Prelude is a relatively new French startup that focuses on SMS verification. On Wednesday, Singular and Seedcamp announced new funding rounds. The two founders met while working at Zenly, a popular location-sharing app with tens of millions of users that was acquired by Snap and later shut down. You might not think much about verification codes, but the Zenly team has thought very intensively about this topic. Implementing a reliably working SMS verification code is very tedious.
“When we first started looking at this at Zenly, we only had one provider. And honestly, when I joined the company, I thought it would be a problem that would be solved in a few months and we could move on. As it turns out, I spent most of the three years I was at Zenly solving this problem and built a team around it,” Prelude co-founder and CEO Matias Berny (pictured above, left) told TechCrunch.
You may not pay to send text messages to your personal cell phone, but your telecommunications service provider will still bill you for those text messages. And if you have a large user base, SMS verification can be a very expensive center.
At the end of 2023, the Signal Foundation shared operating budgets for popular messaging apps and services. SMS verification codes alone cost $6 million per year. By comparison, storage, servers, and bandwidth account for $7 million annually. entire.
You might think it’s expensive, but at least it’s a problem that’s already been solved. A few years ago, Twilio made it easy to send SMS using programmatic calls. Other companies have also used SMS verification APIs.
However, when you request a verification code, that request is routed through multiple intermediaries and multiple phone carriers in multiple countries. This patchwork means that it may take some time before you receive your verification code, if it doesn’t fail outright.
“What we’ve been building at Zenly and now at Prelude on a larger scale is really Skyscanner for phone number verification. We will always find the best route to verify your phone number,” Berny said.
This feature alone can help your business increase conversion rates. However, it can also help businesses save money because new customers don’t have to hit the “resend code” button if they don’t receive anything.
“Besides the smart routing aspect of the product, there are a lot of other issues that need to be addressed,” Berny said. Fraud is one of them. “There are fake users who ask for fake codes to verify fake numbers in order to receive a portion of the SMS cost,” he added.
These fraudulent intermediaries, which generate artificial SMS traffic by creating fake users, can take up to 30% of SMS authentication codes, according to the Prelude team. That’s why the startup is trying to identify fake virtual numbers that use different signals to stop texting in the first place.
Prelude also does not charge customers based on the number of text messages issued by the startup. We charge based on verification, so we align incentives with our own customers. That’s why Prelude also supports other messaging services like WhatsApp and Viber. It’s more about confirmation than SMS.
Many popular consumer apps like BeReal and Locket are already using Prelude. Companies in the fintech or cryptocurrency industry such as Alma, Sunday, and Bitstack are also using Prelude to verify phone numbers.
The startup has raised $8 million to date, with Singular and Seedcamp leading the company’s seed round, with various angels also participating. In total, the company says it has so far verified the phone numbers of 100 million different user accounts.
