Regxit: Regtech Startup Exits Are On The Rise

Last year was a record for exits in the regtech category, with 30 total M&As and IPOs. Exits in regtech have been on the rise over the past 5 years.

The steady pace of exit activity is unsurprising given the surge in deals and funding in the category. On a yearly basis, deal activity in regtech took off in 2014, remained strong in 2015, and broke 100+ deals in 2016.

We define regtech as companies developing technologies aimed at simplifying and streamlining compliance, risk management, reporting, data management, and more.

Using CB Insights data, we analyzed first exits in regtech from 2012-2016. We also created a timeline showcasing regtech first exits between 01/01/16-02/14/17.

Annual exit trends

In 2016 there were 30 regtech exits, including 29 M&A transactions and 1 IPO. The most well-funded regtech startup with disclosed funding that has exited since 2012 is Reval. Reval is a liquidity risk management platform that was acquired by ION Investment Group in Q4’16 and raised $86.9M in total funding.

Exit activity swelled in 2014 when there were 23 exits, just 1 exit shy of doubling 2013’s total.

Increasing exit activity over the last few years is unsurprising given how overall deal activity in the category has picked up in the last five years.

2016 exits trends

To analyze the timeline of exits and investors in the sector, we used CB Insights data to plot each startup’s respective exit since 2016 – 2017 through 02/14/17.

Key takeaways:

• Many of these acquisitions were of early-stage regtech companies, including Evantix, a third-party risk management software provider, that was acquired by Optiv Security.
• The acquirers in the category range from early-stage funds like Medina Capital to private equity firms like BC Partners, which acquired Catbird Networks in a joint acquisition in Q4’16.
• Also making acquisitions are regtech startups like Contego Fraud Solutions which acquired Working Status in Q4’16.
• Corporates are actively making strategic acquisitions such as Cisco’s acquisition of cloud security provider CloudLock in Q2’16.
• 2017 already saw its first exit with Telavance, an AML compliance risk management software that was acquired by ACA Compliance group.

2016 – 2017 Regtech Exits

Company	Exit	Round Investors	Quarter
123Compliance	Acquired	Sparta Systems	Q1’16
cr360	Acquired	UL	Q1’16
November Research Group – Pharmacovigilance Technology Services Division	Acquired Unit	HighPoint Solutions	Q1’16
Kneat Solutions	Reverse Merger	Fortune Bay Corp	Q1’16
RiskFactor	Acquired	Equiniti	Q1’16
HostSure	Acquired	Intergraph	Q2’16
Risk Intelligence Ireland	Acquired	Verisk Analytics	Q2’16
Merrill Corporation – Merrill Brink International, The Language Services Division	Acquired Unit	United Language Group	Q2’16
Jumio	Acq – Fin	Centana Growth Partners	Q2’16
Evantix	Acquired	Optiv Security	Q2’16
CannaScore	Acquired	CS Compliance Systems	Q2’16
Privacy Analytics	Acquired	IMS Health	Q2’16
Enablon	Acquired	Wolters Kluwer	Q2’16
Sphera	Acquired Unit – Fin	Genstar Capital Partners	Q2’16
IMI Health	Acquired	Centauri Health Solutions	Q2’16
Steele Compliance Solutions	Acq – Fin	Bregal Sagemount	Q2’16
CMO Software	Acquired	Mitratech	Q2’16
CloudLock	Acquired	Cisco Systems	Q2’16
Hitec Laboratories	Acquired	Mitratech	Q3’16
Regulatory DataCorp	Acq – Fin	Vista Equity Partners	Q3’16
Kyckr	IPO	Public	Q3’16
Optanon	Acquired	OneTrust	Q3’16
SAI Global	Acq – Fin	Baring Private Equity Asia	Q3’16
Reval	Acquired	ION Investment Group	Q4’16
Techpubs	Acquired	Flatirons Solutions	Q4’16
Palamida	Acquired	Flexera Software	Q4’16
Catbird Networks	Acq – Fin	BC Partners;Medina Capital	Q4’16
Business and Legal Resources	Merger	Simplify Compliance Holdings	Q4’16
HexaTier	Acquired	Huawei Technologies	Q4’16
Working Status	Acquired	Contego	Q4’16
Telavance	Acquired	ACA Compliance Group	Q1’17

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