The news: Compliance automation company Strike Graph raised $7 million to expand its certification offerings. The Seattle startup, spun out of Madrona Venture Labs, makes software that helps companies simplify and lower the cost of various certification processes for security and privacy standards.
The software: Strike Graph’s product analyzes a business and identifies areas that need compliance. It uses AI tools to test and evaluate the effectiveness of security practices.
With the new funding, the company aims to introduce new certifications and expand its product capabilities to win over larger customers, CEO Justin Beals told GeekWire.
The founders: Strike Graph was co-founded in 2020 by Beals, a veteran of NextStep, Koru, Roundbox Global, and other startups. He’s joined by co-founder and VP Brian Bero, who previously co-founded Seattle tech stalwart Apptio and sold security startup Greytwist to SmartRIA. The company has about 50 employees.
The demand: Despite a slowdown in enterprise software spend, demand remains “very high” for Strike Graph. Most data breaches result from third-party vendors or from businesses sharing data with other companies, Beals said.
“Even in a difficult economic environment, a product like Strike Graph is tied to revenue, meaning that we’re a requirement for continued operations,” he said.
The company mostly targets businesses that prioritize cybersecurity investments and have committed employees or leadership leading the initiative, Beals said. However, it does work with some early-stage startup clients.
Beals said customer count is in the “hundreds” and has been doubling year-over-year. Customers include WhyLabs, Spiral, and Valid8.
The market opportunity: According to Beal, the non-financial audits and services market raked in about $120 billion in global spend last year, with about $15 billion allocated to software for governance, risk and compliance (GRC) products. He said Strike Graph is the “delta” between the audit and software markets, representing a market opportunity of $100 billion in annual expenditure.
The competition: There are a number of well-funded competitors vying for market share. San Francisco-based software compliance company Vanta has raised more than $200 million and was valued at $1.6 billion; San Diego-based compliance firm Drata raised more than $300 million, and its most recent funding round pushed its valuation to $2 billion.
Strike Graph differentiates because it’s not a “one-size-fits-all” platform, Beals said. Customers can design, operate, and grow their security posture and compliance practices over time. The startup also offers automated assessments and testing around security practices, which is unique to Strike Graph, Beals said.
The funders: The company has raised $18.9 million to date, including $8 million in Series A funding in 2021. Miami-based Bamcap led the latest round, with participation from existing investors Madrona Venture Group and Information Venture Partners. Bamcap Partner Jim Sheward will join Strike Graph’s board.
