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Hyperproof, a compliance software provider, today announced that it raised $16.5 million in series A funding led by Toba Capital at a $72.5 million post-money valuation. The company says that it’ll use the new capital to support product R&D and grow its headcount as it looks to expand to new markets.
The need for risk and compliance management solutions is increasing as companies move their operations to digital channels. More than 900 regulatory agencies issued a combined more than 200 regulatory updates every day, on average, in 2017. Unsurprisingly, many enterprises don’t feel equipped to address the challenges from a talent or technology standpoint. According to a survey from The Financial Times Group, 57% of senior-level executives rank “risk and compliance” as one of the top two risk categories they’re least prepared to address.
Hyperproof was founded in 2018 by Craig Unger, whose previous startup — cloud-based automation company Azuqua — was acquired by Okta in 2019. Hyperproof offers a software-as-a-service (SaaS) compliance operations platform that lets customers track and manage organizational risks, such as vendor risks, on a continuous basis. Using collaboration tools and workflows as well as integrations with cloud services like Amazon Web Services, Microsoft Azure, and Google Cloud Platform, team members can leverage Hyperproof to complete tasks like evidence collection, dashboard creation, and reporting for more than 50 frameworks including FedRAMP, SOX, and CSA.
“The pandemic has really underscored the importance of maintaining strong security programs and compliance programs to organizations’ leaders, because it has made a number of risks more prominent and introduced new risks,” Unger told VentureBeat via email. “For instance, as [society] shifted to mass remote work, security teams had to maintain cybersecurity under such a radically different environment and implement new security controls. Moving to remote work meant that compliance work also had to be done remotely. Because Hyperproof supports … collaboration between compliance professionals and business units, compliance professionals found it to be a valuable platform that helped them get their work done efficiently.”
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Applying AI to compliance
Hyperproof supports compliance projects and comes with a risk register and a place for tracking an organization’s vendors and conducting vendor assessments. Using Hyperproof, companies can document risk mitigation plans, map risks to controls and compliance requirements, and review software and technology vendors to assess their compliance and security posture.
“[Hyperproof can map] between different compliance standards and frameworks, so work such as control design, implementing and testing, and evidence gathering can be streamlined as much as possible,” Unger said. “[The platform keeps] people accountable for completing security and compliance tasks, [streamlines] audit preparation and efficiently comply with multiple standards and frameworks, [and] automate[s] evidence collection and testing.”
In the coming months, Hyperproof plans to launch and environmental, social, and governance software product designed to help organizations manage their businesses more sustainably while meeting reporting requirements. Beyond this, the 51-employee startup is investing heavily in automation solutions powered by AI and machine learning technologies.
“Hyperproof is planning to leverage machine learning to help our users automatically identify and flag the overlapping requirements across various compliance frameworks, so they can see areas where they’re already meeting requirements and reuse their compliance artefacts to satisfy new requirements,” Unger said. “[In addition, we] will use [AI] to address an area of compliance that’s really tedious: Gathering [compliance] evidence from different systems to show auditors that internal controls meant to enhance security and mitigate risks were operating correctly and effectively … In 2022, we plan to [tap] machine learning to automatically identify opportunities for our users to set up integrations that will pull in compliance data from third-party systems into Hyperproof.”
In addition, Hyperproof aims to develop algorithms that intelligently scan the content of evidence attached to internal policies set up in a company’s account. The algorithm will review the evidence against a specific user-defined parameter or value range to see if the evidence falls within or outside of that acceptable range. According to Unger, Hyperproof is also exploring machine learning to help users gauge how prepared they are for an upcoming compliance audit. The goal is to analyze user activities like how many policies have been implemented and how many requirements have functioning controls linked to them to generate a preparedness score that’ll be updated in real time.
“We plan to leverage machine learning in our products in several different ways, both to eliminate much of the repetitive work compliance professionals have to deal with today and to surface meaningful risk insights to users so that they can make better, more strategic decisions,” Unger continued. “This will not only save compliance professionals hours every month — it will also provides organizations’ leaders peace of mind knowing that the system automatically detects issues as soon as they occur and alerts the right people.”
Bellevue, Washington-based Hyperproof competes with Vanta, LogicGate, MetricStream, and others in a global enterprise governance, risk, and compliance solutions market that was estimated to be worth $35.1 billion in 2020, according to Grand View Research. But Hyperproof claims it’s on track for 400% year-over-year growth thanks to contracts with clients including Sophos, ForgeRock, AppGate, Fortinet, 3M, and Motorola Solutions.
Existing investors participated in Hyperproof’s latest round, which brings the company’s total raised to $26.5 million. Hyperproof previously closed three seed rounds totaling $10 million.
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