Here is our Q2 2019 summary report on the regulatory technology startup sector. The following report includes a sector overview and recent activity.
How is the funding environment shaping up for regulatory technology in 2019? As we pass the mid-year mark, let's see how the year-to-date metrics compare to the historical trends. The graph below shows regtech total funding by year, stacked by quarters.
As the graphic demonstrates, regtech has amassed $2.9B through Q1 and Q2 of this year. This amount represents 138% of the total funding in 2018, and 322% of the funding through Q2 in 2018. The top three funding events in Q2 2019 include a $500M round into Kaseya, a $300M round into KnowBe4, and a $130M round into Druva.
A straight-line projection of the completed funding this year would result in $5.9B, which is 275% of the total 2018 funding. By the same token, a weighted quarterly average projection of 2019 funding would result in $6.9B, which exceeds the total 2018 funding by a whopping 222%. Therefore, based on the mid-year data, regtech funding in 2019 is projected to be significantly higher than the funding in 2018.
How has investor appetite in regulatory technology evolved throughout the years? In this blog post we examine the total investments by year into this sector to help answer that question. The graph below shows the total number of investors in all deals stacked by quarters.
As the graphic demonstrates, investor activity in regtech has been on a generally upward trend in recent years. The 5-Year CAGR of regtech investor activity from 2013 to 2018 is 19%. In addition, the sector has seen a total of 247 investors in all deals through Q2 of this year. This represents 75% of the total investor activity in 2018, and 176% of the investor activity through Q2 in 2018. Taking all these data points together, we can see that investor appetite for regtech deals has been steadily increasing in recent years, despite the slight drop in 2018.
Our sector maps are snapshots of our web-based emerging technology reports. We show the categories that make up a sector and how many startups are within each category. We also present a random sampling of the startups that are innovating in each category.
In this post we share our most up-to-date sector maps for all of our 16 sector reports. They are all available for download. To access the full research coverage in any of these sectors, visit us at www.venturescanner.com or contact us at [email protected].
3D Printing: 9 categories, 389 companies, $3B in funding
Artificial Intelligence: 13 categories, 2545 companies, $63B in funding
Blockchain Technology: 12 categories, 1137 companies, $17B in funding
Energy Technology: 12 categories, 799 companies, $75B in funding
Financial Technology: 16 categories, 2697 companies, $148B in funding
Health Technology: 22 categories,...
For this quarter's funding analysis, let's examine how average funding in the regulatory technology (regtech) sector is evolving. The graphic below shows the regtech average funding across all deals over time by quarter.
As the graphic demonstrates, regulatory technology average funding deal size in Q1 2019 was at $29M, which increased by 113% from the $14M in the same quarter last year. The average funding deal size has experienced strong growth, with the average funding last quarter around 6 times larger than it was 5 years ago. The top three funding events in Q1 2019 include a $261M round into Rubrik, a $160M round into Kyriba Corporation, and a $100M round into OneLogin.
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.
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...
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.
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.
Here is our Q1 2019 summary report on the regulatory technology startup sector. The following report includes a sector overview and recent activity.
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.
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.
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.
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.
Here is our Q4 2018 summary report on the regulatory technology startup sector. The following report includes a sector overview and recent activity.
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.
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....