Checkr raises $9M to help on-demand and sharing economy business with background checks

With the rise of the on-demand economy, we are increasingly having to trust complete strangers. Checkr wants to help make this safer.

The Y Combinator-backed startup provides background checks-as-a-service and is announcing today that it has raised $9 million in a first round of institutional funding.

The startup got it start when co-founders Daniel Yanisse and Jonathan Perichon, who were working for crowdsourced delivery startup Deliv, realized that background checks for drivers were a large pain point that hadn’t been made more efficient through technology.

The onboarding process is fairly easy for Checkr’s customers. After a company reaches out to Checkr because it wants to use its service (Checkr says most of its current customers were inbound leads), it verifies that the prospective client is a legitimate business and integrates its service into the company. Companies can have their employees authorize background checks through a web link, through the employer’s mobile app, via a company dashboard, and so on.

The company already counts iCracked, Instacart, Homejoy, Doordash, and Shyp among its customers, and Checkr is currently in talks with ride-sharing companies like Lyft and Uber, co-founder and Daniel Yanisse told VentureBeat.

Checkr is currently available in all 50 states and in Canada and the U.K., although the company hopes to strengthen its international coverage.

Uber and the LiveScan drama

Right now, Checkr uses social security numbers, address history, driving records, criminal record databases, and court records that it obtains on a daily basis from court runners, a service that brings court documents from courts to attorneys or businesses.

“The hardest thing to do is compliance. … There are lots of rules of what you can do and show the employer and a lot of rules of what the employer can use to reject the candidate,” Yanisse said.

The Fair Credit Reporting Act governs this area, and it can get pretty tricky on the employer’s side, he said.

For the most part, companies have been using less modern services like First Advantage and Sterling Backcheck, Yanisse told VentureBeat.

But what about LiveScan?

Uber got in some hot water last fall when it was discovered that its background checks had let some criminals records, including felony convictions, slip by. It turned out that, unlike the taxi industry, it doesn’t use LiveScan, a pretty thorough background check service that involves fingerprinting and continuous updating of people’s statuses. LiveScan is guaranteed by the U.S. Department of Justice.

When we originally spoke to Yanisse, he wasn’t too aware of the service or of Uber’s past, though after some research, he later told VentureBeat via email, “We will definitely review it and talk to existing users/providers to see if it makes sense for us to add it to our offering.”

Checkr also plans to release industry-specific services and products in the next three to six months to better tailor its offerings to various kinds of customers, so it’ll be interesting if LiveScan appears in some of those.

During its presentation on Y Combinator’s demo day in late August, Checkr said the bigger vision for its service is to become the “trust layer for the Internet.” Essentially, if it collects more and more data about more and more people, it could someday provide authentication for all sorts of things, from Airbnb hosts and guests to online dating. With that said, Yanisse declined to provide more details about this during our chat regarding today’s announcement.

Accel Partners led the round, with additional participation from Khosla Ventures, SVAngel, Data Collective, Google Ventures, and Bobby Yazdani as well as angel investors such as Elad Gil, Wesley Chan, Scott Banister, Joshua Schachter, David Spector, Paul Bucheit, Kevin Hale, Qasar Younis, Ilya Sukhar, and Tikhon Bernstam. Accel’s Rich Wong will join Checkr’s board as part of the deal.

Checkr was founded in 2014 and is based in Sunnyvale, Calif.