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Sigma announces Series A round for growth

Firms rely on risk intelligence platforms to protect against regulatory and geopolitical-related risks

  • Rajeeb Gurung
  • September 13, 2022
  • 3 minutes

Risk intelligence platform Sigma Ratings has announced a Series A investment round to support its growth strategy and scale its intelligent relationship risk management capabilities.

Venture capital firm, Mosaik Partners, is leading the round, with participation from existing investors FinTech Collective and Contour Ventures as well as new investor AngelList Ventures. They will be joining existing shareholders Fitch Ratings and Barclays.

Sigma is a risk intelligence platform that uses AI and machine learning to collect public and proprietary risk data to help firms evaluate risk and monitor perpetual clients.

The team intends to use the funding to expand its commercial functions and invest in additional product and engineering expertise to strengthen its risk and compliance software platform.

According to Stuart Jones Jr, founder and CEO of Sigma, the fintech seeks to provide more efficient solutions to evaluate customer and third-party risks to manage potential downside risks whilst expanding relationships.

“Our platform answers that need through enriched global data, intelligent and configurable workflows and innovative technical applications that simply outperform legacy approaches,” Jones said.

As part of the agreement, John Katzenmerey, partner at Mosaik Partners, will join Sigma’s board of directors.

Firms spend on regtech solutions to avert risks

Sigma’s expansion plan comes at a time when firms are turning to technology to evaluate and protect themselves against increasing regulatory, financial, geopolitical, and environmental risks.

According to a LexisNexis Risk Solutions study, the global spending on financial crime compliance at financial institutions reached $213.9 billion in 2021, surpassing the $180.9 billion milestone in 2020.

A 2022 survey by London-headquartered regtech company, SteelEye, found that 44% of the respondents expect to spend more in regtech in the next 12 months, with another 41% expecting to invest the same amount as before.

In August, Deutsche Bank-owned fintech company, Breaking Wave, tapped legal and compliance technology group Relativity’s AI-powered communication surveillance product, Relativity Trace, to strengthen its compliance and regulatory resources.

In the ESG monitoring space, JP Morgan partnered with London-headquartered ESG risk management platform, Datamaran, in September, to power the financial firm’s new digital platform, ESG Discovery. JP Morgan intends to leverage the partnership to deliver timely information on material ESG risks and opportunities to investors.

Risk intelligence technology providers attract investments

The increasing demand for risk monitoring and compliance solutions among financial firms has provided technology providers with an auspicious environment to thrive.

In the EMEA region, KPMG’s recent findings showed that regtech companies attracted $5.6bn in  investments in the first half of 2022, similar to their 2021 trajectory. Regtech seemed to buck the trend, in contrast to the near threefold drop in overall fintech investments in the first of 2022.

Analysing the strong interest in regtech investments, John Hallsworth, the client lead partner for banking and fintech at KPMG UK said, “In the wake of the conflict in Ukraine, there has been strong interest in anti-money laundering applications as banks seek to comply with sanctions, embargos and other regulatory measures.”

In the first week of September, risk detection solution provider SteelEye joined the ranks of regtechs winning investment this year, raising $21 million in Series B to fund its global expansion plans.

Today, US ESG performance and risk management software company, Sphera, also announced the acquisition of German supply chain risk intelligence group, riskmethods.