Behavox uses machine learning – where its algorithm continues to improve with more data – to analyze employees within an organization. It allows the software to build up a picture of workers and then flag anything that appears out of character. It could be something as granular as using an obscene word in a message to a colleague, to the way you speak to people on the trading floor. The current problem is that compliance officers and investigators could have to sift through millions of documents of message logs or financial statements and not necessarily draw a link between them.
The start-up is trying to build up a database of past misconduct in order to help financial institutions deal with bad behavior, something that can be challenging because companies don’t want to give others an insight into wrongdoings within.
“One of our biggest problems when we were starting out was the fact that you can’t build software unless somebody gives you the data set. And nobody is going to give you the data set until you actually have the software, so it’s a chicken and egg situation,” Adylov said.
However, law firms brought in to investigate are “playing defense” and are happy to give data to Behavox to help, the entrepreneur said.
It’s a solution that should be welcome to many large businesses given that the banking sector has been hit with billions of dollars of fines over the last few years with the whole industry in the crosshairs of regulators. In the U.K., senior managers could face jail time if their employees make bad decisions which leads to the failure of a bank. Behavox is hoping it can win clients by explaining the need to know what’s going on within a business.
So far, hedge fund Marshall Wace and interdealer broker TP ICAP are using the software. Adylov said Behavox has 15 clients in total and is hoping that number will “escalate dramatically” this year. Last year, Behavox raised $3 million from a round of funding from London-based venture capital firm Hoxton Ventures and Chicago’s Promus Ventures. Adylov would not reveal the company’s valuation but said it is already getting takeover offers “north of $100 million”, after being in business for just two-and-a-half years.
