Ten biggest RegTech deals since the Covid-19 lockdown

From: RegTech Analyst

The RegTech sector has seen some massive investment rounds in the past few months despite the global pandemic.

Overall, RegTech companies has fared rather well during the coronavirus crisis. Despite the doom and gloom of the lockdown, the industry raised $3.9bn across 120 deals in the first six months of the year, according to FinTech Global’s research. While that is not half of the $8.5bn raised in 2019, it is almost on the level of the $4.5bn injected into the sector in 2018.

That being said, the first six months of 2020 enjoyed a 5% increase in investment compared to the first half in 2019 along with a 14.2% decrease in deal activity. While this may signal maturity in the sector via large deals, the lack of deal activity can also be attributed to investors’ uncertainty caused by Covid-19 and their unwillingness to commit to early stage, riskier transactions.

Given the big rounds have been instrumental in driving the growth of the sector, why not take a closer look at the investment deals completed in the RegTech sector since the UK went into lockdown on March 23?

TierPoint picked up a massive $320m equity round

Just two days after the UK went into lockdown, RegTech Analyst reported on the biggest funding round that the industry has enjoyed since. The star of the round was the data centre and cloud solutions company TierPoint, which bagged a whooping $320m in a preferred equity funding round.

The platform mitigates online risks through endpoint encryption, web application firewalls and DDoS mitigation.

The round was led by Argo Infrastructure Partners, Wafra and Macquarie Capital Principal Finance, all of which made their first investments into TierPoint. Other contributions came from previous backers including Cequel III, Ontario Teachers’ Pension Plan, RedBird Capital Partners, The Stephens Group, and Thompson Street Capital Partners.

TierPoint said it would use the splash of new dosh to repay the company’s second lien credit facility in full, reduce its balance outstanding under its credit facility and foster growth of the platform.

RegTech platform BioCatch’s huge $145m Series C round

The runner-up entered our headlines a few weeks into April. Behavioural biometrics platform BioCatch successfully raised $145m in its Series C round.

Bain Capital Tech Opportunities led the round, which also enjoyed participation from Industry Ventures, American Express Ventures, CreditEase, Maverick Ventures, OurCrowd and others.

As the name suggests, BioCatch has created a solution that leverages behavioural biometrics to help financial institutions protect their clients from fraud and other criminal activity, such as social engineering voice scams. The technology monitors behaviour of consumers on each of their online sessions, learning their specific habits.

BioCatch said it would use the money to expand its product offerings and enter new verticals.

NS8 closes $123m funding round as it looks to continue its rapid growth

Fraud prevention platform NS8 came in for the bronze by bagging $123m in a funding round led by Lightspeed Venture Partners and AXA Venture Partners. The RegTech venture said wit would use the money to speed up the development of its product and increase its global reach, including the expansion of its partner network.

The news came after year that had seen NS8 grow its team from 50 to more than 200 employees. With the new capital influx, the firm said was looking to beef up its recruitment even more, particularly across its sales, engineering, marketing, and infrastructure teams.

Accellion’s $120m funding round marked the strength of the cybersecurity sector during Covid-19

Back in the beginning of April, when people were still getting accustomed to the social distancing rules, Accellion netted $120m in a financing round led by private equity firm Bregal Sagemount.

In retrospect, the cybersecurity company’s big round isn’t just interesting in its size, but also because of what it represented for the sector. During the Covid-19 pandemic, the cybersecurity industry has enjoyed a bit of a boom.

This, of course, is hardly surprising, given cyber criminals have doubled down on the number hack attacks, frauds and phishing scams during the pandemic. As such, the coronavirus has motivated companies to invest in their digital defences.

Although, there are hints that the fortunes of the cybersecurity sector could also be set to decline as more firms become more reluctant to invest in their digital defences as they have to hold on to their purse strings as they weather the pandemic fallout.

Collibra doubled its valuation after closing a $112.5m funding round

Yet another big company to raise a humongous round in April was Collibra. The data intelligence unicorn more than doubled its valuation to $2.3bn after closing a new $112.5m funding round.

Collibra had been valued at $1bn in January 2019 after a $100m Series E round. The RegTech has raised a total of $345.5m in equity since it was founded.

ICONIQ Capital and Index Ventures co-led the round along with new investor Durable Capital Partners. Other contributions came from existing backers Battery Ventures, CapitalG and Dawn Capital.

The company’s AI and machine learning capabilities support data governance across areas including RegTech and wider FinTech, healthcare, retail and other tech industries. Its goal is to help its customer base, which is currently at 450, improve their decision making through improved data intelligence.

Onfido bagged $100m to fund further expansion

Seriously, how good was April for RegTech? The UK-based biometrics specialist Onfido is the fourth RegTech on this list to top up its coffers in the fourth month of the year. It did so by bagging $100m to fuel further expansions and tech developments.

The RegTech company has made a name for itself by creating an artificial intelligence-powered solution that is able to analyse a person’s face and compare it to government-issued IDs to verify his or her identity.

“We’re standardising the way everyone proves their real identity, in a similar way to how Facebook has standardised the way everyone shares their social identity, and LinkedIn has standardised the way everyone signals their professional identity,” said Husayn Kassai, CEO of Onfido.

TPG Growth led Onfido’s new investment round, which puts the total funding raised by the scaleup to $200m.

Payfone collected $100m in a new funding round

Fast forward to June to get the sevent biggest RegTech round since the lockdown started. That was when RegTech Analyst reported that the digital identity company provider Payfone announced its latest round. Although, it may be more appropriate to say the US-based business would be on a joint sixt place with Onfido, given they both secured $100m in their respective raises.

On the back of the raise, it said it would be able to acquire strategic assets, further strengthen its machine learning capabilities, and build a cross-industry consortium to secure digital transactions and experiences.

Apax Digital, the growth equity team of Apax Partners, led the round. Payfone also enjoyed an influx of capital from Sandbox Insurtech Ventures and Ralph de la Vega, the former vice chairman of AT&T. Existing investors MassMutual Ventures, Synchrony, Blue Venture Fund, Wellington Management and the former CEO of LexisNexis Andrew Prozes also participated in the raise.

ForgeRock enjoyed a $93.5m Series E round

Payfone is not the only company on this list to have something in common with Onfido. Just like the UK-based RegTech, ForgeRock is a digital identity startup that, you guessed it, raised a hunking big round in April.

It collected $93.5m in a Series E round led by Riverwood Capital, the investor that has previously supported ventures like SecurityScorecard, a security ratings startup. ForgeRock’s existing investors also participated in the raise.

The fundraising comes after a year in which ForgeRock secured over 200 new large enterprise customers. “While this is a moment to celebrate, we know the best is yet to come,” said Fran Rosch, CEO of ForgeRock, at the time. “This additional funding will enable us to infuse every aspect of the ForgeRock Identity Platform with the power of artificial intelligence (AI) so organisations can identify the actions that move the needle in order to make better, faster decisions. This new round will also support our cloud ambitions and turbo-charge our sales, marketing, and customer success organisations to take them to the next level.”

Given both ForgeRock and Onfido raised big rounds, it might be prudent to remember that the identification and background check market is one of the biggest RegTech sectors in the world. Between 2015 and 2019, the sector has made up between 13.6% and 19.5% of the total investment going into the RegTech industry, according to RegTech Analyst’s research.

Coalition bags $90m to support its global expansion plans

The penultimate RegTech company on this list is the cyber insurance platform Coalition, which bagged a $90m equity investment round in May to support its rapid growth and global expansion.

The investment was led by Valor Equity Partners, with additional support coming from Felicis Ventures, Greyhound Capital, as well as, a number of the InsurTech’s existing investor base.

Coalition said it would use the money to make its cybersecurity tools more widely available to small and medium-sized businesses, increase its international expansion efforts and enter Canada, and to develop new insurance products which meet the changing threats technology is posing to businesses.

Privitar bags $80m in funding as it looks to continue its rapid growth

The tenth and final company on the list is the data privacy compay Privitar, which secured $80m in its Series C round in April. Private equity firm Warburg Pincus led the round, with additional support coming from Accel, Partech, IQ Capital, Salesforce Ventures and ABN AMRO Ventures.

The RegTech platform plans to use the fresh equity to accelerate the development of its data privacy platform, increase innovation and support its growth initiatives. Funds will also be used to support international expansion and hiring staff for its sales, services and product development teams.

The company topped up its accounts in June by adding another $7m to the round. HSBC was behind the additional cash influx.

Copyright © 2020 FinTech Global

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