Xapien is a research and due diligence platform that combines artificial intelligence and natural language processing to emulate the traditionally complex research and report writing process. Pulse 2.0 interviewed Xapien co-founder and COO Dan Secretan to learn more about the company.
Dan Secretan’s Background/Formation Of Xapien
Could you tell me more about your background and how the idea for Xapien came about? Secretan said:
“My co-founder Shaun and I worked together at a tech consultancy called Detica. I had been developing systems to combat financial crime-fighting fraud, automating KYC (Know Your Customer) and EDD (Enhanced Due Diligence) checks, and helping banks understand the people they are doing business with.”
“Shaun was building IT systems to conduct large-scale investigations, mainly for specialist law enforcement and national security purposes. We wanted to bring together the AML (Anti-Money Laundering) requirement to know your customer and the enormous potential of OSINT (Open Source Intelligence), which is internet data, to hugely improve the manual, slow, and expensive current processes.”
“We founded Xapien to help organizations understand who they are doing business with. It’s a difficult job with a lot of information out there, but we aim to find, distill, and ensure the information is relevant to the company you are interested in working with.”
“We harnessed the beginnings of AI and emerging technologies at that time to build a system that generates a report on any company in the world in minutes, so you understand who you’re doing business with.”
Favorite Memory
What has been your favorite memory working for the company so far? Secretan reflected:
“The first time I heard the real-world impact that we had delivered for a client. We took a case study from Cambridge University, one of our first clients. They reported that they had driven down their overall due diligence time from an average of two days per individual or company to 30 minutes. This had a transformational impact on the overall fundraising process and experience for both fundraisers and donors. Hearing that was a huge moment for us all.”
Core Products
What are the company’s core products and features? Secretan explained:
“Xapien uses artificial intelligence and natural language processing technologies to emulate the complex process of human-led research & report-writing. Our product is far more comprehensive than database screening checks and far faster than an analyst-driven report.”
“It’s as simple to use as Google; you simply say, “I’m interested in this organization” and it will go off and do that research on demand. It will find and surface corporate records, PEPs and sanctions, and watchlist hits. It will also read all of the media, content, and blogs about whoever you’re searching for, and it will stitch all of those bits together to give you a comprehensive picture.”
“For many years, analysts have manually collated all this information from disparate sources together. It’s the task of research, and it’s time-consuming and difficult. The advent of natural language processing allowed us to develop technologies that could read and extract knowledge from articles designed for humans to read. To get information out of these articles, you have to read like a human, understanding references like “he,” “she,” and ‘the co-founder.’ The advent of NLP about 10 years ago allowed us to build something that can do that exact task. The result is that our tool can now do the entire job of reading and understanding data so that it can analyze it and present it in a useful way for humans to use to make decisions.”
“Typically, our clients are Risk & Compliance professionals who want to gain a genuine understanding of their third parties. This spans from Ivy League Universities and charities who need to understand their donors and partners to law firms and financial services institutions looking for greater insight into their clients, investors, or investments.”
Challenges Faced
What challenges have Secretan and the team faced in building the company? Secretan acknowledged:
“One of the biggest challenges we had in our ambition of fully automating research was this concept of disambiguation, which is really the issue of common names.”
“Our CEO’s name is a great example. Is this the right Chris Green, or is this a different Chris Green? When you do an internet search and you’re searching for a common name, maybe if you’re searching for Daniel Secretan, you’d take your chances on Google because it’s quite an unusual name. Question one is, how do you know it’s an unusual name? It’s just your knowledge. But we had to teach the computer what an unusual name is in every country in the world. What is unusual in Islamabad?”
“If you take the example of Chris Green, you can’t just Google that – you will get millions of results. We developed proprietary techniques that separate out the golfer in Colorado from the folk singer in Sydney to the tech entrepreneur in London all with the same name. Doing this over 130 languages and different scripts, and working on AKAs, nicknames, etc, is a really difficult challenge. We spent a lot of time and a lot of our R&D budget on that.”
Evolution Of Xapien’s Technology
How has the company’s technology evolved since launching? Secretan noted:
“Natural Language Processing technologies were nascent when we started, but we could see the potential; if a computer could read and write as a human could, that felt hugely significant.”
“Now the world has seen how powerful they are with the advent of Large Language Models (LLMs) and notably ChatGPT.”
“Some of the models we developed in the early days for things like name parsing are actually much better served by LLMs and we were quick to adopt some of that technology into our product.”
“Ultimately we see our job as harnessing and developing the latest, best technology and techniques to put together a solution that solves our clients’ biggest challenges.”
Significant Milestones
What have been some of the company’s most significant milestones? Secretan cited:
“There are a few to pick from. Our first fundraiser was a big moment. Getting the backing of some incredible Angel investors is what enabled us to get the product off the ground in the first place. We’d never had to fundraise before, so it was a steep learning curve, and when we pulled it off, that meant everything to us.”
“Our first US customer, Dartmouth College, was an exciting moment. Since then, we’ve expanded significantly in the US. Having that first pioneering client, who was keen to advocate for us on Webinars and at other events, was hugely powerful. We’re extremely grateful for that.”
“Other milestones like signing our 100 customer and 50th employee also really stick in my mind.”
Customer Success Stories
After asking Secretan about customer success stories, he highlighted:
“One great example is our client Griffin, a fintech. Due diligence reports were taking them a day, and what growing business has a day to spare for every supplier, client, or investor they onboard? By adopting Xapien, the MLRO reduced this time to 12 minutes.”
“This didn’t just speed up the time of onboarding, it transformed their business development process. With reports in 10 minutes, the MLRO was able to do deep due diligence on potential prospects or partners at the start of any conversation.”
“Previously, the sales team would find prospects and come to the MLRO right at the end of the process, at which point he might have to say “No, you can’t do that”, causing significant friction between compliance and sales.”
“With reports in 12 minutes, he could now say at the start of the process, ‘Don’t invest effort in this because it’s not good business. Put your effort elsewhere.’”
“The MRLO reported that this had fundamentally changed the relationship between compliance and the business, where sales see compliance as enabling them to act more strategically. This has been transformational for the company, enabling them to scale by an order of magnitude faster than they would have been able to otherwise.”
Funding
Are you able to discuss funding and/or revenue metrics? Secretan revealed:
“Yes, for sure. We raised $10M in Series A funding last September, which we are delighted with. We closed our Seed Round in March 2023, so it’s helpful to look at our growth since then.”
“Annual recurring revenue grew by over 150%, and headcount doubled. The company received backing from industry giant Dow Jones, which saw the launch of an industry-leading third-party due diligence tool called Integrity Check.”
“Since then, one of the world’s largest law firms has launched a co-development agreement with the company to develop the world’s first large language model AI tool for AML compliance in the legal industry. The tool will reduce average onboarding times from weeks to hours and reduce risk exposure by better deploying critical human-led compliance resources.”
“In the past 15 months, Xapien has also secured engagements with Magic Circle, Silver Circle, and AmLaw 100 law firms, as well as major players in risk consulting and private wealth. In the philanthropic sector, Xapien has grown its client base by 300% over the past 18 months.”
Total Addressable Market
What total addressable market (TAM) size is the company pursuing? Secretan assessed:
“We believe that every organization in the world, regardless of size, wants to better understand third parties, whether this is in the supply chain, investments, board appointments, or joint ventures. Xapien makes this quick, easy, and affordable. We’ve estimated this TAM to be over $20 billion.”
Differentiation From The Competition
What differentiates the company from its competition? Secretan affirmed:
“We really have two main competitors – Business Intelligence / Risk Consultancies who do manual research, and screening database companies. We sit in between these two.”
“Databases are a great resource for quick results and screening. But they are inherently limited by the population they contain and how up-to-date they are kept. Most people & companies are not on these databases, but that doesn’t mean there isn’t any information about them. Because Xapien works on-demand and has no database, it can work on an organization that launched a website today and is completely up-to-date.”
“Business Intelligence and Risk consultancies provide comprehensive, up-to-date research and nuance, but you have to wait days for it and it can be prohibitively expensive. Many companies also effectively in-house this cost by using manual researchers to gather, analyze and present database and internet content, so that someone else can make decisions on it.”
“Both of these solutions are static – a point in time and one report only.”
“Xapien is a truly dynamic solution that maximizes the benefits of databases whilst still providing the depth and breadth of manual research methodologies. It can be run by anyone at any time and uses Artificial Intelligence to go well beyond the traditional database and watchlist checks. It gathers, reads, and analyses content from databases and information from the entire indexed internet. It provides live, real-time information, and you can query this information long after it is delivered. The end result is a comprehensive and dynamic research report that reads just like a human wrote it, making it easy to digest for decisions. It does all this in under 30 minutes and to the depth that typically takes a team of analysts days to produce.”
Future Company Goals
What are some of the company’s future goals? Secretan concluded:
“From a product perspective, we want to design a full monitoring solution that will enable our customers to reach the holy grail of “perpetual KYC”. Currently, monitoring solutions are restricted to databases and plagued by false positives. This means it is flawed in two ways.”
“First, databases only give a very partial picture of a client. They don’t really enable you to understand any new “risks” around your client. If they are on a sanctions list, then you can’t do business with them. But what if they are a known Kremlin associate but just not on a list yet? That’s a risk that a client would want to know about, particularly if there was talk in the media that they were likely to be added to a sanctions list. That would enable you to move fast and mitigate the risk before it hits and they’re sanctioned, by which point, if it’s an existing customer, it’s already too late.”
“Second, sorting the false positives from the genuine results sucks in a vast amount of business resources as that is currently done manually.”
“Our solution would monitor the wealth of information from the entire indexed internet and alert customers only on what is relevant and useful to them for their risk-based decision making.”
“From a growth perspective we’ll be expanding more and more internationally over the coming years. We already have clients on three continents, but our solution is truly global. We’ll look to set up offices in different territories in order to best serve our customers there.”
