Convercent In The News

Convercent raises another $10 million – its second round in 8 months

Booming business in compliance technology that reminds employees of financial, government and ethical rules


Who says venture funding is slowing down in Colorado? Not the folks at Denver-based Convercent, which just added another $10 million on Friday — eight months after getting $11 million from the same investors.

The company, which offers online tools to help firms stay in compliance with new regulations, had “an exceptional year” in 2016, said Doug Higgins, managing director at Sapphire Ventures, which first invested in Convercent in October 2013 during the Series B round of $10 million.

“We believe no other company enables enterprises to operationalize ethics and compliance programs with such depth and impact,” Higgins said in a statement. “Many global brands already trust Convercent to power company-wide initiatives. As more companies put ethics and compliance at the top of the corporate agenda, we feel there’s a tremendous opportunity for Convercent to lead the way. 2016 was an exceptional year for Convercent as it responded to market demand. We believe now is the time to invest further to take advantage of this market and fuel more growth.”

Friday’s round was Series D. To date, Convercent has raised $47 million from investors.

Convercent’s technology helps companies keep track of government and financial regulations and corporate ethics policies and help alert employees.

“Wells Fargo was a headline for six months. The CEO was fired. And that was specifically a compliance and ethics problem,” said Patrick Quinlan, Convercent’s CEO, about the national bank’s scandal last fall when it revealed that employees used existing customer data to open millions of new accounts. “There were multiple touch points where the calls came in to the hotline. The information was known by the compliance department but they didn’t tie the dots together. This could have been identified earlier if they were a Convercent customer.”

Companies apparently flocked to services like Convercent’s, which added more clients in the fourth quarter of 2016 than all of 2015. Clients include Airbnb, LinkedIn and Philip Morris International.

Quinlan said his team also was prepared with products and services built since the company started in 2012 with the union of compliance hotline firm Business Controls and Nebbiolo Ventures. But the latest round came a bit unexpectedly, he said.

“We knew we were going to raise money sometime this year and were forecasting for the end of the year. But our existing investors were so excited about the performance that at the first of the year they put a very attractive term sheet on the table so that we could focus on operations” instead of raising money,” he said. “They are certainly rewarding the company for performance.”

In the VC world, it’s unusual to see companies add more funding rounds less than 18 months apart, said Adley Bowden, vice president of market development and analysis with PitchBook, which tracks venture deals. But it does happen when a growth metric is crossed faster than anticipated. The current funding market is also making it a bit easier because money is available.

“Activity is down from the last couple of years but it’s still very robust,” he said. “Good companies have no trouble getting capital right now in this market, especially in the later stages.”

Convercent used the investment — and plans to use the new round — to expand staff and focus on product development. The company has gone from 67 employees in June to 88 today. The company expanded internationally in October with a London office. It expects to be at 100 employees in two weeks and 135 by year’s end with the bulk of its engineers and staff staying put in Denver.

Updated statement by Sapphire Ventures on Feb. 11, 2017.

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