Key US RegTech investment stats in Q2 2024:
- US RegTech investments grew by 15% as larger deals increase due to increasing regulatory complexity and heightened regulations
- The average deal size in the US RegTech market increased to from $23m to $27m for the quarter
- Norm AI, an emerging leader in AI-powered regulatory compliance, announced its arrival to the US RegTech market with a Seriea A funding round of $27m
The US RegTech market experienced a positive shift for investments in Q2 2024, with fewer but larger deals compared to previous periods. In Q2 2023, the market saw $2.3bn across 100 deals, with $1.5bn coming from deals over $100m. By Q1 2024, the total fell to $1.4bn (36% decline) across 78 deals, with $782m attributed to deals which were $100m or over. In Q2 2024, despite a smaller number of deals (59), the total capital invested rose to $1.6bn (15% change), with $1bn from deals over $100m and $600m from deals under $100m. The average deal value in Q2 2023 was $23m, which increased to $27m in Q2 2024, reflecting the market’s move towards fewer but higher-value transactions.
This shift towards fewer but larger deals could be driven by the increasing regulatory complexity and heightened compliance requirements in the US, prompting larger financial institutions to invest more heavily in RegTech solutions. This makes the space attractive for investors. Additionally, the consolidation of the sector, where well-established RegTech firms are absorbing smaller players, may explain the rise in high-value deals, while the decrease in overall deal volume reflects a more selective investment environment.
Norm AI, an emerging leader in AI-powered regulatory compliance, announced its arrival with a $27m Series A funding round led by Coatue, with participation from Bain Capital Ventures, Blackstone Innovations Investments, Citi Ventures, and others. Over the past 11 months, Norm AI has raised over $38m from institutions managing more than $5.75tn in assets. Norm AI has developed the first platform that translates government regulations into computer code, enabling companies to automate compliance analyses efficiently and accurately using Regulatory AI Agents. These AI-powered agents convert regulations into executable programs, allowing businesses to ensure compliance with greater speed and precision. Already deployed by Fortune 100 companies, Norm AI is transforming how industries like insurance and asset management handle regulatory assessments, reducing the time spent on compliance from days to minutes. This new funding will help Norm AI expand its platform and further integrate AI into compliance processes, positioning the company as a pioneer in the RegTech space.
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