Arrowroot Capital sees minimal risk in rewarding Sydney-based Protecht with $42m investment

Arrowroot Capital sees minimal risk in rewarding Sydney-based Protecht with $42m investment

Protecht co-founders David Tattam and David Bergmark (provided)

Sydney-based risk management software solutions provider Protecht has secured a $42 million investment from US-based global equity firm Arrowroot Capital to help accelerate its product and growth strategies.

Co-founders David Tattam and David Bergmark have spent more than 20 years building the business after meeting as chartered accountants at PricewaterhouseCoopers in Sydney, and have created innovative solutions for training, advisory and software development in enterprise risk.

The Series A investment will enable Protecht, named after a combination of ‘protect’ and ‘technology’, to increase its global customer base of 300 clients, predominantly financial services companies and government agencies across the APAC, EMEA and North American regions.

“When Dave and I started 20 years ago, risk management was just beginning, whereas now every article you read related to business, there's a lot of discussion around risk and compliance,” Bergmark tells Business News Australia.  

“There’s a real, strong tailwind in this space as well, and we really sought that investment to take advantage of that, to accelerate product features that we know our customers want, from discussions with them.

“The money will be used to accelerate our thinking into the product, and we’ve got Dave [Tattam], he’s a great thought leader in risk and has trained people all over the world, and we’re really looking forward to digitising his thinking in risk management training and bringing that into the product.”

Protecht’s software is designed to help support companies manage its enterprise risk across the business, including identifying key risks, adding mitigating controls, and continually monitoring risks through key-risk indicators and capturing incidents.

Traditionally, risk management has been performed in silos across organisations, with each department focused on its own segregated risk, usually in the form of an excel spreadsheet.

“It’s inefficient, it's ineffective, the board don't get what they want in a consolidated view as they get different reports,” Tattam says.

“Protecht.ERM (enterprise risk and compliance management) is about consolidating that all together so the board gets what they want at a higher level.

“They receive a dashboard covering all the risks of the enterprise that's able to be drilled down so that the coalface get what they want and, the principle we try and aspire to is: one source of truth, multiple uses of the data.”

Although financial services, especially in the US, remains the target sector for Protecht, risk management is now standard practise across many sectors.

Protecht’s approach, regardless of risk type or risk category, allows for integrated, consistent reporting across all departments on a simple web-based platform with workflow rules and analytics, irrespective of industry.  

Tattam still refers to the company as a start-up within a start-up industry, and thinks the industry has taken a lot longer to mature than he initially thought. It is also now far more significant and extensive than he expected too.

Bergmark and Tattam felt the internal and external market forces created a perfect storm in seeking investment, so they were keen to take advantage after running the company frugally for 22 years.

The perfect conditions included strong tailwinds within the industry in terms of demand and regulatory pressure, added to the growing need to further automate manual processes with so many people working from home due to COVID.

When the co-founders started software as a service (Saas) was still in its infancy, but the co-founders' investment in the service has paid off as the technology matured.

“When we talk about being bootstrap for that long, it really does teach you how to manage the books, manage the recruitment pipeline and product pipeline,” Bergmark says.

“Certainly, the guys from Arrowroot said, we’re one of the best-managed buttoned-up companies that they've come across at our size.

“That’s testament to Dave, the board, the executive team - we're a well-run company, and there's a lot of confidence in the investments, so exciting times.”

Bergmark isn’t worried the investment will impact the business’ existing customers and credits the customer success team as maintaining a 97 per cent retention rate.

“Our mission has always been and remains to change the way the world thinks about risk and deploy innovative risk management technology to support excellence in risk management,’ Tattam says.

“This funding and the new partnership will allow us to continue this mission with added vigour.”

Arrowroot Capital has offices in Los Angeles and Miami, focusing on partnering with existing management in minority, majority and buyout investments in B2B (business-to-business) software companies.

Protecht follows several other companies with a physical presence in Australia that has received investment from Arrowroot Capital: FiscalNote (office in Sydney), FluentCommerce (headquartered in Sydney), Hammertech (headquartered in Melbourne) and SnapLogic (office in Sydney).

“Protecht has become a global leader in enterprise risk and compliance management software and is positioned well to help their customers navigate an increasingly complex risk and regulatory environment,” Arrowroot Capital principal Matt Klein said.

“Arrowroot considers ourselves lucky to have the opportunity to partner with the Protecht team, and we are looking forward to supporting the company’s continued growth and international expansion.”

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