Today Denver, CO-based startup Convercent is jumping into the enterprise compliance and regulatory space, launching out of public beta and announcing it has raised $10.2 million in funding from Azure Capital Partners, City National Bank, and existing investor Mantucket Partners. Rather than focusing on employee progress reports like 15Five and other enterprise reporting tools, Convercent is focusing more on compliance and governance, letting employees report issues like financial and auditing concerns, harassment, theft, and other issues, either anonymously or with their name attached.
Convercent founders Patrick Quinlan, Philip Winterburn, and Barclay Friesen formerly worked at compliance software company Rivet Software, and left to start investment firm Nebbiolo Ventures. They decided to start Convercent in March 2012 to build on their experience in the regulatory and compliance space. Rather than start from scratch when it comes to their customer base though, the company has 300 customers right off the bat, thanks to the founders’ investment in Business Controls, a company that provides anonymous hotline services to companies of all sizes.
Quinlan, Convercent’s CEO, said the company is an “ethics and values” platform, and covers the areas of ethics, compliance, governance, and intelligence. The cloud-based platform gives every company a hub where they can upload their ethics and values statements, add training manuals for staff, and receive anonymous reports on issues in the workplace, the idea being that it’s a way to track the tangible impact of a company’s ethics.
“What our focus is is providing companies the ability to manage or understand their employee actions against their stated ethics and values, as well as the compliance/regulatory market,” Quinlan said. “What our core belief is at Convercent is for every minute that a company spends on the good stuff, they save hours on the bad stuff,” he later added.
In terms of who would buy the software, Convercent is targeting primarily compliance officers, chief financial officers, and legal departments. Using the platform, both managers and employees can see courses and training, with managers able to drill down for in-depth reporting on their progress. While they have hundreds of customers at launch thanks to the relationship with Business Controls, Quinlan said they’ll focus on adding new SMB clients in the first half of 2013, then focus on adding enterprise clients later this year.
The company wants to make the platform accessible from any device, and at launch has iOS compatibility, with apps for both employees and managers/compliance officers, and Android compatibility on the way. In terms of pricing, it’s a tiered subscription model, and while they aren’t disclosing the tiers since Quinlan said it varies based on what the company needs, a company of 700 people would be looking at around $15,000 in annual fees. The company already had $1.5 million in seed capital from Nantucket Capital, which they received in August 2012, and today’s funding will be used for scaling out the business and bringing on new clients.
While compliance and governance aren’t typically the most exciting areas of a business, they’re necessary. Just look at the recent example at Square, where COO Keith Rabois resigned last week over sexual harassment allegations. While $15,000 might seem like a hefty price to pay for what can essentially be boiled down to an online employee handbook and ethics statement, that price may be a drop in the bucket compared to the cost of a legal settlement or regulatory fines, which is the value proposition that Convercent will likely be using to sell companies. Whether they can prove to compliance officers that a cloud-based solution is better than their current process remains to be seen, but at least the company has 300 customers right off the bat to prove out the use case.