US regtech firm Droit raises $23M in a Series B funding round

Droit, a US regtech company, has raised $23 million in a Series B funding round. The funding round was led by Pivot Investment Partners and UBS Next. The company’s existing investors, such as Goldman Sachs, also participated.

Droit raises $23M in a Series B funding round

Droit is a firm that was founded in 2012. The company is mostly used by financial service firms that want to comply with the global regulatory framework. The platform targets companies operating in the capital markets industry.

In the last two years, the company has expanded its workforce by almost 70% and its operations in Singapore. The funds raised in this funding round will support the company’s venture into wealth management by launching new products for the industry.

The company also plans to improve its existing products by integrating new features such as position reporting, transaction reporting, and new cloud-based services. It will expand the existing capital market regulatory automation to expand the use cases.

The chief digital and information officer at UBS, Mike Dargan, commented on this funding saying, “We believe Droit’s capabilities will help companies unlock potential revenue streams by simplifying and driving real-time regulatory compliance.” This funding round comes six years after the company raised $16 million in a Series A funding round.

Droit seeks to boost compliance

Droit is used by some of the largest financial institutions globally that use its Adept platform to make investment decisions before and after they place a trade. The company also claims that its offerings can be used to assess “the full regulatory implications of any given interaction within their transactional infrastructure” promptly.

Droit helps financial institutions to make more informed trading decisions by combining regulatory knowledge in the pre-trade process. The platform considers several critical details, such as whether a certain transaction is permitted according to the regulatory framework of a given market and the internal policies used in that market.

Droit also works on the post-trade phase through reporting and tracking transactions. Therefore, the stakeholders have a chance to make trading decisions depending on the most up-to-date information that they can access. They can validate the same information later by tracing decisions back to the source.

The funding round comes amid an increase in financial compliance spending, which hit $274 billion in 2022, an increase from the $214 billion reported two years ago. The spending accounts for over 5% of the annual budgets spent by financial institutions.

New technologies created to assist financial institutions to meet regulatory demands have sprouted in recent years. Besides Droit, the other company that has expanded its operations into this sector is SteelEye. The company secured $21 million for a cloud-based compliance platform to support regulatory reporting and lower the risk of non-compliance.

Earlier this year, another fintech company, GSS, also secured $45 million in funding. GSS assists banks in monitoring possible sanctions and ensuring there is compliance.