- Laika, a compliance-as-a-service startup, helps fintechs and healthtech companies manage the complex due diligence processes required by enterprise clients.
- Canapi Ventures, a VC firm backed by incumbent banks, led Laika’s $10 million Series A, which the startup will use to build out its platform.
- Compliance is increasingly a day-one consideration for startups as they look to work with legacy players in highly-regulated industries like finance and healthcare.
- Visit Business Insider’s homepage for more stories.
Venture-backed startups have historically been painted as disruptors to legacy institutions. But increasingly, early-stage companies, especially those in fintech and healthtech, are actually building products and platforms for the very institutions they’re supposedly competing against.
For incumbents, working with startups can often prove more efficient and cost effective than building new tech in-house. And for startups, nabbing deals with enterprise customers — like the world’s biggest banks — can mean massive growth.
But winning deals with big companies is more than just a compelling sales pitch, especially in regulated industries like finance and healthcare. The deal isn’t done until due diligence is completed, and that process can take several months to work through.
Laika, a compliance-as-a-service platform, was founded to help startups navigate the complex and time-consuming process of due diligence. Its platform helps startups close deals, enabling them to come to the table prepared to manage the due diligence process.
On Wednesday, Laika announced the closing of a $10 million Series A led by Canapi Ventures, with participation from previous investors Bain Capital Ventures, NYCA Partners, and Third Prime.
Founded in 2019, the New York-based startup has raised $13 million to date.
“Startups never really talked about compliance much. It was always an afterthought after the sale was in process and after the bank required them to fill out long due diligence questionnaires,” Jeffrey Reitman, partner at Canapi Ventures, told Business Insider. “But now more than ever those startups are thinking about compliance first.”
Both Laika and Canapi bring a wealth of experience in startups and banking
Laika’s three cofounders each have experience on both the startup and enterprise sides of the due diligence process.
Two of its founders, Sam Li and Austin Ogilvie, have experience selling software to larger companies at their previous startups. The third cofounder, Eva Pittas, has years of experience leading Citibank’s vendor oversight and due diligence processes. Pittas was also founder and CEO of Fintech BRGC, a consultancy set up to help fintechs navigate complex regulatory requirements.
“It’s very rare that you get a team with this much diversity of expertise coming together to build a company,” Reitman said.
As for the investor leading the round, Canapi Ventures is backed by 11 of the 50 largest US banks, in addition to trade groups like the American Bankers Association.
“We believe there are great opportunities to work with Canapi, which is in a unique position because their LPs are regional banks across the country.” Li said. “Almost all of the vendors to those banks need our solution.”
Currently, Laika primarily serves early-stage startups on the vendor side of the market. But its founders see an opportunity to ultimately start working with the banks too, in an effort to streamline the due diligence process on both sides.
“Eventually, we think there’s an opportunity to collaborate with those financial institutions to create a better way to assess information security overall,” Li said. “We chose this investor very deliberately, and we see synergies in the future.”
Laika’s platform helps startups win big clients
Startups are known for their ‘move fast, break things,’ mentality. So regulation and compliance hasn’t historically been a primary consideration for most founders, Reitman said.
As segments like fintech and healthtech mature, founders have realized that prioritizing compliance is essential to being able to serve larger clients in highly regulated industries. Laika helps startups set up their compliance programs through a Turbo Tax-like platform, guiding them through the typical due-diligence questions asked by big clients. It also offers ongoing support for recurring compliance requirements.
For the startups, being prepared to manage the due diligence process means closing a sale sooner and ensuring that enterprise clients take them seriously.
“We’re seeing more and more companies that are not live yet and still in development of their product that are very seriously thinking about security and privacy controls, and they are coming to Laika earlier,” said Pittas.
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