The wonky world of regulation is actually a hot spot for fintech investing. Here are 12 compliance startups set to take off.

  • Insider asked more than 30 top fintech investors to nominate the most promising startups.
  • Many VCs highlighted startups in the world of risk and compliance.
  • Here are 12 up-and-coming fintechs looking to offer solutions to wonky regulations and tax rules.

Startup investors are focusing on fintechs that help businesses comply with regulations and tax policies.

Fintech funding has been declining since 2021, but one bright spot has been startups that sell regulatory technology to financial services players. According to KPMG, such “regtech” players had a record 2022, with the value of deals in this space reaching $20.9 billion. Funding was much more muted in the first half of 2023, but cyberattacks and incoming regulatory policies, according to KPMG’s fintech report, will keep regtech in demand.

Point72 Ventures, for example, is considering reopening its checkbook and is considering risk and compliance.

RegTech has always been one of the “more boring plumbing areas of financial services,” according to Tripp Shriner, a partner at Point72 Ventures, in July. “But it’s one of the most important, and I think that’s one of those that still has a lot of room for innovation.”

Insider polled 34 early-stage investors, including Point72 Ventures, Bain Capital Ventures, and Index Ventures, about the hottest fintechs to watch over the summer. Investors identified 54 promising fintechs that had not raised more than a Series C round. A number of venture capitalists highlighted startups in the risk and compliance space.

Here are 12 emerging fintechs that are looking to provide solutions to wacky regulations, tax rules, and risk monitoring.


Index Ventures (investor) is cited.

Total funding amount: $24.3 million

What it does: Anrok provides subscription-based software companies with sales tax software.

Why it’s on the list: “Recent tax code changes have given states the ability to collect sales tax from software companies that sell into their state — even if they don’t have a physical presence there,” said Index Ventures partner Mark Goldberg. “This means SaaS companies are being forced to fit into a 50-year-old mold in the tax code that was created decades before the birth of the internet.”

“Anrok does all the heavy lifting so companies can focus on building businesses not becoming tax experts,” she said.


Referenced by: Team8 (investor)

Total funding amount: $5 million

What it does: Ballerine is an open-source risk decision-making software that assists banks, wealth management firms, and other financial institutions in automating key decisions regarding client verification prior to opening accounts or executing a transaction.

Why it’s on the list: “Compliance is a constantly-evolving complex issue with stringent requirements, making it top of mind for any company handling financial transactions subject to KYB/KYC and other financial risk regulations,” said Hadar Siterman Norris, a Team8 partner. Know Your Customer and Your Business.

“This category of businesses is growing and already includes many eCommerce, marketplace, and SaaS companies in addition to financial institutions and fintechs.” Ballerine’s open-source architecture provides developers and risk managers with a flexible, future-proof compliance infrastructure, allowing them to select risk ‘building blocks,’ design their own workflows, and gain access to a diverse set of data sources on the Ballerine platform.”

Banyan Infrastructure

Cited by:  Energize Capital (investor)

Total funding: $42 million

What it does: Banyan Infrastructure is a financing platform for sustainable and renewable energy projects used by banks, lenders, and asset managers. For these loans, the software automates data ingestion, risk monitoring, and contractual compliance.

Why it’s on the list: “Banyan’s software is purpose-built for sustainable infrastructure, making it better able to address the intricacies and specificities of the space than other generalist financing software on the market,” according to Honour Masters, a senior investment associate at Energize Capital.

“We believe that Banyan’s focus on sustainability, combined with their customers’ loyalty, gives them a competitive advantage over other project finance solutions.” We’re also looking forward to the role Banyan’s software will play in enabling other sectors of the clean energy economy, such as renewable energy, mobility, and decarbonization. “Banyan’s platform effectively sits at the top of the ‘climate tech universe,'” Masters continued.


Cited by: Restive Ventures

Total funding: $16.3 million

What it does: Cable offers automated risk analysis and testing to banks, fintechs, and cryptocurrency companies.

Why it’s on the list: “The extent to which new entrants will build more sophisticated anti-fraud systems is something we find interesting (and an area in which we have invested),” Restive Ventures managing partner Tyler Griffin said. “Doing a better job with risk management also allows financial firms to serve a broader, more diverse group of customers, which is critical to the long-term health of the economy and its participants.”


Cited by: Information Venture Partners

Total Funding: $6.4 million

What it does: Calculum improves businesses’ cash flows by assisting them in selecting suppliers, negotiating payment terms, and assessing the risk of supply chain disruptions.

Why it’s on the list: “Calculum is developing a highly innovative product in the emerging category of supply chain finance technology, helping companies compare their payment terms to benchmarks and help negotiate better terms,” said Jane Podbelskaya, principal at Information Venture Partners. “Its experienced founder has shown great early traction and delivers clear value to current customers.”

Exponential Exchange

Cited by: MaC Venture Capital (investor)

Total funding: $8.8 million

What it does: Exponential Exchange is developing a tradable index for the used-car market, similar to how energy and agriculture futures markets work. Its platform is intended to protect rental car companies, auto insurers, and auto lessors from price fluctuations in their portfolios of used vehicles through derivatives that settle against the startup’s used-vehicle index.

Why it’s on the list: “Rapidly evolving technology, such as the rise of electric vehicles, has increased the volatility of the value of internal combustion engines,” said Marlon Nichols, managing general partner at MaC Venture Capital. “This has left the value of many fleet owners’ collection of assets uncertain — particularly in a market seeing a rise in shared, rented, leased assets, or new subscription models.”

“The company’s platform leverages industry-wide data to establish better underlyings for index futures,” he said. “By focusing on smart markets and incorporating top-tier security achieved through smart contracts, Exponential Exchange is positioned to create the first derivatives market for the automotive industry—a $3.5 trillion opportunity.”


Cited by: Bain Capital Ventures

Total funding: $40 million

What it does: Federato is a platform for risk analysis in the insurance industry.

Why it’s on the list: “The insurance industry is awash with data across policy administration data, existing models, and third-party data sources, but the industry struggles with how to appropriately use and integrate it,” said Sarah Hinkfuss, a partner at Bain Capital Ventures. “Too often, insurers are reactive to losses rather than proactively optimizing risk across the portfolio.”

“Federato’s platform creates a single pane of glass for underwriters to transform risk selection, improving overall profitability and enabling wider product selection,” Hinkfuss said in a press release.


Cited by: Point72 Ventures

Total funding: $6 million

What it does: Footprint is developing an identity-verification platform that helps businesses solve Know Your Customer, identity verification, and personally identifiable information storage problems while giving people more control over their identity data.

Why it’s on the list: “We believe the concept of truly portable/reusable identity is top of mind for KYC leaders and financial services operators, though execution is still in its early stages.” “Through their one-click KYC platform and personally identifiable information data vault, the Footprint team is focusing on enabling frictionless identity verification, and we believe they are providing meaningful benefits to businesses and users alike, offering improved user experience, cost savings, and data controllability,” said Sugam Sarin, a principal at Point72 Ventures.


Cited by: Felicis Ventures

Total funding: $15 million

What it does: Loctax assists businesses in managing global tax compliance.

Why it’s on the list: “Managing risks with tax is difficult enough, but doing so globally is even more difficult,” said Ryan Isono, a deal partner at Felicis Ventures. “Loctax makes it simple for businesses to manage tax risk and remain compliant.” This year, they’ve added more features, making them one of the world’s most advanced tax management platforms.”


Cited by: Anthemis Group

Total funding: $6 million

What it does: Mesh automates business license and certification verification.

Why it’s on the list: “Mesh’s extensive integrations into disparate data sources give them the ability to automate the vast majority of business identity verification, relieving customers of any painstaking manual review processes,” Ruth Foxe Blader, a partner with Anthemis Group, said

“As they continue to grow their network of verified profiles, they’ll be able to enable a one-click verification for previously onboarded businesses, bringing frictionless user experiences that consumers have grown accustomed to the B2B world,” Blader said in a statement.


Cited by: TTV Capital (investor), The Fintech Fund (investor)

Total funding: $9 million

What it does: Themis has created a full suite of compliance software for banks, fintechs, and the businesses with which they collaborate to manage all of their processes digitally.

Why it’s on the list: “Founder Neepa Patel began her career in compliance, first as a regulator at the OCC and then as a chief compliance officer at several banks.” “She decided to quit and build it herself because she was dissatisfied with the terrible tools and software that bank compliance teams had at their disposal to manage difficult, complex, high-risk processes,” said Nik Milanovc, a general partner at The Fintech Fund.

“While documentation is essential for compliance programs, workstreams have traditionally been managed via email and spreadsheets.” “Themis enables compliance teams to collaborate more effectively while maintaining a single source of truth,” said Neil Kapur, a partner at TTV Capital.

This is the 9-page pitch deck that Themis used to raise its $9 million seed funding.

Toggle AI

Cited by: Citi Ventures

Total funding: $16.5 million

What it does: Toggle AI uses artificial intelligence to monitor and analyze market data in real time, assisting investors in identifying investment opportunities and portfolio vulnerabilities.

Why it’s on the list: “Toggle AI is unique in its ability to harness the power of advanced generative-AI tools such as large language models and natural language processing to help investors understand the overall market and investment opportunities so that they can make informed decisions in real time,” said Jelena Zec, vice president of venture investing at Citi Ventures, in a press release.

“For investors, Toggle AI serves as a source of truth, providing real-time and historical data-backed answers to urgent and complex questions.” It’s a clever way to harness the power of data and AI, allowing investors to better understand both investment opportunities and areas for improvement,” Zec said.

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