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Password protection is not practical. Expecting users to create unique 12-digit passwords with a mix of uppercase and lowercase letters and special characters for dozens of apps is not scalable. Yet many organizations rely on passwords to control user access, leading to data breaches like the one at PayPal.
As a result, many providers are looking at passwordless authentication to identify users in a way that resists credential theft.
One of those suppliers is the authentication and user management supplier Descope, which emerged from stealth today and announced a $53 million seed funding round led by Lightspeed Venture Partners and GGCV Capital. The company’s authentication platform allows developers to create codeless authentication flows via drag and drop.
More broadly, the startup funding highlights the demand for passwordless approaches to cybersecurity to defend against phishing and social engineering threats.
Why password protection is shifting to passwordless
For years, passwords posed a significant risk to businesses. According to the Verizon 2022 Data Breach Research Report, almost 50% of data breaches involve the use of stolen credentials.
This widespread misuse of credentials has led to an increasing interest in passwordless authentication. Vendors, including Google, Microsoft, and Apple, have been trying to develop solutions under the FIDO Alliance’s vision for a common standard for passwordless login.
“Passwords are bad for both security and usability,” said Slavik Markovich, co-founder and CEO of Descope. “They are the leading source of security breaches and the most common entry point for cybercriminals to achieve their goals. Passwords also create friction throughout the user journey, leading to churn and a negative user experience.”
He added that “recent developments such as FIDO2, WebAuthn, and passkeys have paved the way for a passwordless future. But this future will only be truly achievable if application developers have the tools and resources to easily add passwordless authentication methods to their apps.”
Descope wants to contribute to this “passwordless future” by making it easier for developers to implement passwordless authentication as part of their own apps or services. After all, it is complex and time-consuming for development teams to build these components from scratch.
Instead, Descope allows users to develop authentication flows through a drag-and-drop workflow editor. These no-code workflows enable developers to implement user access controls and get apps to market faster, without compromising on security.
The passwordless authentication market
Researchers expect the passwordless authentication market will grow from $6.6 billion in 2022 to $21.2 billion in 2027 as more organizations look to protect themselves against social engineering, phishing and other forms of credential theft.
One of Descope’s main competitors is Stitching, a tool that allows developers to build authentication flows through an API, JavaScript, and mobile SDKs. In November 2021, Stytch raised $90 million in Series B financing and reached a valuation of $1 billion.
Another major supplier on the market is Auth0, a Customer Identity Access Management (CIAM) provider that enables organizations to define access roles for application and API end users to implement dynamic access controls. Okta acquired Auth0 for $6.5 billion in 2021.
According to Markovich, the main difference between Descope and other providers is the use of workflows. “These no-code workflows abstract away the complexities of building authentication while still allowing app builders control over their UX and UI,” he said.
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