With new compliance requirements looming for already jumpy banks, startup software developer Strevus has raised $5.6 million for its risk and compliance service.
The company raised its first institutional round from lead investor Blumberg Capital and U.S. Venture Partners after picking up seed investments from a who’s who of the technology community, including BlackBerry CEO John Chen; Ken Goldman, the Yahoo CFO; and former Oracle CMO Terry Garnett.
“The world has changed quite a bit with the financial service meltdown, and regulatory compliance is the resulting fact in today’s world,” said Strevus Chief Executive Ken Hoang in an interview.
Think of Strevus as a monitored and managed networking tool to ensure compliance with new and existing regulations for financial services firms that are going to start taking effect this year.
“Compliance is not a competitive advantage today. The government is picking off [financial services firms] institution by institution,” Hoang said.
The first market that Strevus is looking to address within the alphabet soup of new and updated compliance requirements being issued by the federal government is the Foreign Account Tax Compliance Act.
FATCA targets tax evaders in the U.S. who aren’t properly reporting overseas financial accounts, and foreign financial institutions who bank for U.S. taxpayers or foreign entities in which U.S. taxpayers hold a majority stake, according to the IRS’s website.
San Francisco-based Strevus is currently working with a handful of banks on its managed platform, which operates as a networking tool and an industry Rolodex — as well as a compliance offering. “It’s similar to Box with a LinkedIn functionality,” said Hoang. “We’re enabling customers to reach out to others and bring their data in.”
Strevus will sell its service to both buy-side and sell-side firms. On the buy side, the company is targeting banks and financial services firms with assets ranging from $250 million to $1 billion. On the sell side the customer base is the top 20 banks, said Hoang.
A subscription to the Strevus service costs a sell-side customer starting at $100,000, according to Hoang.
Photo via Flickr user Bloomsberries.