Checkr runs background checks and counts Uber and Lyft as key clients.ASSOCIATED PRESS
As Uber and Lyft have grown, their rise has helped buoy another business: Checkr , a startup that runs background checks on gig economy workers. Ride-sharing helped its business take off, but the company is now processing background checks for retailers like Hot Topic to staffing agencies such as Adecco for a total of 42 million reviews and counting.
“It’s really driven by the changing workforce. A lot of the workforce is changing to a much higher frequency of people changing jobs, people having multiple jobs,” says CEO Daniel Yanisse . “That’s really the driver for our business.”
On Thursday, Checkr announced it has raised an additional $160 million in venture funding from T. Rowe Price and other investors including Mary Meeker’s Bond Capital and Coatue Management . The new round more than doubles the former Forbes Next Billion-Dollar startup’s valuation to $2.2 billion and brings its total funding to $310 million.
The cash infusion will go toward helping Checkr expand internationally, past the U.S. and Canada where it got its start in 2014. Yanisse and his cofounder , Jonathon Perichon , two Forbes 30 Under 30 list alums, launched Checkr five years ago after seeing how bad background check technology was while working at delivery startup Deliv . The pair developed an easy way to more quickly automate the background check process, and companies from Uber to DoorDash to Instacart signed on.
They brought business, but also controversy. Ride-hailing drivers are often in the headlines for kidnapping, raping or assaulting passengers. Most recently, a restaurant owner in Las Vegas sued DoorDash after he claims he was attacked by a DoorDash delivery worker who allegedly had a criminal history. News reports say that the delivery worker had reportedly passed his background check because it only goes back seven years–the period of time when the driver was in prison, according to reports. (Checkr declined to comment on specific cases.)
“I think our product is the best available product in the country for safety and for background checks, but the background check is not a silver bullet,” Yanisse says. “It cannot predict the future.”
The company has responded to criticism by rolling out “Continuous Check”, a product launched in 2018 that does ongoing checks into individuals rather than once before they start working. (Uber is now using the continuous checking system.*) Checkr, No. 56 on the Cloud 100, also has an identity verification system to help counter people stealing identities to get a clean background check.
“It’s a very hard problem. Fraudsters and criminals are always going to find new ways to hack through the system, and like a security company, we always have to keep adding different technologies and solutions to keep improving,” Yanisse says.
While many companies still pay per background check, Checkr’s new products have also helped it develop monthly subscription revenue—something both private and public investors tend to like. Yanisse declined to comment on the company’s financials, but said it was close to profitability, while an IPO was a few years off. Instead, he’s focused on Checkr expanding to the rest of the globe in 2020 and putting the new $160 million to use.
“It’s not an achievement on its own,” he says of doubling the company’s valuation. “It’s a validation of the strength of our position, having been able to grow beyond just technology companies.”
*Correction: A previous version of this story said Lyft was using the continuous checking system. It is not currently a customer.