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Compliance isn’t just a growth industry, it’s “recession proof,” according to Hyperproof CEO Craig Unger, and it’s a segment of the business world that has yet to invest in technology.

Those are just a few of the reasons why the former Azuqua co-founder and chief technology officer has now raised $3 million for Hyperproof, a Bellevue, Wash.-based software-as-a-service startup that wants to bring the same ideas that Salesforce used to transform a generation of sales management practices to compliance. Unger raised $2 million last year for Hyperproof and just added another $1 million from seed investors, he said in a recent interview with GeekWire.

“We’re effectively creating a system of record for all of your compliance activities,” said Unger, whose previous startup sold to Okta for $52.5 million in March. Unger left Azuqua last year to start building Hyperproof.

Thanks to new regulations such as Europe’s GDPR and California’s privacy law, as well as the growing wariness of Big Tech that has led several Democratic presidential candidates to campaign on the idea of stricter tech regulations, compliance is a booming area of technology investment. There is simply a lot of work required to verify and document how a company’s technology products and services comply with a growing list of regulations, and right now most of that work is done by people, Unger said.

“That is the first great sign that technology really isn’t being deployed in a way that’s tackling the problem,” he said. Hyperproof wants to automate and simplify compliance work, drawing inspiration from Salesforce and Microsoft’s Dynamics business-intelligence software, which Unger ran for several years before co-founding Azuqua in 2013.

Craig Unger, founder and CEO, Hyperproof, with peacock. (Hyperproof Photo)

“When you go into an organization today, half the organization has some touch into a CRM tool” like Salesforce, Unger said. “We think that’s going to happen with compliance,” he said, where people across different departments in an organization like technology, finance, and marketing will need to use a compliance tool as part of their day-to-day activity.

Hyperproof’s service, which is expected to arrive as a preview this summer, was designed with collaboration in mind, Unger said. Customers will be able to define the controls needed to ensure compliance in their respective industries, and given that there is a lot of overlap in compliance requirements, Hyperproof will allow different departments to reuse some controls that colleagues have already established.

Unger also wants to make sure that professional auditors — like the Big Four — can use Hyperproof as part of their workflow. Large public companies that use firms like EY to sign off on various aspects of their business might not be the initial customers, but professional auditors will be a huge part of compliance activity as it grows.

When GeekWire first learned about Hyperproof last year, Unger hinted that blockchain technology and machine-learning algorithms would be a big part of the company’s product, but in this first iteration the company is concentrating solely on using machine learning to improve the effectiveness of the controls, he said.

Hyperproof dashboard
An early look at Hyperproof’s SaaS compliance tool. (Hyperproof Image)

“We don’t profess (to be) and nor do we want to be a blockchain company, but we will use blockchain where it makes sense,” Unger said. Blockchain is especially tempting for compliance because, by design, it creates a “tamper-proof” record, but “there are other strategies as well” for making sure the product leaves a full audit trail of compliance activity.

Hyperproof now has 14 employees, with the 15th employee starting very soon, Unger said. The company will likely raise a new round of funding later this year after getting the initial product out in front of advisers and preview customers, and recently hired Matthew Lehto as chief growth officer.

It’s not the only Seattle-area company eyeing this growing business. Integris is growing strongly after launching in 2016 to tackle some of these issues, and Shujinko launched out of Pioneer Square Labs last year with a similar mission in mind. And Portland’s Antiam recently decided to transform a 20-year-old consulting services company into a compliance vendor after an endorsement of its technology from Amazon Web Services.

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