Why We Invested in Pinch AI

We're excited to announce our investment in Pinch AI and welcome Arthi Rajan, Jayan Tharayil, and Chirag Vaya to the Dynamo family!

We originally began our work around returns in 2020 when we were thrust into COVID lockdowns and eCommerce growth spiked for a period of time. We believed there was an opportunity to quantify a consumer's returns behavior and understand the real impact from fraud and abuse returns have on a brand or retailer's profitability - especially due to rampant abuse of return policies which continue to ail the industry. Being able to profile profitability of individual customers, including the net cost of returns, provides retailers a new and novel insight which might ultimately be used as a shared “digital fingerprint” between retailers to highlight high value customers and those who abuse the system. After five years, we believe Pinch AI has some of the key ingredients to tackle this opportunity and represents an attractive investment for the following reasons:

1. Exceptional founder-market fit with proven execution capability. The Pinch AI team of Arthi Rajan (CEO), Jayan Tharayil (COO) and Chirag Vaya (CPO) brings a unique combination of skills and experience around payment fraud detection which they are leveraging for post-purchase behavior. Jayan and Chirag previously work at Simility in Product before it was acquired by PayPal. Jayan subsequently became the overall GM and Lead for PayPal's Risk as a Service (being Simility and Chargehound) where he teamed p with Arthi. Arthi brings unparalleled experience as former SVP of Global Fraud Risk at PayPal, where she led teams that protected over $1.5T in transaction volume. The founding team's background at PayPal, Google, and Simility gives them intimate knowledge of both the technical challenges and commercial opportunities in the realm of eCommerce fraud.
2. Addressing a large, underserved, and growing market opportunity. The global eCommerce fraud detection and prevention market is projected to be $69.1B in 2025, with a CAGR of 21.7%, reaching $86.8B by 2030. In the US alone, it's estimated there was $103B lost in 2024 due to fraudulent and abusive returns and claims, accounting for 15.1% of all consumer returns. Globally, policy abuse and return/refund fraud cost the sector at least $28B, with three-fourths of online merchants feeling “overwhelmed” by this type of fraud and 84% finding it harder to detect than before. Most fraud solutions are still payment-focused, while post-purchase fraud (like return abuse, refund/policy abuse, "wardrobing") has risen sharply and is not sufficiently addressed by current tools.
3. Clear competitive differentiation in a rapidly evolving landscape. While established players like Forter, Signifyd, and Riskified focus primarily on pre-purchase payment fraud, Pinch AI's specialized focus on post-purchase abuse detection creates a unique market position. Both refund and policy abuse occur post-purchase, so unlike phishing or card testing, are not attacks that can be stopped in real-time. They are therefore more difficult for online merchants to identify and manage. This creates a defensible moat and significant expansion opportunity as the Pinch platform demonstrates ROI. We'd add that overtime, we believe Pinch AI can enable customer-level profiles to include the true cost of returns (including fraud and abuse) allowing retailers to understand their customers’ real LTV which is a meaningful unlock.

We're excited to enter this new era of Commerce enablement with the tailwind of AI!