Fixing workplace misconduct reporting is a mission that’s snagged London-based Vault Platform backing from Google’s AI-focused fund, Gradient Ventures, the lead investor in an $8.2 million Series A that’s being announced today.
Other investors joining the round are Illuminate Financial and existing investors, including Kindred Capital and Angular Ventures. Its $4.2M seed round was closed back in 2019.
Vault sells a suite of SaaS tools to enterprise-sized or large/scale-up companies to support them in proactively managing internal ethics and integrity issues and tools for staff to report problems, data, and analytics that are baked into the platform to support customers’ more comprehensive audit and compliance requirements.
In an interview with TechCrunch, co-founder and CEO Neta Meidav said that as well as being wholly on board with the overarching mission to upgrade legacy reporting tools like hotlines provided to staff to try to surface conduct-related workplace risks (be that bullying and harassment, racism and sexism; or bribery, corruption, and fraud), as you might expect Gradient Ventures was interested in the potential for applying AI to enhance Vault’s SaaS-based reporting tool further.
A feature of its current platform, ‘GoTogether’, consists of an escrow system allowing users to submit misconduct reports to the relevant internal bodies. Still, only if they are not the first or only person to have made a report about the same person — the idea is to help encourage staff (or outsiders, where open reporting is enabled) to report concerns they may otherwise hesitate to, for various reasons.
Vault now wants to expand the feature’s capabilities, so it can be used to proactively surface problematic conduct that may not just relate to a particular individual but may even affect a whole team or division — by using natural language processing to help spot patterns and potential linkages in the kind of activity being reported.
“Our algorithms today match an alleged perpetrator’s identity. However, many events that people might report are unrelated to a specific person — they can be more descriptive,” explains Meidav. “For example, if you are experiencing some irregularities in accounting in your department, for example, and you’re suspecting that there is some sort of corruption or fraudulent activity happening.”
“If you think about the greatest [workplace misconduct] disasters and crises that happened in recent years — the Dieselgate story at Volkswagen, what happened in Boeing — the common denominator in all these cases is that there’s been some serious ethical breach or failure which several people observed within the organization in remote parts of the organization. And the dots weren’t connected,” she goes on. “So the capacity we’re currently building and increasing — building upon what we already have with GoTogether — is the ability to connect on these repeated events and connect, understand, and read the human input. And connect the dots when repeated events are happening — alerting companies’ boards that there is a certain ‘hot pocket’ they need to investigate.
“That would save companies from great risk, great cost, and essentially could prevent huge losses. Not only financial but reputational, sometimes it’s even a loss to human lives… That’s where we’re getting to and what we aim to achieve.”
There is the question of how defensible Vault’s go-together feature is — how easily it could be copied — given you can’t patent an idea. So baking in AI smarts may be a way to layer added sophistication to maintain a competitive edge.
“There’s some very sophisticated, unique technology in the backend, so we continue investing in this side of our technology. And Gradient’s investment and the species we’re receiving from Google now will only increase that element and that side of our business,” says Meidav when we ask about defensibility.
Gradient Ventures founder and managing partner Anna Patterson commented on the funding: “Vault tackles an important space with an innovative and timely solution. Vault’s application gives organizations a data-driven approach to tackling occupational fraud, bribery or corruption incidents, safety failures, and misconduct. Given their impressive team, technology, and customer traction, they are poised to improve the modern workplace.”
The London-based startup was only founded in 2018 — and while it’s most keen to talk about disrupting legacy hotline systems, which offer only a linear and passive conduit for misconduct reporting, several other startups are playing in the same space. Examples include the likes of LA-based AllVoices, YC-backed Whispli, Holdsworth, and Spot, to name a few.
Competition seems likely to continue to increase as regulatory requirements around workplace reporting keep stepping up.
The incoming EU Whistleblower Protection Directive is one piece of regulation Vault expects will increase demand for more imaginative compliance solutions — aka “TrustTech”, as it seeks to badge it — as it will require companies of more than 250 employees to have a reporting solution in place by the end of December 2021, encouraging European businesses to cast around for tools to help shrink their misconduct-related risk.
She also suggests a platform solution that can help bridge gaps between different internal teams that may need to be involved in addressing complaints and helping to speed up internal investigations by offering the ability to chat anonymously with the original reporter.
Meidav also flags US regulators’ rising attention to workplace misconduct reporting — noting some recent massive awards by the SEC to external whistleblowers, such as the $28M paid out to a single whistleblower earlier this year (about the Panasonic Avionics consultant corruption case).
She also argues that growing numbers of companies going public (such as via the SPAC trend, where there will have been reduced regulatory scrutiny ahead of the ‘blank check’ IPO) raises reporting requirements generally — meaning, again, more companies will need to have in place a system operated by a third party which allows anonymous and non-anonymous reporting. (And, well, we can only speculate whether companies going public by SPAC may be in greater need of misconduct reporting services vs. companies that choose to take a more traditional and scrutinized route to market… )
“Just a few years back, I had to convince investors that this category is a category — and fast forward to 2021; congratulations! We have a market here. It’s a growing category, and there is competition in this space,” says Meidav.
“What differentiates Vault is that we did not just focus on digitizing an old legacy process. We focused on leveraging technology to empower more misconduct to surface internally truly and for employees to speak up in ways that weren’t available. Together is truly unique, as well as the things we’re doing on the operational side for a company — such as collaboration.”
She gives an example of how a customer in the oil and gas sector configured the platform to use an anonymous chat feature in Vault’s app to provide employees with a secure direct line to company leadership.
“They’ve utilized the anonymous chat that the app enables for people to have a direct line to leadership,” she says. “That’s incredible. That is such progress, a forward-looking way to utilize this tool.”
Meidav says Vault has around 30 customers, split between the US and EU — it’s core focus regions.
And while its platform is geared towards enterprises, its early customer base includes a fair number of scale-ups — with familiar names like Lemonade, Airbnb, Kavak, G2, and OVO Energy on the list.
Scale-ups may be natural customers for this product, given the enormous pressures that can be brought to bear upon company culture as a startup switches to a rapidly expanding headcount, per Meidav.
“They are the early adopters, and they are also very much sensitive to events such as these kinds of [workplace] scandals as it can impact them greatly… as well as the fact that when a company goes through a hyper-growth — and usually you see hyper-growth happening in tech companies more than in any other type of sector — hyper-growth is at a time when you, as management, like leadership, it’s essential to safeguard your culture,” she suggests.
“Because it changes very, very quickly, and these changes can lead to all sorts of things — and leadership must be on top of it. So when a company goes through hyper-growth, it’s an excellent time to incorporate a tool such as a Vault. As well as the fact that every company that even thinks of an IPO in the coming months or years will do very well to put a tool like Vault in place.”
Expanding Vault’s team is also on the cards after this Series A close, as it aims for its own business’s next phase of growth. Presumably, though, it’s not short of a misconduct reporting solution.
