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Identity Software – May 2021 EXECUTIVE SUMMARY Identity Software Sector Update

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Identity Software – May 2021 EXECUTIVE SUMMARY Identity Software Sector Update SECTOR SNAPSHOT: Identity Software – May 2021 EXECUTIVE SUMMARY Identity Software Sector Update The pandemic has driven digital transformation into overdrive with retailers and financial institutions rapidly adopting to consumer demand shifting from offline to online transactions, and enterprises accelerating migration to cloud to manage millions of workers working remotely. This unprecedented growth in digital activity saw a corresponding increase in intensity and regularity of identity fraud and data breaches on an almost daily basis. Advanced persistent threats are fueling rapid innovation and adoption of identity security and data protection solutions across different market verticals, which in turn have catalyzed some of the most significant M&A and funding activities in recent history Recent M&A activity has been robust across multiple sub categories especially in IAM, highlighted by: Select M&A Transactions ($MM) $28,940 $1,400 $6,408 $850 Financing and investment volume in the overall identity sector has continued unabated with sponsors making bold bets to unleash growth and create new unicorns: Select Financing Transactions ($MM) $210 $205 $150 $100 $100 $100 GCA expects these trends to continue with even stronger identity related market activity excepted in the remainder of 2021 2 I. GCA OVERVIEW II. IDENTITY SOFTWARE MARKET OBSERVATIONS III. APPENDIX 3 GCA’S DEDICATED SECTOR KNOWLEDGE AND EXECUTION EXCELLENCE GCA’s Identity Software Leadership Team Chris Gough Saif Malik Managing Director / Head of Cybersecurity Executive Committee Phone: (415) 318‐3658 Phone: (212) 537‐4533 [email protected] [email protected] GCA Identity Software Focus Behavioral Bot and Malware Data Management Fraud Detection Authentication Analytics Detection and Governance and Prevention Identity Access Identity Data Identity Proofing Identity Theft Regulatory Management Aggregation and Verification Protection Compliance GCA Overview 25 >500 500+ 245 80% Offices Around M&A Transactions In PE Deals In The Repeat Or The World Professionals Last 3 Years Last 3 Years Referred Clients 4 OUR GLOBAL INVESTMENT BANKING PLATFORM Global investment bank providing strategic M&A and capital markets advisory services to growth companies and market leaders STOCKHOLM MANCHESTER LEEDS PARIS FRANKFURT BIRMINGHAM MUNICH KYOTO NAGOYA ZURICH TOKYO LONDON SHANGHAI NEW YORK LAUSANNE MILAN NEW DELHI OSAKA TEL AVIV SAN FRANCISCO FUKUOKA TAIPEI MUMBAI SINGAPORE HO CHI MINH CITY Global platform: Sector expertise: Exceptional cross‐ 25 offices in key Experienced team: Expansive coverage border capabilities: markets across Over 500 employees and deep ~50% of all America, Asia and across the globe specialization transactions Europe Strong reputation Broad spectrum Diversified and track record: of clients: High number of business model: Leading repeat clients and Geographically conglomerates, top referrals with 189 balanced, synergistic private equity firms deals announced or and complementary and emerging high‐ closed in last 12 focus areas months growth companies 5 GCA operates as GCA in America and Asia, and GCA Altium in Europe OUR RECENT SOFTWARE TRANSACTION EXPERIENCE Deep software sector expertise with demonstrated success advising public and private companies sold to strategic investment from Advisor to ShowingTime acquired by 6 I. GCA OVERVIEW II. IDENTITY SOFTWARE MARKET OBSERVATIONS III. APPENDIX 7 CONVERGENCE OF VERIFICATION AND FRAUD DETECTION TECHNOLOGIES Increased Digital Activity Driving Need For Sophisticated Fraud Protection Solutions Covid‐19 accelerated the shift toward digital identity and triggered changes in online shopping behaviors, pushing retailers and financial Ecommerce… institutions to adopt eCommerce strategies penetration incr’d over 2.0x YoY, from 15% in CY19 to 35% in CY20 This drastic rise in online sales saw a corresponding increase in the volume and sophistication of fraudulent activity, especially ATO fraud involving bots, phishing, social engineering, credential stuffing and brute‐force attacks to infiltrate systems $861 billion… was spent via online channels in Steep costs of such attacks have fueled a stronger desire for KYC the US; 44% increase from 2019 onboarding and identity verification solutions, while enabling an inclusive frictionless experience for customers To prevent fraud, a robust multi‐layered and risk‐based identity 72% increase… solution is required to differentiate a trusted user from a fraudster in account takeover (ATO) fraud and combat all types of fraud, beginning with account origination to reported in 2020 from 2019 the transactions that follow Mastercard’s latest acquisition of Ekata, for example, brings the integration of identity verification data, fraud prevention and digital $4.2 billion… identity programs to help their customers ensure trust in real‐time in reported loses to US consumers during online account opening, payments and every other digital due to internet fraud interaction Investors are betting on continued growth of fraud prevention outside of ecommerce to other market verticals as evidenced by recent 12.8% CAGR… fundings of Signifyd ($205MM), Veriff ($69MM), Sift ($50MM), Jumio projected from 2020‐2025 in the ($150MM), Socure ($100MM), and Id.me ($100MM) global fraud prevention market Notes: Source: DigitalCommerce360, Federal Bureau of Investigation. 8 EXTENDING AUTHENTICATION AND AUTHORIZATION FOR DATA PROTECTION Implementation of Zero Trust Data Security Principles Rise in consumer online activity has also led to ever growing What companies have now amounts of personally identifiable information (PII), which must Lengthy Manual and ad‐ Incomplete Infrequent or retention hoc data be properly consumed, measured, tracked, and protected. identification decentralized policies and retention data disposal of data schedules processes Organizations lacking proper implementation of data security, What is the need privacy, governance and compliance are increasingly at risk, and Clarity on data assets Next‐gen governance Investment in the right have been subjected to a significant level of security breaches and retention methods of data retention technologies and tools recently Legacy architectures remain ill‐equipped to handle sprawling sensitive data as it transitions to distributed multi cloud Why environments. To address this, a redefined zero trust approach Enables Realizes value of Minimizes risks Gains consumer that works seamlessly across networks is required sustainable, data in including and stakeholder efficient privacy intelligence and compliance risk trust operations busines growth Identity layer is at the heart of securing these networks and endpoints, with authentication and authorization as the core Cumulative Data Breaches components of zero trust information access control 10,000 9.5 8.1 8.5 9,000 7.2 7.5 8,000 7,270 Recent acquisition of Auth0 by Okta, delivers the critical identity 7,000 4.9 6,162 5.5 solutions needed to streamline processes, maintain high security, 6,000 2.9 4,800 and improve customer experiences for growth 5,000 3.5 4,000 3,520 1.5 3,000 0.3 With continued recent large investments in BigID ($100MM) and 1,889 2,000 785 ‐0.5 Securiti.ai ($50MM) in data management and privacy, Biocatch 1,000 ($168MM) in behavioral biometrics / continuous authentication, 0 ‐2.5 and Hypr ($35MM) in passwordless authentication 2015A 2016A 2017A 2018A 2019A 2020A Cum. Data Breaches Cum. Individuals Impacted (B) Notes: Source: Identity Theft Research Center (2021), PwC Insights. 9 OVERVIEW OF THE END‐TO‐END IDENTITY SOFTWARE ECOSYSTEM Identity Theft Protection Provide software and services to reduce the risk of ID theft from online or electronic media Identity Theft Password Personal Identity Self‐Sovereign Utilize monitoring software to track unauthorized Protection Managers Products Identity (SSI) use of credit and other personal information Fraud Detection Provide tools to monitor user behavior and transactions in real‐time to detect suspicious activity and prevent account fraud User & Entity Fraud Prevention & Regulatory Compliance & Behavioral Biometrics Endpoint Malware Behavior Analytics Risk Management Transaction Monitoring & Bot Detection Detection Identity Access Management (IAM) Define and manage the roles and access privileges of individual network users and the circumstances in which users are granted (or denied) those Privileged Access Identity‐as‐ Identity Governance Customer Identity & Access Management a‐Service SSO & Administration Management (CIAM) privileges Identity Authentication Provide recognition technology for a user’s identity by associating an incoming request with a set of identifying credentials Multi‐factor Mobile Identity & FIDO Authentication Token Access Authentication Device Management Identity Proofing Verify and affirm the true identity of an individual interacting with an organization for the first time, based on document verification, digital attributes, Know Your Customer & Identity & Document Identity Background Data – Prevention – Detection – Remediation Entity Verification Verification Proofing Screening and national identity systems Data Aggregation Identity data gathered from multiple sources for combination into a summary analysis and to present a single view of an individual Credit Data Alternative Credit & Master Data & Scoring Aggregators Financial History Consent Management 10 IDENTITY SOFTWARE LANDSCAPE Proofing Fraud Detection IAM Identity Theft Protection KYC & Entity Verification User & Entity Behavior
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