Why Canapi is Leading Thoropass' $10M Series A
Vendors are Extensions of Banks and Other Enterprises
Everyone knows that banks are regulated. They always have been, always will be and always should be. But where does the bank start and end? It seems simple on the surface, but what many do not realize is that banks rely on a significant number of third-party vendors to deliver basic and complex services to customers. On average, banks have more than 20K+ vendor relationships .
This is why vendor management and compliance are such critical functions at large financial institutions. Coming out of the 2008 financial crisis, regulatory scrutiny began to extend beyond banks to the companies that supply them. The regulation was clear that while activities and services can be outsourced, responsibility cannot. Banks are liable not only for their own actions, but also for those of their partners. The stakes have only increased as the number of security and data breaches have multiplied over the last decade, costing many large institutions billions of dollars in remediation, fines and lost brand value.
As B2B focused fintech investors, we hear all too often from software companies that vendor onboarding processes are too invasive, resource constraining and time consuming. This extends beyond banks to all large institutions. The time frame is measured in months, not days or weeks. For enterprises, the process is necessary. It helps them control costs and ensure service quality, while simultaneously reducing third-party risk.
We also often hear from enterprises that the process is inefficient. Early-stage technology companies often lack the compliance and security know-how to move through vendor onboarding processes expeditiously. Time is wasted when SOC-2 audits have not been completed and ISO 27001 certifications are not in place.
The Power of the Laika Platform
In a world where regulated enterprises are making technology partnerships a key priority, tools to help streamline proving and maintaining compliance are desperately needed. This is where Laika comes in. Laika is an expert-in-the-loop software platform that helps companies design stage-appropriate compliance policies, controls and procedures and obtain infosec certifications like SOC-2, ISO 27001, PCI and others.
Today, when a technology company undergoes a compliance audit, it is not uncommon for the team to be unfamiliar with the preparation steps. Laika’s solution is a workflow tool that abstracts away the ambiguity and provides companies with industry standard compliance practices.
Laika is collaborative by design and allows teams to designate tasks across team members and share documents with external stakeholders, ensuring that nothing falls through the cracks during vendor onboarding processes. Today, the platform has three key components:
- Laika Playbook – Gives companies turn-by-turn guidance to set up a robust compliance program while allowing for most tasks to be completed directly on Laika. Enables customers to start from scratch and become audit-ready in record time.
- Laika Knowledge Base – Provides a central hub for documentation and relevant compliance objects with third-party integrations. This goes well beyond generic system-of-record tooling. Knowledge Base provides functionality to facilitate key compliance activities such as vendor management and training.
- Laika Dataroom – The Dataroom is a bidirectional hub for sharing compliance information with third parties like auditors or enterprise buyers. With the Dataroom, compliance teams can serve as a catalyst for growth by streamlining deal processes and enabling sales teams who would otherwise get stuck with security questionnaires.
Most importantly, Laika’s vision extends well beyond compliance enablement. The team is already working on workflow tools that can be used to improve the information security audit process itself. Given Laika’s rapid pace of product development, we have full confidence that the team will soon emerge as the connective tissue layer that ties together software companies, enterprise buyers and auditors.
Compliance as a Way to Win
At Canapi, our investment team draws on many years of experience in compliance, regulation and financial services. We understand the situational nuance bound-up with compliance and embrace the vision Sam, Austin and Eva have for Laika as a combined tech-meets-services solution. Tech-enabled services companies create leverage for knowledge workers by building powerful tools that make it possible to deliver white-glove services at scale — think Carta, Justworks, Gusto, Pilot, etc.
Compliance presents a similar opportunity. Laika is systematically automating parts of the compliance workflow to empower information security officers and compliance officers to do more without sacrificing quality. Automation eliminates error prone and painful tasks that far too frequently prevent knowledge workers from focusing on high-value work that only they can do.
Companies on the platform can demonstrate compliance to procurement teams and independent auditors at significantly lower costs. Laika has transformed compliance from a cost-center into a revenue generator by helping customers tighten their sales cycles and winning deals with bigger customers.
At the same time, Laika is helping enterprises adopt new technologies faster and more effectively. Enterprises have already started to embrace Laika as their preferred platform to review and assess vendors, a pattern we expect to repeat as the company continues to scale. For example, several of our bank LPs are looking to Laika to help seamlessly onboard fintech partners and SaaS vendors that too often get stuck in procurement.
Backing the Right Team
Laika’s founding team was a major driver in our investment decision. Austin, Sam and Eva bring an ideal mix of entrepreneurial and compliance experience to the business. The idea for Laika was born out of Sam and Austin’s first-hand experience completing SOC-2 audits and vendor onboarding as founders of Zinc and Yhat (acq. NYSE:AYX). Eva on the other hand, sat at the other side of the table as a Managing Director of Global Risk and Compliance functions at Citi. There she oversaw third-party vendor processes and installed several post-financial crisis compliance initiatives. In that role, Eva realized that many innovative technology companies fail to close enterprise deals due to weak security and organizational controls. This motivated her to launch her own consultancy to help fintech companies solve these exact issues.
When it comes to innovating in compliance, there is no margin for error. Technology customers require the trust of Laika, and we at Canapi know they will be in great hands with Austin, Sam and Eva and the rest of the team.
At Canapi, we have known and supported the Laika team for many years already, which is why we couldn’t be more excited to formalize this relationship by leading Laika’s $10M Series A. We look forward to working with them and existing investors, Third Prime, Bain and Nyca to make compliance a way to win!
 Managing third-party risk in a changing regulatory environment, McKinsey & Company.