Regulatory Technology Sector Overview – Q1 2019

This blog post examines the different components of the regulatory technology (regtech) ecosystem. We will illustrate what the categories of innovation are and which categories have the most companies. We will also compare the categories in terms of their funding and maturity.

Financial Crime Compliance Is The Largest Regulatory Technology Category

Let’s start off by looking at the Sector Map. We have classified 569 regtech startups into 10 categories. They have raised $12B from 987 investors. The Sector Map highlights the number of companies in each category. It also shows a random sampling of companies in each category.

Regulatory Technology Logo Map
Regulatory Technology Logo Map

We see that Financial Crime Compliance is the largest category with 118 companies. Financial Crime Compliance companies help financial institutions comply with regulations on identity related crimes. Their functions include client on-boarding, payment fraud, account takeover, and identity verification. Some example companies in this category are NetGuardians, Finomial, DueDil, and Feedzai.

Let’s now look at our Innovation Quadrant to find out the funding and maturity of these categories in relation to one another.

The Pioneers Quadrant Has the Most Regulatory Technology Categories

Our Innovation Quadrant divides the regtech categories into four different quadrants.

Regulatory Technology Innovation Quadrant
Regulatory Technology Innovation Quadrant

We see that the Pioneers quadrant has the most number of regulatory technology categories at 5, accounting for 50% of all regulatory technology categories. The Quality Compliance category has the highest average age, and the Network Compliance category has the highest average funding. On the other hand, the Compliance Tracking category is low on both average funding and age.

To learn more about our complete regulatory technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Identity Compliance Leads Regulatory Technology In Number of Investors

The regulatory technology (regtech) industry has seen 960 investors and $11B total all time funding. Let’s analyze which regtech categories have the most number of investors actively financing the startups. The graphic below highlights regtech categories based on the number of investors in each category.

Regulatory Technology Investors Per Category
Regulatory Technology Investors Per Category

As the graphic demonstrates, Identity Compliance has the highest number of investors at 275, with Data Compliance following close behind at 268. Identity Compliance companies help financial institutions comply with regulations on identity related crimes. Data Compliance companies help businesses comply with regulations around the integrity and security of their data. In addition, the average number of investors across all regtech categories is 121.

To learn more about our complete regulatory technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Regulatory Technology Report Highlights  – Q1 2019

Here is our Q1 2019 summary report on the regulatory technology startup sector. The following report includes a sector overview and recent activity.

To learn more about our complete regulatory technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Regulatory Technology Funding Peaked in 2018

As we progress through Q1 of 2019, let’s look back on 2018 and analyze how funding in the regulatory technology (regtech) sector compares to previous years. The graphic below shows the total annual regtech funding amounts over time.

Regtech Funding Over Time
Regtech Funding Over Time

As the graphic demonstrates, 2018 was a record year for regtech funding at over $2B. It represents a 6% increase from the previous year’s funding. In addition, regtech funding grew at a CAGR of 42% over the past 5 years. Some of the largest funding events in 2018 include a $250M round for Cohesity, a $169M round for Netskope, and a $100M round for Assent Compliance.

To learn more about our complete regulatory technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Regulatory Technology Investors With the Most Activity

The regulatory technology (regtech) industry has seen $10B in total all time funding. Let’s now examine the investors financing the regtech sector and identify the most active firms.

The graphic below highlights regtech investors based on the number of investments made in the sector. If an investor participates in two investment rounds in the same company (such as a Series A and Series B), that would qualify as two investments for this analysis.

Regtech Investors with Most Investments
Regtech Investors with Most Investments

As the graphic demonstrates, New Enterprise Associates has made the most investments in the regtech sector with 21 investments. Lightspeed Venture Partners and Accel follow with 20 investments each. Examples of companies that New Enterprise Associates has invested in include Forter, Fugue, DataVisor, and Tigera.

To learn more about our complete regulatory technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Regulatory Technology Report Highlights  – Q4 2018

Here is our Q4 2018 summary report on the regulatory technology startup sector. The following report includes a sector overview and recent activity.

To learn more about our complete regulatory technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Financial Crime Compliance and Network Security Compliance Lead Regtech Funding

As we’ve previously observed, regulatory technology (regtech) funding is on an upward trend in recent years. If we look closer at the category level, we notice two key takeaways:

  • The Financial Crime and Identity Compliance category leads the sector in Q3 funding
  • The Network Security Compliance category leads the sector in all-time funding

We’ll highlight these observations with some graphics and discussions below.

The Financial Crime and Identity Compliance Category Leads Regtech Q3 Funding

To start off, let’s review the amount of funding raised this quarter by each category within regulatory technology.

Regulatory Technology Latest Quarter Category Funding
Regulatory Technology Latest Quarter Category Funding

The above graphic highlights that the Financial Crime and Identity Compliance category leads the sector in Q3 funding with almost $90M. The Governance, Risk, and Compliance category follows in a close second with $83M in Q3 funding.

Financial Crime and Identity Compliance companies help financial institutions comply with regulations on identity related crimes. Their functions include client on-boarding, payment fraud, account takeover, and identity verification. Some example companies in this category are NetGuardians, Finomial, DueDil, and Feedzai.

Let’s now investigate how the regtech categories’ funding compare with each other historically.

The Network Security Compliance Category Leads the Sector in All-Time Funding

The graph below shows the all-time funding for different regulatory technology categories. The Q3 funding and growth rates of these categories are also highlighted.

Regulatory Technology Total Category Funding
Regulatory Technology Total Category Funding

As the bar graph indicates, the Network Security Compliance category leads regulatory technology in total funding at $1.5B. The Data and Privacy Compliance category follows in the second place with $1.2B in total funding.

Network Security Compliance companies help businesses comply with regulations around cyber-security risks. Some example companies in this category are Synack, HyTrust, AlgoSec, and SecurityScorecard.

In summary, the Financial Crime and Identity Compliance and Network Security Compliance categories are leading the sector in funding. Let’s see how the the rest of 2018 shapes up for regulatory technology!

To learn more about our complete regulatory technology report and research platform, visit us at www.venturescanner.com or contact us at info@venturescanner.com.