Cambridge-based Featurespace, the leading machine learning for fraud prevention, has raised $21.6 million (£16.5m) in a funding round led by Highland Europe.

The cash will support Featurespace’s international expansion and continued upgrades of its software capabilities.

The round includes follow-on funding from existing investors including Touchstone Innovations plc, NESTA, TTV Capital and Cambridge angel, Robert Sansom. Touchstone committed £1.4 million to the round and now holds a 27.9 per cent stake in the business.

Worldpay Group plc, a leading global payment processing company, and Mike Lynch’s Cambridge-based investment vehicle, Invoke Capital, also participated as new investors.

Alongside its investment, Worldpay has formed a commercial partnership with Featurespace. The alliance will help further accelerate the development of fraud prevention services for Worldpay’s own merchant customers. 

As part of the agreement, Worldpay will licence Featurespace’s advanced behavioural analytics technology for a number of key use cases, including risk management and fraud prevention for merchants.

Featurespace was created out of Cambridge University’s Engineering Department, co-founded by world-renowned experts in applied statistics, the late Professor Bill Fitzgerald and Dave Excell, Featurespace CTO.

The company’s real-time, ARIC™ platform uses Adaptive Behavioural Analytics to detect anomalies in individual behaviour for fraud and risk management. The fast-growing fraud detection and prevention market was worth $14.23bn in September 2017 and is growing at 20 per cent per annum, according to MarketsandMarkets. 

Martina King, Featurespace CEO, said: “This funding round will enable us to continue to protect our expanding client base and their customers from real time fraud attacks. These additional funds will also help support our continued international growth following the successful launch of our US offices earlier this year.”

Laurence Garrett, partner at Highland Europe and formerly head of 3i in Cambridge, commented: “Featurespace is one of the most exciting artificial intelligence companies we have seen, with huge potential for international expansion, since it offers one of the most advanced technologies in this area on the market. 

“The demand for Featurespace’s products is great and I am delighted that this funding will help support its rapid growth in the US and other international markets. Martina King is an exceptional leader and we are truly looking forward to working with her and the team.”

Mike Lynch added: “At Invoke, we aim to identify companies that can commercialise technologies with a demonstrative advantage over the competition. Featurespace is one such company. Its machine learning capabilities are hugely impressive, while it operates in a market that is potentially massive given the ubiquity of online fraud. We look forward to supporting the company’s further growth and technology development.”

Worldpay says it is looking to grow with Featurespace internationally. Chief information officer Mark Kimber said: “We are always looking to work with innovative companies and are confident that this partnership will deliver superior outcomes for our customers by preventing more fraudulent transactions whilst reducing the number of genuine transactions that are declined. 

“We’ve been incredibly impressed by the evolution of this business and believe it has the potential to grow significantly. With our investment in the company, we are looking forward to supporting the Featurespace team as they expand their business and capabilities.”

• PHOTOGRAPH SHOWS: Featurespace CEO, Martina King