Manhattan Beach-based private equity firm K1 Investment Management has made a $120 million investment in New York-based Compliance Science Inc., a fast-growing fintech in the regulatory technology space.

The company, operating as ComplySci, is a developer of regulatory and employee compliance software for wealth management firms and other financial services enterprises.

ComplySci’s software is used to identify and mitigate employee regulatory and compliance risks. The company serves broker-dealers, registered investment advisers, hedge funds, private equity firms, investment advisers, venture capital firms and other businesses across the financial services sector.
The K1 investment will support Comply-Sci’s expansion efforts with its 1,400 customers.

ComplySci is considered a regtech company. These businesses manage regulatory processes within the financial industry through technology. The main functions of regtech include regulatory monitoring, reporting and compliance.
They also are known to use cloud computing technology through software-as-a-service, or SaaS, to help businesses comply with regulations efficiently and inexpensively.

Competitors in the regtech niche include Brookfield, Wisc.-based Fiserv Inc.; Austin, Texas-based Abrigo Inc.; and Atlanta-based Riskalyze Inc.

“With K1 as our partner, ComplySci looks forward to continuing to build out our products and services, and to driving additional growth through acquisitions,” ComplySci Chief Executive Amy Kadomatsu said in a statement.

“This investment underscores the enormous momentum that ComplySci has generated as the leading provider of innovative technology-driven employee compliance solutions across the financial services sector,” she added.

ComplySci plans to leverage K1’s investment to build out its platform. These include processes to verify political contributions, compliance program management and recently launched products to track employee activities to identify potential conflicts of interest and market abuse.

Existing investors will retain their stakes in ComplySci following K1’s investment. The company did not identify other investors.
 
K1’s ComplySci investment and other partnerships with enterprise software providers, including Smarsh Inc., Digital Reasoning, Entreda Inc. and FMG Suite, will drive “substantial growth in the wealth management space,” according to the private equity firm.  

K1 said strong expansion opportunities exist for ComplySci.
K1 has invested more than $1.4 billion in 150 enterprise software companies, according to the firm’s website.

In May, the Business Journal reported that K1 was making plans to raise nearly $4 billion for its fifth software flagship fund. The raise, K1’s biggest to date, is more than twice as large as the firm’s previous fund three years ago.  The new fund, K5 Private Investors, came to light in late April.