Hyperproof, a company specializing in software-as-a-service for risk and compliance management, has announced it successfully raised $40 million in a funding round led by Riverwood Capital, with participation from Toba Capital, an early-stage venture capital firm.
This funding round marks a significant milestone for Hyperproof, bringing its total funding to $66.5 million and doubling its valuation in just nine months, according to co-founder and CEO Craig Unger.
Unger emphasized the increasing importance of compliance services as regulatory agencies continue to pass new laws and establish compliance standards, even amid economic challenges. He noted that the compliance industry remains resilient and attractive to investors due to this heightened regulatory environment.
The corporate sector has shown growing interest in compliance-as-a-service solutions, particularly in response to new data privacy regulations. In 2023, at least 25 U.S. states and Puerto Rico introduced or considered approximately 140 consumer privacy bills. Additionally, the EU implemented the Cybersecurity Act, imposing stricter requirements on businesses handling private data, while the U.S. Securities and Exchange Commission introduced new regulatory disclosure rules.
However, many enterprises face obstacles in building a culture of compliance due to the increasing complexity of regulatory changes. In a survey by Deloitte, 61% of internal compliance teams reported that recent regulatory changes had negatively impacted their ability to perform effectively.
Craig Unger’s inspiration for founding Hyperproof stemmed from his experience with disruptive audits that disrupted product development efforts at Microsoft, where he previously worked. He encountered similar compliance challenges at Azuqua, a small cloud integration and workflow startup he co-founded.
In 2018, Unger launched Hyperproof to simplify compliance efforts. The company offers a system of record for compliance data combined with collaboration and work management tools. Hyperproof aims to automate non-strategic compliance tasks for approximately 85 compliance and governance frameworks, including FedRAMP, the U.S. federal government-wide compliance program for cloud services and products.
Hyperproof also provides various software modules to support different aspects of risk and compliance management, including risk monitoring, compliance operations, audit management, and vendor risk management. The platform integrates with popular platforms like AWS, Google Cloud, GitHub, and task management apps like Jira, Asana, and ServiceNow. It leverages heuristics and AI to streamline compliance and risk workflows, saving teams time and money.
Despite competition in the compliance software market, Hyperproof has seen substantial growth. The company’s customer base has grown by 130% in the past year, driving a 260% year-over-year increase in revenue. Hyperproof’s clientele includes prominent companies such as Motorola, Nutanix, and 3M.
The recent funding will be used to expand Hyperproof’s platform, grow its team of 100 employees, and focus on product development, customer success, marketing, and engineering. The company also plans to expand its market presence into new verticals and regions while strengthening its partnerships.
