Global RegTech investment grew almost five-fold between 2014 and 2018. An increase of 48.5% CAGR, in terms of capital invested, has seen funding grow from $923.4m in 2014 to $4,484.5m in 2018. Funding doubled between 2014 and 2017, before jumping to just under $4.5bn in 2018.
Funding in 2018 was bolstered by large transactions with SenseTime, a facial recognition solution provider, raising over $2.2bn across three deals.
When we exclude the $2.6bn that SenseTime raised across 2017 and 2018, global RegTech funding still grew from $1,467.6m to $2,264.5m during the period. This increase was partly due to there being as many as 11 transactions valued above $50m last year.
Exiger, a New York-based provider of financial crime compliance and risk management solutions, raised $80m of Series A funding from Carrick Capital Partners in Q3 2018. This was one of the largest deals of the year and will enable Exiger to accelerate its growth by continuing to build out and acquire differentiated technology and technology-enabled solutions.
Checkr, a San Francisco-based automated background checking solution provider, raised a $100m Series C round led by T. Rowe Price, which was one of the largest transactions in 2018 outside of SenseTime’s funding rounds.
More than $6.2bn has been invested in RegTech solutions that address KYC and AML since 2014
An analysis of the capital invested in RegTech companies according to the area of regulation addressed by their solutions reveals which pieces of legislation appear to be causing the most problems within financial institutions and are thereby deemed to offer the most attractive opportunities for investors.
Just under $10bn was invested in RegTech companies between 2014 and 2018, with 34.5% of this invested in companies providing KYC solutions. AML follows with 28% of the capital invested, GDPR takes third place with 13.1% and MiFID II in fourth place with 6.4% of total investment.
KYC and AML regulations have dominated the RegTech landscape due to their cross-industry applications and heightened expectations from regulators.
China’s regulatory landscape has also been evolving, with the People’s Bank of China paying greater attention to AML initiatives.
Much anticipation and uncertainty surrounded GDPR, which was implemented in late May 2018, given the strict penalties for non-compliance.
BigID provides enterprise protection and data privacy solutions, and the company raised a $14m Series A round in Q1 2018, in the run up to GDPR implantation, then closed a $30m Series B round led by Scale Venture Partners in June 2018.
Basel III, PSD2, Solvency II and AIFMD take 5.4% share of the total investment combined, with ‘other’ legislations accounting for the remaining 12.6%.
The data for this arficle is sourced from the RegTech Analyst platform. More in-depth research, data and analyfics on investments and companies across all RegTech subsectors and regions around the world are available to subscribers of RegTech Analyst at www.RegTechAnalyst.com ©2019 RegTech Analyst