Boaz Falkin: Cofounder and CEO at Falkin on raising $2m to prevent AI Scams

0:00Boaz Falkin:Hello and welcome back to Scaling Europe show. I am Seb Johnson. I'm here with Boaz who's got some very exciting news. Can you touch on the news and give us a quick introduction to who you are? sure uh hey seb uh i'm one of the co-founders at uh falcon uh we're a digital safety platform that helps uh prevent people from getting scammed uh today we're announcing our two million dollar pre-seed uh led by triple point ventures and a number of other great funds um so yeah delighted to to be on the show thanks for having me absolutely amazing news congratulations i mean And we've known each other for, I think, a few months now.

0:40Boaz Falkin:I've been kind of watching your journey as you kind of go through this process and build out the product even more. So it's like amazing news. Like super congratulations to you and the rest of the team. This is really exciting. Can you talk a little bit more about what it is that you've built and that's kind of what it is that's enabled you to raise this money? Yeah, so the journey really starts close to home. My mother lost 15 % of her life savings to a scam last year, May. And that made me realize how severe the problem really was. Around 7 million people across the UK were scammed in the last 12 months.

1:19Trillion dollar problem affecting all ages, only getting worse with advancements of AI. So that was the catalyst to create Falcon with the thesis that people need more help. before payments happen. And that's really what we're building, which I'm sure we'll get into. And that's really the genesis of the company. And then we work with financial institutions to embed our simple but powerful digital safety tools across their journey. So that could be security centers, fraud hubs, into the transaction journey, as well as a few other examples as well. It's really around getting the tools in the hands of everyday people to help stop scams and social engineering from happening.

2:06Boaz Falkin:Can you give some examples of the type of scams that Falcon has been built to prevent? Sure. Right now we're specialised on impersonation scams. So that could come via phishing or smishing. So that's like text message and other messaging channels, as well as purchase scams and investment scams. So that's the vast majority of scams affecting a number of countries at the moment. And how that works is we, like I said, we embed in different financial institution apps and their customers are able to verify something before they click on a link, check a website, check something that they're about to buy.

2:51and it's an additional safety check throughout their journey, which then allows the user to get a user-friendly risk score with clear reasons why we think something might be a scam or not and some clear recommendations.

3:08Boaz Falkin:And so you mentioned that these problems are getting worse with AI. Can you talk about why that's the case? yeah so um you know scams have existed since the dawn of time uh people have been impersonating people since there was always like human to human contact and i'm sure when you were growing up when i was growing up um you know you were used to these clearly fake emails that were just mass attempts uh you know they were known as like prince impersonation scams or you've won the lottery and the throughput for someone, you know, in inverted commas, falling for that was very, very low. So what's happening now is that AI, like every other technology industry, is having a massive wave of innovation in the scams industry.

3:56So AI voice, people using AI to assist with more technical things like writing malware, cloning websites, really taking the production value to such a high level, which would have previously taken teams of sophisticated scammers maybe weeks or months, now take hours and minutes, similar to the productivity gains you see in normal industries. And then that's just being now fed through all of the traditional communication channels and wherever there's human-to-human contact. So that could be SMS, that could be email, that could be marketplaces. So it's really around the production value. And the core problem being it's becoming exceptionally difficult to identify what is genuine or not.

4:43And the key add-on to that is if someone is maybe sitting at home, not tired, on their sofa, really, really analyzing every little thing, it's maybe easier to detect it. But the problem is we're all mobile first and we're all distracted. Like you just see a message that says your account has been compromised or we don't recognize these transactions. What do people do? They panic, they click on a link, call a number, reply. And that's, you know, that's that's really what's happening. So there's just a couple of examples around why it's getting worse. And then there's some broader macro things. I know you've covered a lot around, you know, Project Europe and other initiatives is that there is a major national security issue.

5:28And there's been a number of publications with malicious state actors essentially using scams to get people's data or to get foreign currency if there's sanctions on those countries. So it's not just organized crime groups moving away from traditional crime into the human psychology side of cyber. It's also malicious state actors as well.

5:50Boaz Falkin:and i saw that you mentioned something before about uh vibe coding and how you mentioned it just then you talked about like how easy it is to spin up a fake website you know like yeah the scams that we used to get you could quite clearly just see the email looked fake right it would be like i don't know microsoft 1000 whatever it was it was like a fake email address you could tell it was a scam but i thought it was really interesting when you spoke about uh the the the downside of vibe coding and tools like lovable that actually somebody could knock up a fake website of your bank or your provider something that looks very legitimate you click on the link and it looks like that's taking you to the home page or look they could knock up a site that could look really convincing and that actually is just a complete scam and all of these things the barrier has been massively lowered to be able to create fake alternatives absolutely i mean i I can just share some data from what we're seeing.

6:43So about 80 % of dangerous sites are less than 30 days old. So again, those tools are helping to exasperate the production value to create really genuine looking sites super quickly. So we see cases of people cloning reputable financial services companies, whether it's banks, insurers, financial advisors, merchant stores like sneaker stores, equivalent, creating ads that they're listing on Gumtree, Etsy, any marketplace that looks incredibly genuine. And it's becoming incredibly difficult to spot exactly that, whereas maybe historically, I think I saw a report where something like seven out of 10, you know, consumers think that they can spot the scam.

7:37But now that's radically reducing by half. So there's also somewhat, you know, contradictory is that there's now a lot of overconfidence about detecting this because there's a lot of awareness and education out there that are saying scams are bad. be wary of phishing, that's not really actionable, helpful for everyday consumers. And then, you know, a couple of really, really out there examples, we literally helped a customer last week, is that people were using AI to take genuine company docs from their website, change the branding and the colors in a couple of minutes, they've ported over the employee page from the genuine website and now just put it in various PDF documents and putting it as like investor relation, prospectus stocks, things like that.

8:32So previously, that would have maybe taken quite a chunk of time to do. Now people are using AI tools to just basically do that instantly. So leveraging the hard work of genuine assets and then just, you know, changing a couple of details and the production value is still really high. And now that's now been translated in several languages and now it's being used to target people for investment scams.

8:57Boaz Falkin:Yeah, I mean, it's terrifying how quickly people can just get these things up and running. I know that you're targeting financial institutions, like that's who you're kind of selling the proposition to. But I also know that you've had the product in the hands of users. Can you talk a bit about kind of what the experience has been? What's been the reaction? Have you kind of got any good examples that you can give on that? Yeah. So we're working with several financial institutions at the moment. We've had tens of thousands of checks, again, really focused on urgent messages, purchases, investment opportunities.

9:32we score very highly in terms of repeat engagement NPS people comment that our tools make them feel safer online there's a quite a high referral rate with like friends and family which is also an interesting perspective and then you know essentially what we're trying to do as we go from this round of funding to the next is then to work with our partners on case studies, testimonials, ROI calculations with the view that the data is valuable, but also that we can actually reduce fraud losses with this sort of first line of defense approach, pre-transaction or before money leaves an account. That's ultimately what we're working with is people feeling safer and having a resource to check things and then reducing fraud losses.

10:26Got it.

10:27Boaz Falkin:And you mentioned the funding around there. So you've raised$2 million pre-seed from a range of investors. I think there was, yeah, Triple Point Ventures, Ledit, but you also got Notion Capital, Back Future Ventures, Hatch, Founders Capital, and a bunch of high-profile angels. How did you find the fundraise? uh i mean it was it was okay it's okay i think it's fundraising you know i'm sure you've uh you you've got lots of different perspectives um look i think pre-seed is a hard fundraise um you know really really early uh pre-revenue um you know when we kicked that off and sort of I guess, you know, first time founder, from my perspective, Joel is a second time founder.

11:16So that experience helped, I guess, really, for me, it was around finding the right people who really believed in the team and in the thesis, as well as the problem space. I think for me, especially at the pre-seed level, it really is around an energy fit because the product is going to change. You know, the world is so uncertain at the moment. Things are rapidly changing, even just in this space, never mind broader technology space since we started the company over a year ago to now. So, yeah, I think in the end, absolutely delighted with everyone that we have on board. Super supportive, super helpful.

11:54And, yeah, now we're really trying to go from strength to strength. We're going to use the funds to enhance the team, accelerate the roadmap on a number of capabilities, you know, including on the ML side, as well as the various product features across the platform, and then really being able to support large scale with our financial institution integrations.

12:18Boaz Falkin:and you mentioned there that yeah the product is likely to change over time especially from kind of pre-seed to you know the however far in the future um you know you you iterate and you transform until you find whatever product market fit or scale or whatever have you changed it at all up to this point have you have you had to think okay we wanted we started really broad and now we're really focusing on this kind of this this key scam because we think we can solve this and how yeah how's that change revolved in the year that you've been building um look i think it's changed quite a lot i think um when we started out we were very consumer centric um and thinking you know evaluating three main opportunities there's a b2c angle there's a b2b angle and there's another b2b angle which could be maybe focused on smes um because their people are heavily exposed to scams and often are, you know, companies of one to 10 people.

13:16So they're at risk as a consumer, as well as the company, they don't invest in cyber capabilities. And the human psychology side of cyber is underserved across each of those verticals. And then we really focus then on like the B2B embedded approach through trusted financial institutions. When you get scammed, or when you think something suspicious has happened, you usually call a family member and then you call your bank. You're not really calling anyone else. Maybe you're reporting it to the police or the government, but that's usually like later on. And then we went quite broad in terms of, you know, doing some stuff around phones, voice, phone number, websites, etc.

14:01And now we're really focused on those three main use cases that I mentioned, which is impersonation scams, usually associated with urgent messages, purchase scams, and then investment scams. And then we are not looking at romance scams right now. We plan on covering that later. So we deprioritize that. So yeah, that's kind of come through in the last few months. And I guess the other things around how the product has changed is we've really had to make it more adaptable to meet the needs of different financial institution customers. There's kind of this paradox where people are really keen to move quickly, but for pilots and POCs are not really keen on like, you know, really deep integrations.

14:49And usually the more deeper the integration, the better the embedded experience. So that's kind of like a tension and a challenge we've had to resolve with the product.

14:59Boaz Falkin:That's super interesting. Did you struggle to focus on going B2C or B2B or that kind of SME middle ground? I know that whenever I speak to founders who have products that are used by end users, but are not paid for by those end users, there's always that sort of like push and pull of, yeah, do you go after those direct consumers and try and get them to pay for the product in some way? Or do you try and do the B2B approach? How did you find navigating that kind of commercialization of the model? Yeah, I think it's a really good question. And, you know, we had lots of sleepless nights up front about it.

15:38I think ultimately, we believe that scam prevention is more of a feature than a fully fledged business, especially for the B2C side. I think you would need a number of other features around it to be something that's worthy for consumers to pay. I do think that there would be consumers that would be interested in paying. And probably, I think by the end of this decade, I do see even banks kind of moving from this being a focus on reputation and a cost center into something that could even be revenue generating for more premier experience. experience. And maybe on another show, we could cover like what does Premiere look like in the B2C digital security space.

16:25And then, you know, based on that, then I think if you think about an embeddable B2B business, scam prevention is really interesting for a number of different use cases. Banks are just one of them. There's other use cases that are interesting. We're just like laser focused on various forms of banking and associated fintechs around that. And I think that has more longevity as a B2B business. And like anything in life, there's pros and cons. Convincing consumers to pay is difficult. Selling into banks and highly regulated enterprise customers is also difficult because the sales cycles are long. So, you know, you kind of need to pick what pros and cons you want to optimize for.

17:08and we've landed on the B2B embedded approach.

17:11Boaz Falkin:Yeah, it makes sense. It's super interesting, the point on like premium consumer. Like I could definitely imagine that, especially for sort of like our generation, for our parents, like almost trying to like get our parents and the older generations onboarded with something like this would be worth paying for, for the peace of mind or feeling like they're taken care of. I want to get into two final things. Sorry, go ahead. I was going to say, imagine a world where there was like multi-generational banking, and then you could sign up your grandmother for like holistic scam prevention. Like, wouldn't that be a great hook for a bank to then bring in the finances that, you know, across different banks into one and building out like family orientated banking?

17:57It's more of a thing in the US. I think that's exactly it. Like it's pulling on the heartstrings. and if your grandmother, your mother or your parent or even you lose money, it's not just a money thing, it's the shame, it's the trauma, it's the emotional impact on the family and I think ultimately the banks have a massive opportunity to leverage the trust and credibility in that brand that people expect to have money confidence with that institution not just for them but for their family as well and that's exactly the type of feeling that we want to support just not through the payment layer, but through the digital safety, you know, trust layer.

18:36Boaz Falkin:Yeah, I can completely see the value of that. Yeah, I mean, it makes perfect sense. It would be amazing to see that sort of like multi-generational banking. You touched on sales processes, sales cycles. You know, every founder that I speak to that is selling to banks and financial institutions, it sounds so painful. It sounds like it is like, yeah, they're tearing their hair out the thought of going through more rounds of procurement and sales cycles and it just takes months and months and months how are you kind of able to balance that process and that experience if that is your experience with also trying to iterate quickly ship products quickly learn about you know your customers and your users yeah no it's a great question.

19:22Look, I won't lie, it's definitely challenging. I guess, you know, if you look at it from a more optimistic lens, you know, they are slower for reason, you know, with additional regulation, they're inherently more conservative organizations. And I think once you're embedded, I think it's harder to be dislodged. So I think it is particularly hard for pre-seed, seed businesses where you're working to validate the technology, the buyer, the ROI, and you might run out of time and money by the time you really get the proof points to do maybe the next round or to expand the team. So that's definitely a challenge.

20:08On the other hand, it makes you grow up faster. It forces you to think through things like ISO certification, more data privacy requirements kind of it makes you grow up a lot faster I think compared to you know some some other industries and then I think on the iteration part because we're core product people you know product engineers you know both myself and Joel are very you know product minded we we have created a sort of labs initiative where we release to friends and family the exact features that we're building for the platform that we're selling on the B2B side, just to get really, really quick feedback.

20:53And that's really helped validate kind of which problems, what are the consumer touch points? How do we, you know, we're sort of segmenting the problem actually linked to like tech savviness and age, although not exclusively. And that sort of feedback has really helped say like, okay, this part of the platform is really much stronger for people over the age of 60. this is more end-to-end so we're still doing the super iterative and then you know also pushing the the people that we're pitching to like run experiments really quickly with clear hypotheses limit the scope prove it out and then expand and but that is a challenge it is really really hard to get the actual data with experiments in production with an enterprise bank is exceptionally difficult.

21:40Boaz Falkin:Yeah, well it feels like you found a decent workaround, yeah at least like getting the product into the hands of real people. You touched on like this is your first time founding a business but I know that you've got quite extensive experience kind of like building and shipping in fintech. Can you just give like a brief overview of like you know some of your experience and that's kind of led you to this point and how that's enabling and shaping your journey now as a founder? Sure, that's a great question. So I was, I sort of started my career in tech at Prodigy Finance, which is where I met my co-founder Joel.

22:19He was one of my first bosses at Prodigy Finance. I was sort of business development slash strategy role, then moved into product management. So Prodigy Finance gave me my first PM opportunity, which I'm totally grateful for. I did that for nearly, I think, four years. And I think being a PM is incredibly valuable for becoming a founder. And then I joined Kazoo, which is probably a segment for another time. Kazoo was Europe's fastest growing company. We acquired 10 businesses in 18 months, really unheard of by European standards. We listed on the New York Stock Exchange as a SPAC, like basically as a two-year-old company.

23:01So it was like half publicly listed, half scrappy startup at the same time. And I was the head of product for the largest tech domain, which was about 10 teams at its largest size, probably around 80 people, which I grew from one team. So I think that sort of pace and like intensity, I think is somewhat similar to some other cultures. in the UK, but they're hard to find. Like maybe Revolut comes to mind and others. And I think that really like battle hardens you. And then like anything in life, you know, you learn things from the various founders or CEOs you have exposure to. Alex Chesterman, this was his third company.

23:48He started Zoopla and sold that. And before that was Love Film, which got acquired and became, was a precursor for Amazon Film. So, you know, learned a lot from him. And then I was after Kazoo, I decided to do I was a founding employee at Moment, which is now one of Africa's fastest growing fintech. So I went from publicly listed to founding employee. So I think the zero to one phase, though, which is the phase that we're in now at Falcon is by far the hardest because you have nothing. you have no culture, you have no product, you have to get the people, you have to get the funding. So I think all of those experiences you probably don't realize at the time helps you here.

24:29And I think the single biggest thing is just like adaptability, resilience, and then just laser focused on the user and like what problem we're looking to solve. And having the innate belief that the team will figure it out, like we will figure it out, which is the inherent like product mindset, which is, you know, there's so many problems to solve. Why are we solving this one? So that's a little bit about my journey. And then, yeah, I always wanted to find something, but I never had the conviction around the idea that I was totally obsessed with. Like, you know, you hear different podcasts, people thinking about a problem when they go to sleep, when they wake up.

25:09And then for whatever reason, my fate was scam prevention. My wife often jokes with me, like, could I not have chosen like a sexier business like revenue enablement clear buyer you know AI native plug it in get the data like the big trend no for me it was like super hard you know multi-tenanted distribution unclear like the exact business model at least initially but really focused on the mission and so yeah that's become my calling and that's what I'm doing

25:41Boaz Falkin:amazing well look i'm super happy for you it's uh yeah it's it's an amazing result kind of to get the pre-seed done to give you the time and the the the resources to to build it out and to go from zero to one which like as you mentioned is firing on all cylinders fighting on all fronts and just trying to make it work um so well thank you so much for joining me and best of luck with the next phase of your journey and you know i know you and i will stay in touch but um yeah it's been yeah thanks for everything you do thanks for covering this thanks so bye thank you