Verified financial intelligence startup Valid8 Financial Inc. said it has raised $8.5 million in a Series A funding round announced today.

The round was led by Silvertone Partners and saw participation from Touchdown Ventures, First Trust. CPA.com and Capital Midwest, and will enable the company to accelerate the delivery of its automated forensic accounting platform to accounting and law firms.

The startup’s platform is designed to dig up verified evidence of a wide variety of complex financial matters and is used to uncover proof of white-collar crime investigations such as Medicaid fraud. The platform can also be used to gain evidence that can be used in partnership disputes, asset division, high-net-worth divorces, merger and acquisition due diligence, accounting auditing and Chapter 11 bankruptcy investigations.

Valid8’s software incorporates artificial intelligence models and automation to rapidly parse, reconcile and categorize financial data from almost any kind of source, including bank transactions, cryptocurrency wallets and hand-written checks. The software itself doesn’t make any judgements regarding any fraudulent or illicit activity, but instead provides visualizations that illustrate the flow of funds between individuals and entities, and clarifies which transactions, if any, may require further investigation by professionals.

The technology is primarily aimed at certified public accountants and law firms, and enables their staff to focus on higher-value activities instead of the mundane task of piercing together numerous transactions from databases and other sources.

Valid8 said its platform can revolutionize the process of tracking down fraudulent financial activity. Historically, this has always been done through sample risk assessments and rote reviews of transactions. According to the startup’s own research, the average financial investigator spends up to 90% of their time on these tasks before they can move to analyzing things more deeply and uncover concrete evidence of fraud.

Co-founder and Chief Executive Chris McCall said Valid8 aims to eliminate the need for sample risk from accounting. “It’s really eye-opening to have the complete picture and not be forced to base one’s opinion on a finite portion of a financial history,” he said.

The startup reckons its platform will be more useful than ever at a time when prosecutions and reported losses from fraud are rising fast, citing data from the Department of Justice and Federal Trade Commission.

McCall said financial malfeasance and fraud are among the most complex investigations in the justice system, and that forensic accountants can spend months or even years trying to untangle a web of financial transactions. “Verified Financial Intelligence leverages AI to expedite the process,” he said, in order to deliver “court room-ready evidence” that expert witnesses can rely on.

Stout Risius Ross LLC, a global investment bank and advisory firm, was an early adopter of Valid8’s platform and said it has fundamentally changed how its fraud investigation teams work. “Before, it took us a significant time to evaluate even a small sample size,” explained Stout Managing Director Jason Wright. “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.”

With the funds from today’s round, the startup plans to invest in its engineering and go-to-market teams, primarily at its headquarters in Boulder, Colorado.

Silverton Partners’ Roger Chen said the accounting industry is ripe for innovation. He pointed out that with digital banking, cryptocurrency exchanges and other financial innovations becoming more commonplace, it’s getting harder for investigators to keep up. “Beyond forensic accounting, this technology already has compelling use cases for audit, transaction advisory, M&A due diligence and beyond,” he added.

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