Start-up that detects online fraud has billion dollar potential, claims founder

Trustev will be a multi-billion dollar company — the CEO of the start-up,Pat Phelan told UCC students.

Mr Phelan is so confident of his company’s ability to detect fraud that in less than a year Trustev plans to guarantee all online transactions that use the system, he told the business information systems students.

Mr Phelan admitted that he was an unlikely tech start-up success story given his training as a butcher and a chef. “I never went to college. I am a butcher and a chef. They are the only qualifications that I have.”

Despite little in the way of formal training, Mr Phelan is on his third online company. His last, Cubic Telecom was scaled into a multi-million euro company that raised $6.7m (€4.9m) in funding and allowed mobile operators globally to be able to offer local rates.

He has just sold this business but all the proceeds are going back into his new venture.

His latest company provides a fraud solution for online sales. Mr Phelan said that e-commerce will be worth $1 trillion by 2014 and his company has come up with a solution to a problem that is costing retailers $20bn a year.

“Online fraud is growing faster than turnover. It is a $20bn a year problem,” he said.

Trustev’s solution is a number of patented algorithms that work together in a sixth of a second to generate a score based on a users’ social networking history combining Twitter, Facebook and LinkdIn accounts.

To give an idea of the cost saving that will provide to companies, Mr Phelan said that Apple employs 480 people in its fraud section — the wage bill of this section outweighs the cost of the fraud it tackles.

On average 27% of all orders have to be manually checked, Mr Phelan said.

Trustev is expecting to close a large round of funding in the next few weeks, but Mr Phelan has no intention of sitting back.

He was asked why he continues to reinvest in his new businesses instead of taking the money, he said “I’m no good at golf.”

When asked what advice Mr Phelan would have for students consideringstarting a business, he had a one-word response, “start”, but he cautioned students not to be seduced by easy money.

“Watch control of your business. Don’t start looking for venture capital when you don’t need it. Take it as far as you can, absolutely bootstrap it. A very famous Cork business man’s accountant rang him and said, ‘you are €5m in the red we’ll have to stop.’ This was year two. He said ‘we’ll keep going’. It’s a billion-dollar business now,” he said.