‘The funding is for us to double down on investments in the channel,” says Dave Colesante, Apptega CEO. ‘It’s being able to package up compliance-as-a-service with our partners and do the same on the security scoring part.’

Apptega has raised $15 million in funding to accelerate the development of technology that brings continuous compliance to the market as well as help in-house IT teams automate security and compliance programs.

“The funding is for us to double down on investments in the channel,” Apptega CEO Dave Colesante told CRN in an exclusive interview. “It’s being able to package up compliance-as-a-service with our partners and do the same on the security scoring part.”

The investment was a combination of growth capital comprised of third-party debt and growth equity from growth equity firm Mainsail Partners.

The funding will also go towards the Atlanta, Ga.-based lifecycle compliance vendor’s R&D efforts in artificial intelligence so that MSPs can deliver security and compliance guidance more efficiently and at higher margins.

[Related: CRN Panel: Cybersecurity and AI]

“The investment will help take large language models and knowledge-based work and workflows, and the basics of being able to do things through a service provider lens, and invest it in our products so that we can continue to drive costs out,” Colesante said. “It’s to help them drive better customer retention, help them drive better gross margins and actually grow their business. This funding is designed to help us deliver on that promise to those problems.”

While other companies offer compliance software, very few have considered the specific needs of MSPs, he added.

“Companies are struggling with how to take what effectively has been a consultative-type approach in the compliance space and turn it into a reoccurring revenue stream,” he said. “That is literally the challenge that we are investing in and that we’re delivering on.”

Because of that, he believes compliance has come to “an inflection point” in the market.
The funding round also comes during a period of significant growth for Apptega as it’s been designated a high performer and leader in G2’s Security Compliance Software category for 12 consecutive quarters.
“The quantity of new partners that we’re adding has grown,” Colesante said, adding that the amount of new partners has almost tripled in the last two years.

The company has also seen “significant growth” in annual reoccurring revenue through its channel partners as well, “And we’re focused on how to continue to grow reoccurring revenue for our partners.”

“We’re not interested in them reselling our software at all,” he said. “We want our software to be the engine that drives their services that they sell to their customers.”

The vendor also has plans to grow its revenue by 30 percent in 2024 and then double it in 2025.

“We believe we can get there through service provider partners and making sure that we add the quantity and the right folks,” he said.

Marc Brungardt, president of Overland Park, KS-based Foresite Security, said Apptega’s announcement shows that their partner-first approach is “clearly resonating with managed service and security providers.”

“With Apptega, Foresite is able to go to market with highly differentiated continuous compliance offerings that empower us to better deliver and prove the value of our best-in-class cybersecurity services and consulting,” he said.