices (real-time acquisition cost), conversion performance to adjust onboarding processes and how long it takes for users to validate the code is an important KPI to avoid churn.

The Way Ahead

Prelude, established in 2022, has seen its technology being used to protect over 100 million user accounts across 230 regions, apart from winning the trust of enterprise clients representing sectors such as social services, finance, travel, retail, and food technology.

One such client is Sunday, a global payment solution for restaurants, whose CTO Arnaud Lemaire told the media outlet EU-Startups, “Operating across Europe and North America with international customers, we needed a solution that could keep up with our global reach while maintaining competitive prices—our previous provider fell short. With Prelude, we’ve completely transformed our messaging strategy. Now, we send OTPs worldwide effortlessly, with full visibility into deliverability and conversion rates. Plus, their responsive support team is always ready to help, ensuring we stay on track.”

The fresh funding of 7.6 million euro will allow Prelude to further innovate, broadening its services beyond one-time password verification and expanding its mobile-first onboarding tools. The company is aiming to empower businesses to streamline user verification, onboarding, and engagement in the coming months.

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