Xapien raises USD $56 million to fuel US expansion

Xapien has raised USD $56 million in a funding round led by Spectrum Equity, which it will use to expand globally.

Existing investor YFM Equity Partners also participated. Part of the funding will support a larger presence in the United States, where Xapien already generates half of its revenue.

The Boston-based due diligence software company sells tools that help organisations assess third-party risk across suppliers, customers and other counterparties. Many businesses still rely on manual checks at onboarding, leaving large parts of their networks outside regular scrutiny.

Xapien said its annual recurring revenue has grown by more than 350% over the past 24 months. It added that 350 clients and partners in 15 countries use its platform, including multinational corporations, law firms, private banks, universities, nonprofits and professional services firms.

The company was founded in 2018 by Dan Secretan and Shaun O'Mahony. Chris Green joined as Chief Executive Officer in 2022. All three previously worked in BAE Systems' financial crime and national security divisions.

US expansion

The funding will support an expanded US operation through Xapien's Boston office. Green and other senior leaders will relocate as the company builds out its American presence.

The move reflects the market's importance to the business. Despite Xapien's UK origins, the US already accounts for 50% of its revenue, and the company sees further room for growth among compliance, legal and procurement teams there.

The broader market opportunity centres on the challenge of monitoring business relationships at scale. Xapien pointed to conditions in which organisations often lack the budget or staff time to review more than a portion of their counterparties, creating what it described as blind spots in risk coverage.

The platform draws on open web sources, corporate records, sanctions lists and media reports in multiple languages, then produces a sourced report for users. Xapien said clients report that 90% of onboarding cases can be fully automated, leaving analyst teams to focus on more complex work.

It is also testing a product called Xapien Live, designed to give companies continuous oversight of counterparty risk rather than relying on periodic checks. The product reflects a wider push in compliance technology towards ongoing surveillance rather than static reviews.

"Third-party due diligence has remained stubbornly manual for twenty years," said Chris Green, Chief Executive Officer of Xapien.

"Hence, businesses have had to ration their scrutiny to a subset of relationships with one-off checks at the point of onboarding, leaving them massively exposed. This funding lets Xapien pursue its mission to give compliance, legal, and procurement teams full visibility on every counterparty, all the time, giving organizations the confidence to move at speed," Green said.

Investor view

Spectrum Equity specialises in growth investments in software, artificial intelligence and data companies. The firm said its previous work in risk and compliance technology includes investments linked to businesses such as World-Check and Verafin.

For Spectrum, the deal adds another company in a sector where regulatory pressure, reputational risk and more complex supply chains have pushed businesses to review how they vet third parties. Due diligence has become a bigger operational issue for banks, law firms and major corporates, particularly when they operate across multiple jurisdictions.

"Xapien represents a rare opportunity for Spectrum to back a team with deep domain expertise that has been laser focused on harnessing innovative AI technology to transform and automate enhanced due diligence. Xapien is fast emerging as a new standard for counterparty risk management, and we are excited to support Chris, Dan and Shaun in this next stage of growth," said Adam Margolin, Managing Director of Spectrum Equity.

Xapien's customer list includes Greenberg Traurig, ABB, Dow Jones Risk & Compliance and KPMG. It also works with leading professional services firms through automation partnerships.

One customer pointed to the pressure on compliance teams to balance the depth of research with the speed of commercial decision-making.

"For too long, compliance teams have had to choose between the depth of their research and the speed at which they need to act. Xapien shows that automation can deliver both, helping organizations conduct rigorous due diligence more efficiently and make faster, smarter risk-based decisions," said Joel Lange, Executive Vice President & General Manager, Risk and Enterprise, Dow Jones.