Q1’17 was a slow quarter for regtech startups which saw 27 deals worth approximately $205M in funding. At the current run rate, both deals and dollars are on track to come in behind 2016’s totals.
We define regtech as companies using technology to simplify and streamline compliance, risk management, reporting, data management, and more.
Using CB Insights data, we analyzed annual and quarterly equity funding trends to private companies operating within regtech from 2012-2017 YTD through 05/04/17.
Annual financing history
Deal activity in 2016 hit a record of 127 deals, up approximately 17% from 2015’s total. At the current run rate, deals are on track to dip to 108 and funding to drop to $843M in 2017.
At the current run rate, 2017 would be the first year that both deals and dollars decline and could drop to a three-year low. Given the surge in deals and dollars over the past 3 years and the high proportion of regtech companies that are still in the early stages (seed/angel and Series A), a slowdown would not be surprising.
Despite the projected decline, the numbers are on pace to surpass 2012 and 2013. In 2017 YTD there have been 36 investments worth $282M. The top deal went to Netwrix, a cybersecurity company whose product offering includes Netwrix Auditor, a platform that supports compliance with security regulations. Netwrix raised a $51M Series A from Updata Partners.
Quarterly financing history
Digging into the quarterly data, Q1’17 saw 27 deals worth $205M in funding. This was the second consecutive quarter that deals and dollars dipped.
The second-biggest deal in Q1’17 (aside from the top deal to Netwrix mentioned above) went to WorkFusion an AI-powered enterprise software that includes AML/KYC services for banks and financial institutions. WorkFusion raised a $35M Series D investment that included Georgian Partners, Greycroft Partners, iNovia Capital, Mohr Davidow Ventures, Nokia Growth Partners, RTP Ventures, and Wildcat Venture Partners. Third place is a tie between Canopy Tax and VATBox, which each raised a $20M equity round. Both Canopy Tax and VATBox provide software that collects required tax revenue, conducts record keeping, and aids with government required fillings. Want more data on regtech startups and investors? Log in to CB Insights or sign up for free below.
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