Global RegTech funding is off to a flyer at the start of 2021 driven by large deals over $50m

RegTech companies raised $4.3bn in the first three months of 2021 as the sector recorded 11 deals over $100m

  • Global RegTech investment between 2017 and 2020 rocketed as investors increasingly backed companies looking to solve and bring efficiency to outdated compliance processes as well as take advantage of the new complex regulations coming into effect such as MiFID II and GDPR. Total funding grew at a CAGR of 74.7% over the period from 1.5bn to nearly $8.0bn at the end of last year.
  • It looks like the coronavirus pandemic has only increased investors’ appetite for deals in the sector as funding reached $4.3bn in the first three months of 2021, a 79% increase compared to the same period last year. The massive capital growth was mainly driven by 11 deals valued at $100m or more, compared to just five such transactions recorded in Q1 2020. The largest deal of the period was raised by Lacework, a threat/anomaly detection and compliance platform across multicloud environments, which raised $525m in a deal led by Sutter Hill Ventures and Altimeter Capital.
  • If we leave the volatile quarter to quarter large deals, the RegTech sector still saw strong levels of deal activity with 100 transaction completed in the opening quarter of 2021. That’s a 26.6% growth compared to Q1 last year.

Nine of the top ten RegTech deals completed in Q1 were Series D or beyond as the RegTech market matures

  • The top ten RegTech deals in the first three months of 2021 collectively raised $2.62bn. This figure is higher than the one recorded in Q1 last year when the top ten transactions raised $1.7bn. This is to be expected as established RegTech companies raise late-stage rounds of funding to fuel international expansion and tackle new challenges brought by the pandemic.
  • Indeed, nine of the top ten transactions in Q1 were classified as Series D or beyond. In comparison, the same number for the top ten deals in the opening quarter of 2020 stood at just five transactions. The latest stage deal of the period was completed by Dataminr, an AI data platform to detect emerging risks, which raised $475m Series F round valuing the company at $4.1bn.
  • The only Series C deal on the list was raised by Orca Security, a provider of cloud-wide, workload-deep security and compliance solutions, which collected $210m in March. The transaction valued the company at $1.2bn making the company one of the fastest cybersecurity startups to reach unicorn status, doing so within just 27 months.

The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2021 FinTech Global

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