Barcelona-based online fraud prevention startup Red Points has raised €20m to develop its AI-powered technology and continue its international growth plans.

The investment was led by Iris Capital with existing investors Summit Partners and Eight Roads also joining the round.

What does Red Points do?

Red Points operates in an area of online fraud prevention known as “brand protection” — when a brand’s content, image or other work is pirated, impersonated or counterfeited on the internet.

The scaleup was founded in 2011 and sells its SaaS platform — which uses AI to scour the internet and detect instances of so-called brand abuse — to clients like Puma, Hugo Boss and Real Madrid FC.

Red Points says that counterfeiters who wrongly profit from a brand’s content or image are “effectively stealing revenue” and claims that, in the last 12 months, it’s taken down counterfeit listings worth more than €1.7bn combined.

CEO Laura Urquizu tells Sifted that demand for the startup’s product remains strong despite current market conditions, and that “​​online counterfeiting, piracy and impersonation are not expected to cease any time soon”.

Despite that, she adds that fundraising for growth-stage tech companies has become more challenging in today’s market, saying that “investors were way more conservative compared to previous rounds”.

Urquizu says that, for VCs, “it’s not only about growth, but growth with profitability” and that this is a change that Red Points “quickly adapted to”.

Who else invested in Red Points?

• Northzone — London-based VC that’s invested in big names like music streaming platform Spotify, BNPL scaleup Klarna and e-learning platform Kahoot!
• Banco Sabadell — Spanish bank that’s invested in the likes of online travel agency Exoticca, influencer marketing agency SamyRoad and orthodontics provider Impress.
• Mangrove Capital Partners — Luxembourg headquartered fund that’s invested in video call company Skype, website builder Wix and secondhand marketplace Wallapop.

What’s next for Red Points?

Red Points will be using the capital to further develop its technology for detecting online fraud.

Urquizu says that the network of online fraudsters that it’s trying to combat “is well-structured and has advanced technology” and that Red Points’ product must evolve in response to “the ever-changing online fraud landscape”.

The company also says it’ll use the capital to “strengthen its go-to-market strategy” to respond to “growing customer demand as online fraud and brand abuse continue to escalate worldwide”.

Sifted’s take

Red Points is one of the Spanish tech companies that’s often named as a so-called soonicorn — a business that could soon be worth more than $1bn. Today’s round hasn’t come with any such announcement and Urquizu tells Sifted that she won’t comment on valuation.

She doesn’t seem like a CEO that’s particularly preoccupied with labels like unicorn though, and insists that today’s investment round, while smaller than its last raise, represents “the perfect amount of investment” to deliver its growth plans.

And as businesses begin to feel the squeeze of a tightening economic environment, tools like Red Points, which can help companies protect their revenues, could become amore attractive proposition.

Tim Smith is Sifted’s Iberia correspondent. He tweets from @timmpsmith