Victims of identity theft have new source for help

May 9, 2005

BY MICHAEL KRAUSS

Identity theft is a growing challenge of the technology age, and Garnet Steen, 34, founder of Chicago-based RelyData, makes lemonade out of technology's lemons. The Winnipeg native and Accenture and Bain alum just needs $1.2 million in funding to expand.

Steen sees a $70 million business opportunity. He envisions RelyData as the H&R Block of identity-theft resolution. A victim of stolen identify could resolve the problem himself, just as a taxpayer can prepare his own tax return. But Steen is betting it's easier to hire an expert who knows the process.

Consider the frustration factor. Once someone pilfers your identity and sullies your credit, you need to contact the leading credit bureaus -- Experian, Equifax and Trans Union -- to report the crime.

"On your first call to Trans Union, you'll get an automated system," Steen predicts. "It's going to take you 10 days to actually talk to somebody."

But Steen has a business partnership with Trans Union and can start resolving things 15 minutes after he's reviewed an identity theft victim's case.

Growth industry

Steen estimates there are 4 million victims of identity theft annually. That's the number of Americans who report the crime to the credit bureaus. It may be under-reported. A study by the Federal Trade Commission says 9.9 million Americans are victimized annually. Steen adds, "Identity theft is growing at a rate of 20 to 40 percent per year."

Once identity theft occurs, the challenge is clearing your name. That takes time, often while you work.

"It takes 60 hours to resolve the problem," says Steen, provided you can access a telephone, fax and the Internet during the day. That's when the credit bureaus, banks and insurance companies are available.

Steen estimates the cost in lost productivity and profits from an employee's identity theft runs to $800 to an employer. He aims to sell his service to employers as an employee perk for a few bucks a head.

"I think RelyData is a very interesting play," says Tom Churchwell, managing partner, ARCH Development Partners, which makes early-stage investments. Churchwell moderated a recent venture forum held by the Illinois Technology Development Alliance, where Steen presented.

"We've not seen anything like RelyData," adds Churchwell, who cautions he has not done due diligence, nor is he an investor. He says Steen and RelyData are addressing a major problem of the technology age.

Morningstar & U. of C.

Here's more evidence Chicago-style entrepreneurship is blooming. The University of Chicago is becoming a launch pad for entrepreneurs.

Morningstar founder and CEO Joe Mansueto, who completed a very successful initial public offering last week, earned his BA and MBA there. On paper, Mansueto's stake in publicly held Morningstar is worth more than $550 million.

Another positive sign: Top faculty are getting active with ventures. U. of C. finance professor and private equity expert Steve Kaplan serves on Morningstar's board.

Springboard launches

Female entrepreneurs take note. Northern Trust hosts a launch party Tuesday promoting Springboard Midwest 2005, the venture capital competition supporting female entrepreneurs.

"Nationally, Springboard showcased 317 women-led enterprises," says Nancy Sullivan, director of the Center for Women Entrepreneurs in Technology at Northwestern University, a co-sponsor and organizer of this year's effort. "Those portfolio companies raised $3 billion in equity capital."

Springboard co-chairs include Ed Condon, Paradigm Capital; Bob Geras, LaSalle Investments, and Misty Gruber and Kathleen Swan, Dykema Gossett. Springboard Midwest 2005 will be held Sept. 28 at Northwestern.

Comstock speaks

Tech companies aren't all start-ups. At $152 billion in revenue, GE is a top tech company with nearly 2,400 workers in the Chicago area. Beth Comstock, GE chief marketing officer, speaks Thursday at the Business Marketing Association at the Mid-America Club. She'll explain CEO Jeffrey Immelt's effort to grow through innovation. GE is a lead sponsor of WiredNext Fest planned for June at Navy Pier.

Blago blog?

Gov. Blagojevich says more than 63,000 individuals visited the Illinois Business Portal, www.business.illinois.gov since its February launch. Will a Blagojevich blog be next?

Michael Krauss is a Chicago-area tech writer and consultant.

 

 ©2005 Marion Consulting Partners