- 16th April 2018
- Posted by: Manolis
In a parallel to the thriving fintech sector, an industry is emerging to automate complex regulatory reporting requirements.
According to statistics from CB Insights, RegTech startups have raised approximately $2.3 billion across 317 deals between 2012 and 2016. As an area that continues to grow, propelled by interest in and demand for FinTech solutions, more investors are turning their attention to regtech startups, including those in cannabis, vendor risk management, information security/cybersecurity, healthcare, background checks, compliance management and government/legislation.
Here are 15 investors who are focused on helping build out the RegTech industry:
1. Octopus Ventures
This UK venture capital firm invests in all types of technology-backed startups. Recently, it made the move into RegTech by leading the investors in backing the US-based open banking platform Token, which raised $15.7 million in a Series A funding round in April. The startup’s open banking platform helps banks to meet the compliance requirements of the upcoming European Payment Services Directive (PSD2).
2. SeventySix Capital
This U.S. venture capital company invests in numerous business segments, including its foray into RegTech thanks to Managing Partner Wayne Kimmel’s decision to put money into KIND Financial, a regulatory and compliance platform for the cannabis industry and for the government to monitor those businesses. Along with Lindy Snider, the investment firm determined that the high growth potential in the cannabis industry and the need to help propel that growth with compliance solutions would offer a significant return.
3. Summer Capital
The investment firm has been focused on funding RegTech, FinTech, and data companies throughout Europe. For example, Summer Capital has invested in Sybenetix, which is a RegTech startup that offers market surveillance and compliance monitoring software for banks, asset managers, hedge funds, and regulators.
4. Carrick Capital Partners
This venture capital firm invests in different business segments, including those that focus on compliance issues. One example of their investments is Bay Dynamics, which is a cyber risk analytics company that helps enterprises measure, communicate, and reduce their cyber risk. They offer analytics software, Risk Fabric®, which automates security information analysis.
5. EQT Ventures
This European investment firm focuses on making minority equity investments in tech companies across a diverse area of industries. With RegTech, EQT Ventures has invested in companies like Tokenand HackerOne. These startups are geared toward online payment compliance and risk mitigation and cybersecurity, respectively.
6. Insight Venture Partners
This U.S. venture capital firm invests in a diverse set of industries, including RegTech startups for a number of areas, including government, healthcare, and financial applications. For example, DigitalHarbor has application for government and financial services, offering a platform for intelligent composite applications that include compliance and risk management solutions for those verticals.
7. JMI Equity
This U.S. investment company works with RegTech startups across many verticals, including government, healthcare, security and compliance, and financial and insurance. Its portfolio covers numerous software and technology startups that are providing critical solutions for these business segments, offering compliance and security applications to facilitate all types of transactions, recordkeeping, and public sector activity.
8. Aquiline Capital Partners LLC
As a U.S. investment firm, the team invests primarily in financial services-related startups, including those that offer services and RegTech solutions for banking, credit, insurance, investment management, and financial technology. The various startups in their portfolio help to ensure compliance for hedge funds and other types of investments, billing, financial services marketing and more.
9. Sageview Capital
This U.S. venture capital firm bills itself as an “engaged long-term partner for growth,” helping small to mid-sized companies in areas like technology, financial services, and business services. Their extensive portfolio includes RegTech startups and companies that address compliance for treasury and wealth management, payments and transactions, investor management, and more.
10. Accel Partners
Investing in what have become some of the world’s biggest companies (Facebook, Slack, Dropbox, Venmo and others), Accel has been expanding its business segments to include investments in RegTech startups. Among them is risk analytics startup OpenGamma, which has facilitated activities in the derivatives markets.
11. Warburg Pincus
This large global investment firm works with all sizes of companies across a diverse set of industries. Included among some of the verticals, such as energy, healthcare, and financial services, are numerous RegTech startups and businesses that Warburg Pincus has helped to fund for their growth and development.
This international investment firm with offices around the world has recently become more involved with investments in RegTech. It typically offers primary, secondary, and co-investing options to assist companies with funding as well as strategic consulting and development direction. It has now helped numerous RegTech companies in various regions reach the next stage in their growth.
13. Digital Currency Group
This is a unique group of investors who are focused on building out bitcoin and blockchain technology, assisting startups and companies with developing in specific areas like compliance and regulation, payments, security, identity, smart contracts and more. Their focus is to further the growth of various applications that are built on blockchain, offering more standards and a process for facilitating compliance to gain wider adoption of this technology.
14. TTV Capital
The U.S.-based venture capital firm is focused on financial technology and solutions that drive efficiencies, compliance, and security across all types of financial services segments. These solutions are for banks, payments, capital markets, data analytics and security. Included in the companies that its helped are Bill.com, Bitpay, Cardlytics, DefenseStorm, FTrans, GreenDot, iKobo, and SmartAsset.
15. Balderton Capital
This investment firm deals mainly in early investments in European startups for healthcare, technology, mobile and consumer segments. Some of the investments in RegTech startups include those that provide solutions like an electronic voting platform, online and mobile payments, medical records and data centers. ComplyAdvantage was a recent RegTech investment where the firm funded over $8 million to grow this company.
Tip of the RegTech Iceberg
These 15 investment firms just touch the surface of the RegTech investment landscape as more business segments and issues related to compliance in these areas emerge. Along with FinTech and InsureTech, RegTech will continue to grow over the course of the next decade as demand grows for online business for both consumers and businesses.