Internet Explorer is not supported by our website. For a more secure experience, please use Chrome, Safari, Firefox, or Edge.
Trending
Michael Brown, Dallin Bills  |  May 23, 2024
Audit and Beyond: The Unbelievably True Story of AuditBoard

Today we are excited to announce that AuditBoard*, a software company specializing in risk-and-compliance software for large enterprises, has entered into an agreement to be acquired by Hg, a global software-and-services investor, for over $3 billion. The last six years of Battery’s partnership with AuditBoard have been, in our view, the ride of a lifetime. Today, we’d like to share some of that story with you—as AuditBoard is in many ways an atypical, venture-backed company.

AuditBoard was founded in 2014 by Daniel Kim and Jay Lee, two childhood best friends who sought to reshape the audit, risk and compliance landscape. Daniel, an auditor by trade, had spent the eight years prior to founding AuditBoard running internal audit teams. But he had grown frustrated with the lack of purpose-built tools for his daily workflow.

Sharing his frustration with his friend Jay, who was working in private equity at the time, they teamed up to launch Soxhub, a tool for managing corporate Sarbanes Oxley compliance. The duo complemented each other perfectly: Daniel was the pensive industry expert who experienced the pain first-hand, while Jay played the role of the outgoing/dynamic sales and business-development lead. Kevin Jhangiani soon joined as CTO, coding the first few lines of the product. For four years, the three wore many hats – running product, finance, customer support, customer success, HR, sales, business development, engineering and more.

In 2017, the team started to see a much bigger opportunity for the company beyond purely Sarbanes Oxley compliance management. This is when Battery entered the picture.

Battery originally invested in AuditBoard in July 2018. In the years leading up to the investment, we ran a project around the emerging market for software for the CFO suite—which is how we initially discovered the company. Software purchased and consumed by chief financial officers (and their respective teams) includes some of the most mission-critical technology platforms that companies use. Yet, we found that the CFO suite was one of the most under-invested areas of enterprise SaaS. The timing felt ripe for software innovation.

Coming across AuditBoard (still called Soxhub at the time), the first challenge for us was figuring out whom to contact. Nobody at the company had the title “CEO” listed on their LinkedIn profile. Jay (head of business development) and Daniel (head of product) were worried that putting “CEO” on their respective LinkedIn pages might scare away some of the Fortune 500 clients they had landed in the early days of the company – accounts that might label AuditBoard as being “too small” at the time to do business with.

Once we tracked down the right company contact, the pain points in this space became clear. Auditors had no purpose-built tool for their daily workflow. They were being left using governance, risk and compliance (GRC) tools that were built for a compliance buyer and needed to be repurposed for the unique needs of auditors. Further, the industry lacked tools to address the idea of ‘connected risk’; instead, companies thought of risk in distinct silos: operational risk, financial risk and supply chain risk. Battery shared Jay’s and Daniel’s vision of a connected risk platform in which controls updated in one functional area flowed through to all of the other groups across the enterprise.

The other key insight that made AuditBoard special was that it was software built by auditors, sold by auditors and consumed by auditors. At the time of our investment, the company was staffed almost entirely by former auditors – from the sales and marketing teams down to the product and customer-success teams. For instance, if a large oil and gas company reached out to learn more about the platform, there would likely be someone internally who had previously led audits with oil and gas companies that could speak directly to how AuditBoard could address their specific needs.

Not long after Battery’s investment, the company rebranded from Soxhub to AuditBoard and started executing on this vision of connected risk. Today, the company boasts over eight product modules that work together as a suite connecting controls and frameworks across audit, risk and compliance teams.

We cannot tell the AuditBoard story without remarking on what we think is its best-in-class efficiency. The company has operated profitably since the day of our initial investment in July 2018 – not ever touching the capital we initially put into the business and instead building up significant cash reserves. The growth, efficiency and scale of AuditBoard far exceeded not only our own expectations, but also those of the founders, Jay and Daniel, who in June 2020 decided to jointly take a step back from running the business in order to bring in a seasoned CEO that could take AuditBoard to new heights. After a thorough CEO search, Scott Arnold was hired as president and CEO.

CEO transitions are always delicate, but we think Scott proved to be the right leader for the company from day one. Over the next four years, Scott has built a stellar executive team. He has led the company to greater than $200M ARR and, we believe, set the foundation for future growth.

Battery is humbled to be AuditBoard’s largest shareholder today and honored to have played a part in the company’s journey. It’s impossible to list everyone here who played crucial parts in the company’s journey, but we want to personally thank Daniel Kim (co-founder & co-chair of the board), Jay Lee (co-founder & co-chair of the board), Kevin Jhangiani (CAO), Josh Harding (CFO), John Reese (CMO), Tom Schmit (CRO), Happy Wang (CTO), Chris Doell (CCO), Rajiv Makhijani (SVP Product), Tina Yeh (SVP Finance/Operations) and Roxanne Oulman (Board Member & Audit Chair). To the rest of the 800+ AuditBoard employees who made this journey possible: AuditBoard would be nothing without you.

We are excited for this new chapter ahead of AuditBoard. We believe Hg brings the stewardship that will continue to build AuditBoard as the defining pillar of the audit, risk and compliance communities. This unbelievably true story of AuditBoard is really just beginning…

 

The information contained herein is based solely on the opinions of Michael Brown and Dallin Bills, and nothing should be construed as investment advice. This material is provided for informational purposes, and it is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by Battery Ventures or any other Battery entity.

This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and is for educational purposes. The anecdotal examples throughout are intended for an audience of entrepreneurs in their attempt to build their businesses and not recommendations or endorsements of any particular business.

*Denotes a Battery portfolio company. For a full list of all Battery investments, please click here.

Back To Blog
Related ARTICLES