Robert Ambrogi Blog
SingleFile, a company that aims to automate outdated corporate compliance filing processes by leveraging AI technology, has raised $6.5 million, on top of three previous funding rounds totaling $8.6 million, bringing its total funding to date to $15.1 million.
Led by the VC firm Foundry Group, this round, an extension of the company’s seed round, included participation from all of the company’s prior investors in its three seed rounds, as well as by two new investors, The LegalTech Fund and Underdog Labs.
Other prior investors included Pioneer Square Labs; the law firms Wilson Sonsini, Perkins Coie, Fenwick & West, DLA Piper, and Cooley; and individual lawyers from the firm K&L Gates.
The company, which spun out of Pioneer Square Labs’ Seattle incubator in 2019, serves law firms, corporations and investor firms with a digital platform for filing and tracking annual reports and other state-required filings. It also offers entity management and resident agent services.
The publication GeekWire recently named the company one of five finalists for its Startup of the Year award.
While the company has seen steady growth over the past couple years, CEO Aaron Finn told me in an interview yesterday, new beneficial ownership filing requirements that took effect this year under the Corporate Transparency Act (CTA) have helped the company’s business pipeline “blow up.”
With an estimated 32 million businesses subject to the law, the company offers a CTA filing and monitoring service. Finn said that a number of states are already considering enacting their own versions of the CTA, which will further complicate compliance.
CTA Driving New Business
The original idea for the company was to bring on companies as customers at their birth and then expand with them as their needs expand, handling their filing services, serving as their registered agent, and working on their annual reports and other required documents, Finn said.
But as the company researched and spoke to law firms about the CTA and realized the compliance challenges it potentially posed for businesses, and the market opportunity that presented, it decided it needed to develop a product focused on that.
With the addition of its CTA filing and monitoring service, that means that, on a single platform, the law firm can do the entity formation, the company can do the filings and other compliance work it needs to do, and the beneficial owners can provide the information required of them.
“So the whole thesis of our company is that modern technology can help take the manual paperwork burden out of this industry,” Finn said, “And we’re seeing it really blossom with CTA combined with filing and registered agent services.”
As important as the CTA filing will be for the businesses covered by this law, an estimated 45% of them are going to have to report changes in beneficial ownership throughout the year — changes that must be reported within 30 days. “We think the real work is going to come in monitoring those changes,” Finn said.
“If you don’t have a system of record where all of your information is being looked at in one place — like the filing work, the amendments, ownership changes, percentage ownership changes, officer and director changes, the expiration date of a driver’s license that you gave the Treasury Department — if you don’t have all that into one place, how are you going to be able to monitor the change part of this for that 30 day requirement?”
Even as the SingleFile platform allows companies to monitor its filings and related information, it also allows law firms to see activity by the entities that they represent and ensure that they are meeting all requirements, without the firm having to email the client or check with the state secretary’s office.
The Stripe of Compliance
Finn said that roughly half of SingleFile’s business comes from law firms and half from corporate legal departments, with several private equity, venture capital and real estate investment firms also customers.
With this new round of funding, SingleFile will focus on building out new products, improving its existing interface, and hiring sales, marketing and other employees, Finn said. The company currently employs just under 30 people.
Competitively, SingleFile positions itself against traditional companies in the registered agent and legal filing industry, such as CT Corporation, owned by Wolters Kluwer, and and CSC Global, as well as against newer CTA compliance solutions. SingleFile’s cloud-native infrastructure differentiates it from competitors, Finn said, by offering a seamless, integrated platform for managing various compliance and legal processes.
Referencing the challenges companies face in complying with jurisdictional differences in filing requirements, Finn said, “I believe there’s an opportunity for SingleFile to really become the sort of Stripe of compliance — to have that all programmed to be able to take company information and pass it to the government, the jurisdiction that needs it, at the time they need it, without having to have a lot of humans involved in that process.”