Danish RegTech Firm Formalize Secures €30 Million in Series B Funding

Formalize raised €30 million in Series B funding to expand across Germany, France, and Switzerland, targeting small and mid-sized businesses scrambling to formalize compliance ahead of tightening EU enforcement deadlines. Acton Capital and BlackFin Tech led the round, which will fund AI-powered automation tools and a sales push into markets where NIS2 and DORA regulations take full effect in 2025 and 2026.

The Danish RegTech firm plans to double its 160-person team within 18 months and open offices in Munich and Paris by mid-2026. CEO Jakob Lilholm said demand has accelerated sharply since NIS2 compliance deadlines hit in October 2024, with customer acquisition up 40 percent quarter-over-quarter.

Funding Comes as EU Regulations Tighten

The timing reflects mounting pressure on European companies to formalize governance processes. NIS2 cybersecurity rules now cover 18 sectors including finance, healthcare, and energy, while DORA regulations require financial firms to document digital resilience frameworks by January 2025.

“We’re seeing panic buying,” Lilholm said in an interview. “Companies that ignored compliance for years suddenly have six months to formalize everything or face penalties up to 2 percent of global revenue.”

Formalize has added 3,200 customers in the past six months, bringing its total to more than 8,000. The company declined to disclose revenue but said annual recurring revenue grew 180 percent year-over-year. West Hill Capital and CIBC Innovation Banking also participated in the Series B, bringing total funding to €50 million since the company’s 2021 founding.

DACH Region and France Are Primary Targets

The expansion focuses on Germany, Austria, Switzerland, and France, where Formalize currently has limited presence. The company will hire sales teams and compliance specialists in Munich and Paris, with plans to formalize partnerships with local consulting firms that advise SMEs on regulatory requirements.

Fritz Oidtmann, managing partner at Acton Capital, said European SMEs lack affordable compliance tools. “Most platforms are built for US regulations or priced for enterprises,” he said. “Formalize has found the gap.”

The company competes with OneTrust, LogicGate, and Drata, but positions itself as the European specialist. Its platform supports GDPR, NIS2, DORA, and ISO 27001 in 12 languages, with pricing starting at €500 per month compared to €2,000-plus for enterprise alternatives.

AI Assistant to Automate Evidence Collection

Part of the Series B will fund an AI compliance assistant launching in Q1 2026. The tool will help companies formalize documentation by automatically collecting evidence, mapping controls across frameworks, and flagging gaps in real time.

“Right now clients spend 60-80 hours per audit cycle gathering evidence,” Lilholm said. “We think we can cut that to under 20 hours.”

The AI system will also provide predictive alerts when regulatory changes affect a company’s operations. Formalize is training the model on EU regulations and aims to support automated risk assessments by mid-2026.

Michele Foradori, managing director at BlackFin Tech, said automation is critical for market penetration. “SMEs won’t hire compliance teams. They need software that does the work.”

How Formalize Built Its Platform

Formalize started in 2021 as a whistleblower management tool after EU directive 2019/1937 required companies with 50-plus employees to formalize reporting channels. Founders Jakob Lilholm and Sebastian Daae launched in the nordics, then expanded the platform to cover GDPR and ISO 27001 in 2023.

The company raised €15 million in Series A in March 2024 and used the capital to enter Spain and Italy. It now has offices in Copenhagen, Aarhus, Madrid, and Milan, with more than 850 consulting and audit firms using its software for client work.

Growth accelerated when NIS2 went into effect in October 2024. The directive requires companies to formalize cybersecurity governance, incident reporting, and supply chain risk management. Many SMEs were unprepared, creating a surge in demand for compliance automation.

Execution Risks in Competitive Markets

Success depends on hiring and localizing quickly in Germany and France. Both markets have entrenched competitors and complex regulatory interpretation that varies by region.

Analysts say execution will be challenging. “Germany alone has 16 different data protection authorities,” said Maria Schmidt, a RegTech analyst at Nordic Capital Research. “You need local expertise, not just translation.”

Formalize plans to hire compliance specialists in each target market and work with local law firms to ensure its templates meet regional standards. The company is also building integrations with German accounting software DATEV and French HR platform PayFit to streamline data collection.

Market Opportunity Grows with Regulation

European RegTech is projected to grow 15 percent annually through 2030 as digital tools replace manual compliance processes. The EU’s AI Act, updated data protection rules, and cyber resilience requirements are adding to workloads across industries.

Formalize serves banks, law firms, utilities, manufacturers, and tech companies. Its largest customer segments are professional services and financial services, which face the most stringent audit requirements.

The company’s pitch is simplicity. Clients get one platform to formalize processes across multiple frameworks instead of juggling spreadsheets, consultants, and separate tools for each regulation.

What Investors See

Acton Capital and BlackFin Tech both specialize in European fintech and RegTech. They cited Formalize’s growth metrics, regional focus, and product-market fit as reasons for leading the round.

“Compliance is no longer optional in Europe,” Oidtmann said. “Formalize has the right product at the right time.”

The Series B values Formalize at an undisclosed amount. The company said it’s not currently profitable but expects to reach breakeven by late 2026 as it scales in new markets. Lilholm said an IPO or further funding rounds are possible in 2027 or 2028, depending on growth trajectory.

For now, the focus is execution. Formalize plans to formalize its own operations as it scales, adding finance leadership and a chief revenue officer in the coming months. The company is also exploring acquisitions of smaller compliance tools in target markets to accelerate local presence.