Exterro Inc., a maker of data risk and compliance software, is expected to announce a new round of investor financing on Monday that will boost its market value above $1 billion, a milestone that makes the 14-year-old company ponder a public market debut. as early as 2023, company officials said.
The latest round of funding brings in a group of new institutional investors led together by Coller Capital and Glendower Capital. The terms have not been disclosed.
Until four years ago, Exterro was running solely on its own income, with no investor financing, said Chief Executive Bobby Balachandran. Leeds Equity Partners, the company’s first outside investor, came on board in 2018.
“We’re getting ready for an IPO, and this is a time to really build and grow, even as everyone tries to slow down,” said Mr. Balachandran.
Exterro’s cloud-based software is used by corporate legal departments and information technology teams in data management, risk and compliance efforts. The platform is designed to help companies ensure growing stocks of data are stored securely and compliant with industry and government regulations for privacy, security, forensics, and more.
Those efforts have been fueled in recent years by companies’ insatiable appetite for data collected everywhere from sales, marketing reach, customer emails, manufacturing processes, weather reports, and countless other sources.
The drive for more data is fueled in part by the rapid spread of digital tools across operations, but also by the availability of nearly unlimited data storage in the cloud, industry analysts say. A growing number of companies are also feeding massive datasets into artificial intelligence algorithms, hoping to extract insights and guide business decisions.
“Data is the most powerful asset of any organization,” says Mr. Balachandran. “Without it, you’re flying blind.”
Mr Balachandran, who founded the Portland, Oregon-based company in 2008, said the injection of new capital – which he termed a “pre-IPO round” – will boost growth through acquisitions and continued expansion. on the world markets. Exterro has more than 3,000 global customers, the company said.
Exterro’s recent growth reflects growing demand for data risk and compliance capabilities, which increased as companies moved to remote working and collaboration apps during the Covid-19 pandemic.
“In late 2020 and early 2021, we saw a massive shift from on-premises to software-as-a-service implementations for governance, risk and compliance,” said Alla Valente, senior analyst at IT research firm Forrester Inc. in addition to risk and compliance processes, agility and business resilience became paramount,” said Ms Valente.
According to research firm International Data Corp., the global governance, risk and compliance software market will reach $15.2 billion in 2025, up from $11.3 billion in 2020.
Amy Cravens, a research executive who oversees governance, risk and compliance technology in IDC’s security and trust group, said the market is growing rapidly “because risk is growing so fast.”
She mentions not only the risks of cyber-attacks, but also of third-party vendors and service providers’ access to corporate data. There are also sweeping new laws aimed at protecting consumer data, such as the European General Data Protection Regulation. “The magnitude of the risks and potential consequences continue to expand at a rapid pace,” said Ms Cravens.
According to Gartner, global companies will spend an estimated $6.3 billion on risk management software this year, an increase of 11.6% from 2021. Inc.,
an IT research and consultancy firm. That includes software tools designed for data risk and control assessments and documentation, incident management, risk mitigation, risk reporting and monitoring and analysis, among other apps.
Exterro and other risk and compliance providers are increasingly using artificial intelligence and machine learning to automate repetitive and manual data entry tasks. “For highly regulated industries such as banking, financial services and insurance or pharmaceuticals, automation of this process can be beneficial,” said Elizabeth Kim, principal analyst at Gartner.
In the past, Mr Balachandran said, most companies handled data governance, risk and compliance through a mix of competing services and applications that did not always work together. That created digital silos, creating risky data security holes and other vulnerabilities, he said.
Exterro wanted to solve that problem, he said, by developing a more holistic platform that not only links software tools with data risk within a single system, but also acts as a bridge between legal departments and IT, “under the supervision of CIOs”.
Write to Angus Lots at angus.loten@wsj.com
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