Q1 of 2017 saw total funding to the sector grow 102% Q1-on-Q1. However, the funding total remained below the high reached in Q3 2016 when USD 314 million was committed to regtech companies.
The number of deals also increased in the Q1 of 2017 with 10 more transactions closed compared to the Q1 of 2016. The largest deal went to Netwrix, a compliance startup, which raised USD 51 million Series A round from Updata Partners in February 2017.
In 2016, for the first time anti-fraud companies received larger proportion of regtech investment than compliance-focused firms. The share of funding going to the compliance subsector has been decreasing since 2014. However, compliance-focused investments staged a comeback in the Q1 of the year raking in 59% of regtech investments.
The share of investments to the reporting subsector also saw an uptick in Q1 with 12% after they only comprised 4% of regtech funding in 2016.
London continued to close the highest number of regtech transactions worldwide in Q1 2017. The largest of the 9 deals closed in London in the Q1 of 2017 went to Dealflo, a financial agreement automation service, which raised USD 12.5 million Series B round in February 2017.
A new entry in the top cities ranking is McClean, Virginia. The city is home to anti-fraud companies ID-me and Verato that raised USD 19 million and USD 12.5 million, respectively.
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