Is RegTech the new FinTech? At least the number of startups that are tackling the processes in Regulation with the help of Techtechnology. One of these startups is alyne.
Founded in 2015, the company makes technology risk management more cost-effective and, above all, simpler for highly regulated industries such as the financial sector.
The focus here is on topics such as cyber risks, data protection and compliance for corporations and medium-sized companies. According to a study to around 35 billion euros.
At a glance, with one click
Software as a Service (SaaS) solutions, for example, help a German bank simultaneously check whether several dozen IT suppliers comply with cybersecurity and data protection regulations. The process is automated via the platform. It is scalable and intuitive to use, eliminating the need for the bank to maintain and compare hundreds of Excel spreadsheets.
Winning customers in a highly competitive market
However, alyne's competition is large and established. However, the founder Stefan Sulistyo:
"Many customers are extremely dissatisfied with existing software solutions because they are very difficult to use. The increasing demand for usability plays into our hands. Because that's our unique selling point; we're the first on the market."
Of course, sales is one of the biggest challenges for the young company. It's a long road to finding the right contact person within corporations—be it a data protection officer, security officer, or risk manager. The founders leverage their extensive network for this.
Several (sales) paths lead to the goal
The four-person founding team met more than ten years ago as employees at a large consulting firm. Their paths crossed repeatedly. One of their former employers is now both a client and a partner of the startup.
"The partner model is efficient because the consulting firm draws on existing client contacts and can provide us with access to customers worldwide. We have already implemented our system with several companies in Australia."
explains Sulistyo.
In addition, alyne successfully engages in content marketing. Sulistyo has already acquired several customers through its own blog and other articles. The most convincing was a type of 'Guide to the first 100 days in the role of an IT security officer'. This is where the readers found themselves and, after testing the functionalities in the test access, they stayed with the startup.
Anyone interested in alyne can get started immediately from day one. For comparison, Sulistyo offers an assessment:
"We know companies that took two years to implement a new system and wasted two to three million euros in the process – and in the end, the projects failed."
The limiting factor, however, is the employees who have to make time for testing.
First financing round in sight
Speaking of employees: This is where the RegTech startup is planning to make some changes soon. In order to scale and further advance sales and product development, the four founders are currently in the middle of their first financing round. Initial discussions took place through personal contacts in spring 2016, but alyne was still just entering the market. It was far too early for an investment round.
“But it was still good to sharpen certain areas and find out what an investor actually wants to see,”
says Sulistyo. The ongoing exchange with investors has intensified in recent months. And now?
"Now we have a situation where some investors are very specifically interested in us. We're moving forward quickly. On the one hand, that's great, but on the other hand, it's a challenge to keep all the balls in the air."
adds the founder. After all, day-to-day business must continue to run alongside investor discussions.
Bootstrapping – and no salary
So far, the startup is entirely self-financed. The four founders haven't even paid themselves a salary yet. However, the initial investment has already been covered by monthly revenue, and several more high-revenue contracts are within reach.
The so-called sweat investment
However, the biggest investment currently is the time the founding team is putting into business development. In mid-2015, the founders quit their jobs and have been without a steady income ever since—not an easy feat in Munich, especially since two of the founders have children.
What motivates someone to start a business under these circumstances? First, the conviction that they can create real added value with a good product. Second, the desire to create something of their own.
“If we don’t do it now, we’ll never do it,” The founders agreed. All four have known each other for so long that they know what they have in common. And the team constellation also seems to have impressed in investor discussions.
Accelerator as a springboard
Also helpful is the recording of alyne in the London Techstars AcceleratorThe network of the renowned fintech accelerator is intended, among other things, to help companies gain a stronger foothold in the UK market. Participation also brings international attention.
A VC from Silicon Valley is calling, says Sulistyo. Even though it's still far too early, it's helpful in the long run to get the contacts. The first round of financing will hopefully be successfully completed soon, but the four founders are far from resting on their laurels.
