Dusseldorf The online trade in plagiarism has reached dramatic proportions in recent years. According to OECD estimates, counterfeit gangs make more than $500 billion in annual sales worldwide. This corresponds to around 3.3 percent of world trade.
Companies are having a hard time stemming this flood of counterfeiting. Red Points uses artificial intelligence to scan the Internet on behalf of customers such as Hugo Boss, Puma, Fila and Electrolux. The aim is to identify counterfeit products and delete fraudulent websites and accounts. According to its own statements, Red Points has withdrawn counterfeit offers worth 1.7 billion euros in the past twelve months alone.
With an additional growth financing of 20 million euros, the start-up Red Points now wants to step up its fight against counterfeit branded goods on the Internet. The financing round is led by European venture capital firm Iris, together with previous investors Summit Partners and Eight Roads.
Artificial intelligence checks 40 million offers every day
“Red Points enables companies to recover lost revenue and brand equity through fraud,” said Laura Urquizu, CEO of Red Points. “This new funding will help us accelerate the adoption of the technologies that can do this effectively,” she said. The start-up has raised a total of 76 million euros in capital in several rounds of financing.
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Red Points has a “unique, automated and highly scalable” platform, praises new investor Iris. Itziar Estevez Latasa, Partner and Member of the Board of Directors at Iris, explains the investment: “The fact that Red Points is able to uncover fraudulent networks regardless of industry and to concentrate on those violations that cause the greatest damage, that impresses us enormously”. .
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In addition to the capital raised, Red Points received up to EUR 15 million in loan financing from the European Investment Bank (EIB) last year. “The agreement with Red Points will fuel the growth of this Spanish software house and boost investments in technologies and artificial intelligence,” said Ricardo Mourinho Félix, EIB Vice-President. The EIB sees this as part of the measures it has taken to ensure that the economy recovers quickly from the effects of the corona pandemic.
Numerous start-ups, such as Entrupy, Cypheme or Authentic Vision, want to help brand manufacturers to distinguish their branded products from counterfeits and thus put a stop to fraudsters. The original articles are often marked in order to be able to distinguish them from the plagiarisms.
Red Points has a slightly different approach. The company’s systems automatically check around 40 million offers every day using image and logo recognition and artificial intelligence. Urquizu emphasizes that this makes the solution quickly scalable and cost-effective, which gives them an advantage over the competition.
Hugo Boss withdraws 9000 counterfeit products from the market
The start-up already works with more than 1000 global brands in the fields of fashion, sports, consumer goods, housewares, finance, electronics and software. For example, the fashion company Hugo Boss has already had more than 9,000 counterfeit products taken off the internet with the help of Red Points.
According to the OECD, a large proportion of counterfeit branded products are sold via online platforms and digital marketplaces. That’s why Red Points works closely with platform operators like Amazon in the fight against counterfeiters, as Urquizu explains. Amazon has set up its own investigative team, which also searches the platform for counterfeits and, together with state authorities, has already broken up numerous counterfeiting rings in several countries.
Since 2014, Urquizu has been CEO and partner of the company recently founded by David Casellas in Barcelona. Previously, she worked at the Arthur Andersen consultancy and the major bank Caja Navarra. She also supports start-ups herself as a seed investor.
Under her leadership, Red Points grew from 10 to 300 employees and today has offices in New York, Salt Lake City, Barcelona and Beijing. “We are on the way to profitability,” explains Urquizu. “But growth is still our strongest driver.” In 2018 and 2019, Red Points was named one of the “hottest European start-ups” by Wired magazine.
More: The billion problem: How Amazon’s investigators fight counterfeiters