Deals to regtech startups hit a record of 102 deals in 2016. It is the first time deal total hit triple digits in the last 5 years, despite a slight dip in total funding.
Companies tasked with complying with a wide array of existing and new regulations are using regtech startups’ technology to simplify and streamline compliance, risk management, reporting, data management, and more.
Using CB Insights data, we highlighted annual and quarterly equity funding trends to private companies operating within regtech.
Annual deals and dollars
Global equity funding to private regtech startups has skyrocketed in the wake of the financial crisis. 2014 saw the biggest jump in both deals and investment activity. Deals saw a 48% increase from 64 in 2013 to 95 in 2014 and funding spiked 115% from $403M in 2013 to a record $867M in 2014.
In 2016, deals saw a 9% increase from 94 in 2015 to a high of 102 deals. Funding saw a 3% dip from $757M in 2015 to $732M in 2016. Capital Confirmation and Prevalent were tied for the top deals of 2016.
Capital Confirmation, a document transmission platform, facilitates the secure transfer of documents electronically for audit requests. Capital Confirmation raised a $60M Private Equity investment from Great Hill Partners in Q4’16. Prevalent provides third-party risk management software that helps companies facilitate a vendor risk management program. Prevalent raised a $60M Series C investment led by Insight Venture Partners also in Q4’16.
Quarterly deals and dollars
On a quarterly basis, deals and funding peaked in Q3’15 with 32 deals across approximately $386M. This spike in funding was partially due to a $122M Private Equity investment to Intelex Technologies in a round that included HarbourVest Partners and JMI Equity. Intelex Technologies provides Environment, Health, and Safety (EHS) software that helps companies comply with industry specific quality standards.
Deals spiked again in Q1’16 with 30 deals, following a sharp decline in Q4’15 which saw only 16 deals. Deals ended 2016 slightly down with 23 deals, but was enough to push total deals for the year to a record annual high.
In addition to the deals to Capital Confirmation and Prevalent, mentioned above, other top deals in 2016 went to information security software providers Druva and LogRhythm and to tax management software provider Avalara.
Druva raised a $51M Series E investment that included Sequoia Capital India, Hercules Capital, Nexus Venture Partners, NTT Finance, EDBI, Tenaya Capital and Blue Cloud Ventures. LogRhythm raised a $50M Series F investment that included Silver Lake, Siemens Venture Capital, EDBI, Adams Street Partners, Delta-V Capital, Riverwood Capital, and Exclusive Ventures. Avalara raised a $50M Growth Equity investment that included Warburg Pincus, Technology Crossover Ventures, and Sageview Capital. All investments occurred in Q3’16.
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