Governance, risk, and compliance (GRC) is a category so unsexy that it’s been largely been ignored by the last two decades of software revolution. Fortunately, sex appeal is in no way a prerequisite for a massive market opportunity. In fact, it can often be the inverse, as the glamour of an industry attracts competition. But finding and capitalizing on these greenfield opportunities is easier said than done.
Denver-based Convercent is no stranger to this fact, having launched in January of this year with a new cloud-based solution aimed at dragging GRC into the modern era. Today, the company is announcing $10 million of Series B funding led by SAP ventures, bringing its total capitalization to more than $25 million in the last 10 months. The ugly duckling is becoming a swan.
Also participating in the B round are early backers Azure Capital, Rho Capital Partners, and Mantucket Capital, while City National Bank increased Convercent’s existing debt facility. SAP Ventures Managing Director Doug Higgins will join the company’s board of directors.
Convercent’s founders, Patrick Quinlan (CEO), Philip Winterburn (CPO), and Barclay Friesen (COO), are plenty comfortable with unpopular categories, having previously built and sold accounting regulatory and compliance software company Rivet Software previously. So for a second act, the trio identified the GRC opportunity and acquired a bootstrapped profitable fraud investigation anonymous hotline company as the foundation on which to build Convercent.
Under this new leadership, the company has quickly grown the company from 10 to 73 full-time employees and amassed 374 customers – many of which carried over from the acquired hotline business – and more than 1 million total users. The company also supports more than 50 languages.
Enterprises and SMBs have long spent billions of dollars annually on GRC software that was more focused on managing the negative – sexual harassment, fraud, etc. – than promoting good behavior. In fact, the company’s newest investor SAP has been a prominent seller of such legacy solutions. Convercent takes the very opposite approach, by incorporating business intelligence, social collaboration, and employee education around a company’s internal policies and federal regulations.
“We empower companies to be proactive in their approach to communicating their values to employees, mitigating risks, saving costs and creating thriving environments,” Quinlan told me at the time of their January Series A round.
The company still allows compliance departments to track incidences of ethics violations, environmental issues, safety violations, and the like. But it does so through a set of modern – read, aesthetically pleasing and intelligent – Web dashboards and accompanying mobile apps. Where the company takes this a step further is by simplifying the act of managing and distributing key corporate materials like employee handbooks, codes of conduct, and continuing education course materials using the same platforms.
With a swanky new 21,000 square foot office, a growing roster of employees, and now piles of venture cash, it’s little surprise that Convercent is becoming one of the darlings of the emerging Denver technology ecosystem. Mayor Mike Hancock even gave the company near-interest free financing for the construction of its new space.
The kind of growth that Quinlan and his team have demonstrated to date means that it’s likely of little consequence to the Rocky Mountain tech community or to the company’s backers that Concercent is tackling an “unsexy space.” Rather, the fact that the company is innovating in a category desperately in need of this modernizing but little competing innovation is directly responsible for its rapid growth to date.
It’s the very early innings for Convercent, as 374 customers is barely a dent in this massive market opportunity. The company still needs to prove that it can move up the food chain from small and medium sized businesses to the kinds of large, multinational enterprise customers that heavily-regulated industries like financial services and healthcare are notorious for. But it’s off to a strong start.
Quinlan and his team have shown themselves adept at capitalizing on unsexy opportunities in the past. But as the saying goes, once you’re lucky, twice you’re good. At the pace Convercent’s grown, we may know sooner than later into which bucket they belong.