RegTech investments in Q1 more than doubled YoY, as interest in compliance software picks up

RegTech services pertaining to finance are growing more common. To maintain compliance with existing regulations, and keep up with new ones, firms are more often seeking solutions that can help them streamline and manage their data, processes, filings etc.

RegTech investments more than doubled in Q1 2017, YoY

  • In Q1 2017 RegTech investment figures showed an 102% increase in total investments YoY. The number of deals is also up YoY with 10 more deals closed in Q1 2017.
  • Q3 2016 saw the most investment over the last 5 quarters. The average size of each funding round closed in the quarter was over $13m.
  • The largest deal of Q1 2017 was received by Irvine-based Compliance-focused firm Netwrix, which raised $51m in a Series A round from Updata Partners back in February.

Investment in the compliance sub-sector has made a comeback in Q1 2017 after 2016 was dominated by interest in Anti-Fraud.

  • In 2016, for the first time since 2014, Anti-Fraud companies received a higher proportion of the total funding than compliance.
  • Compliance companies have seen a gradual decline in their share of funding year on year since 2014. However so far in Q1 2017 interest seems to have risen as the sector took 59% of the total investment in RegTech.
  • Reporting companies received 12% of the total investment in financial RegTech companies in Q1 2017, after the share of investment to reporting companies halved between 2015 and 2016.

London continues to dominate, consistently closing more RegTech deals than any other city.

  • London continues to close the highest number of RegTech deals worldwide, after FinTech Global found that the city closed the highest number of deals in the period 2012- 2016.
  • The largest of the 9 deals closed in London in Q1 2017 went to Dealflo who raised $12.45m in their series B round in February. The company provide an agreement automation service to ensure enforceability and compliance.
  • One area that didnt feature in the top cities for 2012-2016 is Mclean, Virginia. Mclean is home to Anti-Fraud company ID-Me and Verato which raised $19m and $12.5m respectively in Q1 2017.

Q1 2017 has been a good quarter for investment in financial RegTech companies. Four companies closed deals of $20m and above in Q1 2017. These include New York Payfone, which specialises in mobile authentication, and Tel Aviv VATbox, which processes VAT transactions will full internal compliance. These companies raised $23.5m and $20m respectively in Q1 2017. Overall the sector received just under a third of the total investment in 2016 in Q1 2017 alone.

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