Valid8: How This Company Extracts And Reconciles Banking Transactions Quickly

By Amit Chowdhry ● Feb 12, 2024

Valid8 is a Verified Financial Intelligence platform that extracts accounting evidence from documents and systems to eliminate sample risk and improve the speed and quality of rendering a professional opinion in financial investigations. Pulse 2.0 interviewed Valid8 Financial co-founder and CEO Chris McCall to learn more about the company.

Chris McCall’s Background

Chris McCall

McCall’s background is in electrical engineering and technology startups. And McCall said:

“I began my career at Boeing as a systems engineer working on the 747 laboratories before transitioning into data storage and networking startups.”

“I co-founded Valid8 Financial with my long-time friend Tod McDonald, a credentialed CPA and Certified Insolvency & Restructuring Advisor (CIRA) with deep expertise in accounting, auditing and financial investigations. We make a great team — I handle the technology and product side while Todd provides the accounting subject matter expertise.”

Formation Of Valid8

How did the idea for Valid8 come together? McCall shared:

“The idea for Valid8 Financial originated from Todd’s experience investigating a massive Ponzi scheme where over $350 million was stolen from investors. He had to meticulously analyze tens of thousands of financial transactions, which took over 18 grueling months.”

“We realized there was a huge unmet need for technology that could automatically extract, verify and trace the flow of funds into and out of accounts and between entities – vast amounts of financial data. Due to time constraints and data complexities, traditional forensic accounting practices often involve sampling transactions. We saw the opportunity to leverage technology to enable accountants to assess the entire scope of financial data without relying on samples, leading to more comprehensive and reliable results.”

Favorite Memory

What has been your favorite memory working for the company so far? McCall reflected:

“Seeing our platform successfully reveal what is really going on with the finances in real-world, high-stakes cases often referenced in media and household conversations has been immensely satisfying.”

Core Products

What are the company’s core products and features? McCall explained:

“Valid8’s Verified Financial Intelligence platform automates various aspects of the investigative process – making it possible to look at the entirety of the source documents (vs sampling), and delivering courtroom-ready evidence in just hours vs weeks or months. The platform includes the following features:

1.) Loading Transactions: AI enables the ability to upload source documents of different types and from different financial institutions that use different formats without having to rely on templates.

a.) AI Bank Statement Extraction (including Bitcoin).

b.) Brokerage Statement Extraction.

c.) AI Check and Deposit Slip Extraction (including hand-written checks).

2.) Quality Assurance: highlights data quality issues such as missing, duplicated or incorrect data.

a.) Visual Statement Status. 

b.) Automatic Statement Reconciliation.

3.) Association Mapping: traces the flow of funds into and out of accounts and between accounts and legal entities.

a.) Automated Transfer Match.

b.) Automated Cash Journal Match.

c.) Automated Trace.

d.) Automated Check Item Match.

4.) Multicurrency: automatically converts all transactions to a base currency for faster and easier analysis.

a.) Automatic currency conversion (166 currencies supported, including Bitcoin).

5.) Categorization/Classification: automatically categorizes transactions by type, location, main category, sub category and counterparty.

a.) AI Categorization.

b.) Custom Categories.

6.) Visualizations: data visualizations illustrate the flow of funds, making it easy to create a compelling courtroom-ready narrative.

a.) Visual Source-Use Analysis.

b.) Visual Trace Verification.

c.) Visual Cash Journal Verification.

7.) Automated Reports: all transactions are tied back to the original source documents, maintaining the evidentiary chain of custody.

a.) Financial Activity Report.

b.) Banking Transaction Report.

c.) Banking Transaction Report – item details.

d.) Bank Balance Trending Report.”

Challenges Faced

Has McCall faced any specific bottlenecks in your sector of work recently? McCall acknowledged:

“Regulatory compliance continues to be a challenge. The regulations frequently change and grow more complex. Adapting to these stringent policies requires significant time and effort, hindering other areas of the business.”

“Many legacy operations tend to be slow to adopt new technology and processes. Verified Financial Intelligence is the way of the future, but it marks a significant departure from how things have always been done. The hesitancy to embrace change can obstruct progress and efficiency in the financial investigations arena.”

Evolution Of Valid8’s Technology

How has the company’s technology evolved since launching? McCall noted:

“Since our launch, we’ve continued to leverage the latest in AI to increase the scope of the investigative workflows that we automate. Our visualizations and real-time dashboard tools continue to grow more robust, providing invaluable insights to users.”

“In just the last couple of months, Valid8 has added AI categorization capabilities and automated multicurrency support. With a single click, users can automatically categorize all income and expenses to create a trended statement of cash directly from banking evidence. The platform also automatically accesses a daily exchange rate from the European Central Bank and converts each transaction into a base currency.”

“We are continually innovating our product to include new features that make it possible for the accounting firms, law firms and government agencies who use our platform to investigate more cases faster and with decreased costs.”

Significant Milestones

What have been some of the company’s most significant milestones? McCall cited:

“Our most significant milestones have been:

— Completing the prestigious TechStars accelerator in 2017.

— Doubling our revenue each year since 2019.

— Closing a seed round in 2021.

— Closing our $8.5 million Series A round in November 2023. 

— Hitting more than 20,000 cases resolved, over 1,800 users and more than 400 million transactions verified with our platform.”

Customer Success Stories

After asking McCall about customer success stories, he cited:

“Facing a tight deadline to analyze extensive financial records for a high-value divorce case, Stout – a global investment bank and advisory firm – used Valid8 Financial’s software to efficiently categorize over 12,000 transactions across 11 accounts dating back four years. By leveraging Valid8’s automated data extraction, quality control checks, transfer matching algorithms and interactive visualizations, the Stout team quickly gained insight into the sources and uses of funds. This allowed them to accurately establish the standard of living from the marriage while meeting court deadlines and working on other cases.”

“‘Using Valid8’s software has fundamentally changed how our team works,’ said Jason Wright, Managing Director at Stout. ‘Before, it took us significant time to evaluate even a small sample size. With this software, we gain a comprehensive understanding of the entire financial picture in less time. Our team is freed from the tedious review of each and every statement and transaction – time-consuming work that nearly every accountant wishes to avoid.'”

Funding

After asking McCall about the company’s funding information, he revealed:

“On November 30, we announced $8.5 million in Series A funding led by Silverton Partners with participation from Touchdown Ventures, First Trust Capital Partners, CPA.com and Capital Midwest. This funding will support our engineering and go-to-market teams, primarily at our Boulder, Colorado headquarters.”

Differentiation From The Competition

What differentiates the company from its competition? McCall affirmed:

“Valid8 uses best-in-breed technology for data extraction, but more importantly, it focuses on automating all of the other tasks in the investigative workflow that are required after the data is extracted. That is how we are different. We focus on parsing, reconciling, categorizing, matching (tracing the flow of funds) and delivering visualizations and reports to help users communicate a compelling, courtroom-ready narrative in just hours, instead of weeks or months. Additionally, because we match every transaction to the source document, the evidentiary chain of custody is never broken. All transactions and the final reports are Verified Financial Intelligence.”

Future Company Goals

What are some of the company’s future company goals? McCall concluded:

“We’ll continue to build upon our global leadership within the Verified Financial Intelligence category as it relates to the biggest and most complex fraud investigations and crypto bankruptcies. In the coming months, you’ll see us extending the Valid8 platform and output to optimize for a broader array of use cases, including Transaction Advisory (M&A diligence) and Financial Statement Audits.”