Pushpay founders Chris Heaslip and Eliot Crowther back First AML's $8m raise

From Left: First AML co-founders Bion Behdin, Milan Cooper and Chris Caigou. The trio aim to emulate the success of Pushpay, and number its founders amoung their shareholders. Photo / Supplied

Pushpay founders Chris Heaslip and Eliot Crowther are chipping in to support an $8 million Series A raise by First AML.

The Auckland-based startup automates the process of customer verification, a pain-point with complex anti-money laundering legislation.

The round was led by San Francisco-based venture capital firm Bedrock Capital, whose other plays include early investments in Lyft and Canva. Icehouse Ventures also participated.

It was Seattle-based Heaslip and Crowther's second time at the well. In October last year, the Pushpay pair led a $2.5m seed round for the then two-year-old First AML, founded by Milan Cooper - a one-time patent lawyer turned Bain consultant and Air NZ strategy manager - with ex-corporate bankers Bion Behdin and Chris Caigou.

It was also Heaslip who introduced Bedrock managing partner Geoff Lewis to First AML.

Lewis has now applied for the Edmund Hillary Fellowship, an effort to bring together 500 "high impact global entrepreneurs to catalyse New Zealand's economy and startup community", and is on the lookout for more opportunities here.

First AML is still at an early stage, with just a few hundred mostly local customers - albeit some marquee names like Grant Thornton, Bayleys, Colliers, Lowndes Jordan and Blackbird Ventures. Cooper's aim is to follow in Pushpay's footsteps and build a software company worth more than $1 billion.

And he says Heaslip (who is also a director) and Crowther have been hands-on investors, offering advice and mentorship towards that goal.

Pushpay founders Chris Heaslip (left) and Eliot Crowther, pictured in 2015. Crowther left the Kiwi-American company in 2018 and Heaslip the following year. Photo / EY NZ

"Being Kiwis now based in the US who have taken a business to the world they're quite keen on helping other Kiwi companies achieve the same thing. They have the mindset to think big and not get stuck at these small markets down at the bottom of the world. They're encouraging us to shoot into the stars and get out into the world."

On a meat-and-potatoes level, that means taking some of the $8m and using it to open an office in Sydney as a staging post for a push into the Australian market. Ten staff will be recruited to staff it. A move into the US will follow.

First AML's founders have already made a pilgrimage to Seattle, where they met with Heaslip and Crowther last year.

"Eliot and I had an opportunity to share Pushpay's playbook to help them scale the company," Heaslip tells the Herald.

The new funds will also be used to boost staff numbers from 40 today to around 60 to "significantly expand our product engineering capability", Cooper says.

The co-founder - who serves as CEO - says First AML could be profitable today, but prefers to shoot for growth instead.

He won't share financials but says the Series A round was over-subscribed despite the pandemic, and some investors were turned away.

Cooper says there is no direct competitor in terms of fully automating every step of the customer due-diligence process required by NZ's Anti-Money Laundering and Countering Financing of Terrorism Act (2009), and equivalent laws in other countries amid a global crackdown.

Locally, there has been a steady stream of prosecutions under the AML/CFT Act - sometimes with heavy penalties.

In 2018, for example, Auckland finance company director Xiaolan Xiao lost his challenge to a $5.3m fine imposed by the High Court for failing to follow the anti-money laundering law's strict reporting requirements as he failed to properly identify some 362 customers who routed transactions through his company.

For breaches of civil offences, individuals can be fined up to $200,000 and companies can be fined up to $2m. Repeated failure to comply with AML/CFT obligations, providing false or misleading information and other criminal offences can result in fines up to $5m for businesses. Individuals can be fined up to $300,000 or sentenced to up to two years in prison.

Pain and pain

Punakaiki Fund principal Lance Wiggs has been one of a number of business leaders to rail against the cost and paperwork involved with AML/CFT Act compliance.

But for Cooper, regulatory pain is his firm's gain.

"This is a $100 billion global market - there's massive opportunity out there. We're really focused on making it easy for companies that need to comply with their AML obligations," he says.

And like any good new market, it has a snappy abbreviation: "reg tech", Cooper calls it.

Photo / File

Its boosters - perhaps ironically, given it hasn't invested in First AML - include Aussie VC outfit Blackbird Ventures. Its business operations manager Dan Danilov says: "First AML reduced our AML case bottleneck, completely removing the burden of collecting and verifying AML documents, with an easy-to-use dashboard that tracks the status of all our cases. Many of our investors have reached out to let us know how much better the experience is."

When the Herald checked in this morning, First AML was sprucing up the biometric identification element of its service.

"We have developed proprietary biometric technology. It involved facial matching between a person and the ID document they are holding. This can all be completed on their mobile phone," Cooper says.

"This allows people to be verified wherever they are in the world, rather than having to obtain certified copies of documents."

A new release of First AML's platform is scheduled this month, which will include improved biometric identification for remote verification and new visual tools to help users understand the ownership of complex company structures.