Signicat forms ‘European identity powerhouse’ with Inverid acquisition

Signicat is absorbing NFC-based digital identity verification specialist Inverid in a deal that Co-founder and CEO Maarten Wegdam told Biometric Update in an interview on the eve of the announcement will create a “European identity powerhouse.”

The terms of the deal were not disclosed, but Inverid’s Netherland’s based backer Main Capital, Wegdam and his Co-founder, CRO Wil Janssen will all be backers of Signicat post-acquisition. Wegdam and Janssen explained that while the two companies have an existing partner relationship, the acquisition allows them to integrate comprehensively, beyond the limitations of a partnership arrangement.

Inverid’s ReadID will be integrated with Signicat’s portfolio of digital identity verification products to make it even more of a “one-stop shop,” Wegdam  says.

From Inverid’s perspective, “there are some limits in growth if you sell this one product. By joining Signicat, we can more easily approach a much wider range of customers and leverage our unique technology better.”

Matchmaking for growth

Wegdam and Janssen emphasize the natural fit of Inverid’s capability to scan the biometric and biographic data from the chips in ID documents with Signicat’s digital identity capabilities, but also the cultural fit between them.

Janssen notes Signicat has already made several successful integrations from around the continent, including Electronic Identification from Spain, Dokobit from Lithuania, Connectis from the Netherlands.

“Some of those parties we knew very well,” Wegdam says, “and yes, we did chat, ‘hey how did you like this, what do you think?’”

The “reverse due-diligence” was a matter of taking “care of our baby and our colleagues,” he explains. “For us it’s not just a financial thing.”

“They all have been integrated, but it has already led to a company with 16 different offices, and with a culture that allows teams to be spread throughout the Europe, and to collaborate virtually,” Janssen points out.

Inverid will be known as “a Signicat company” or something similar within weeks, Wegdam says, and the brand will eventually be absorbed within Signicat, as will the team.

“This is about growing faster, this is not a cost-saving exercise,” he says. “Our offices will stay; our people will stay.” The well-known ReadID product name will continue, as well.

As a combined entity with Signicat, Wegdam says, they will be able to better serve their customers, such as government, banking, and digital signing organizations with a wider range of products.

“Being more tightly integrated will make it easier and better to do that than it was before,” Wegdam predicts.

That tighter integration is necessary to achieve the market reach the two companies are striving for. There are a couple of reasons for this. One is that customers don’t want the hassle of stitching together technologies from several vendors.

Signicat’s portfolio is organized “around the customer, the life-cycle of the user, so they’re groups of products that make sense,” Wegdam explains. “Our product will be in several places in that journey.”

Biometrics and digital identity technology providers are “used to having more complex relationships,” according to Wegdam. It is “an industry, maybe more than most, where you’re partners, suppliers, customers, resellers and sometimes competitors all at the same time.”

But those the industry is selling to do not want to be exposed to that kind of complexity.  They just want identity verification to work.

“In the past smaller, but nowadays also bigger customers don’t want to have that hassle, they want to go to one place,” Wegdam observes. The companies also hope for cross-selling opportunities with their existing customers.

“By adding Inverid’s unique NFC-based solution to our platform, we can offer our customers the best possible document verification technology and unmatched identity solutions,” comments Asger Hattel, CEO of Signicat, in the announcement. “This transaction demonstrates our commitment to remaining at the forefront of digital identity innovation, constantly striving to offer our customers still more effective tools to fight fraud while improving digitization journeys for their end users.”

Another way that the acquisition helps with market reach is the expanded geographic presence referred to above. A dispersed workforce is a benefit to both the employees and the company itself, according to Janssen.

“That’s no longer an issue; it’s even an asset in a company that wants to lead in Europe and conquer the world.”

Different opportunities, different expectations

Signicat intends to play a leading role in Europe’s evolving digital identity market, but also plans to leverage made-in-Europe advantages like experience with GDPR compliance to compete in regions around the world. Achieving those kinds of goals requires scale.

The acquiring company has connections in countries like Norway and Denmark, as well as in ones where Inverid already has a presence, like Spain and the Netherlands.

And there is pressure on some customers, particularly European governments, to use digital identity providers and software that is hosted in Europe. Inverid is not just based on the continent, but also brings extensive experience with just the kids of data those customers are most concerned about.

“We handle so many European passports, European identity cards, European biometric information, and this combination does allow us to do that more than some other combinations might have,” Wegdam says.

The executives see NFC as key enabling technology for EUDI Wallets, enabling eIDAS high level binding and bringing the biometric element from the physical ID document to the digital one. With EUDI Wallets set to reshape the European digital identity market, they represent a massive opportunity for Signicat, and ReadID broadens the role the company can play in that market.

Signicat is currently part of the We Build large-scale pilot, which is focused on enterprise wallets, and Inverid is part of APTITUDE (Advanced Project for Trusted Identity Technologies and Unified Digital Ecosystem), which focusses on individual travel and payment use cases. “Together we can cover the whole space,” Janssen says.

He characterizes the EUDI rollout situation as “quite chaotic” at the moment. Some member states don’t have as much capacity for early testing, and will “wait until the dust settles.” The market is also somewhat fragmented by nature.

“But we do see that all over Europe, the initiatives are moving forward.”

The EU is now moving into the second round of the large-scale pilots. This second phase moves from exploratory phase to consolidation phase “where things actually have to work in practice with real people, with real member states, with real use cases. We’ve built the infrastructure, we’ve experimented with it, we know that it can work, we can demo it.”

Tenders have already begun, though “some are more in the market consultation phase or an RFI phase,” Janssen notes.

The market is also adjusting to the impact of a round of consolidation, with major acquisitions by Laxton by DNP, Idemia Smart Identity by IN Groupe and HID Citizen Identity by Toppan Gravity.

“We’ve been seeing and also expecting this for quite a few years now,” Janssen says, chalking it up to market maturation.

It is also part of a longer trend, he says, that traces all the way back to when Inverid started in 2013.

“Many experiments have been out there, and many technologies have been developed, and it’s been in the innovative or experimental phase. We’re now moving into a phase where those technologies need to be combined to create full solutions.”

Less mature technologies and implementations will struggle. Startups are finding that it’s hard to grow while remaining financially healthy, as in profitable. Profit had been considered a negative at one point, when money was abundant, Janssen says.

Inverid has always been profitable, attracting Main Capital to acquire a controlling stake in in 2022. Along the way, the sentiment has changed with regard to profit, but so has the market.

“That’s part of that consolidation,” Janssen explains. “Growing with complex technology in a maturing market where there’s actually competition. When we started there was hardly any competition, now there’s severe competition. It’s not only competition between optical solutions, signing solutions and NFC solutions, it’s also competition within the NFC market.”

Signicat is banking on Inverid’s leadership in that area to make a more formidable competitor in the broader global digital identity market.

Article Topics

acquisitions  |  biometrics  |  digital identity  |  document verification  |  Europe  |  identity verification  |  Inverid  |  Signicat