In the high-growth environment of tech ventures, rapid user growth and product innovation often take centre stage. But for software companies scaling quickly, especially those with ambitions of going public, there’s another priority that must not be overlooked: understanding who their users are.
Today’s most successful software platforms often focus on productivity, collaboration, or data analytics. Many operate using a freemium or self-serve model, which encourages viral adoption and rapid user acquisition. While this approach drives impressive growth, it can also result in limited user information being collected, particularly in the early stages.
As a result, when the time comes to prepare for a significant funding round or IPO, these companies can find themselves facing a difficult question from investors: how well do you really know your users?
Having a large and diverse user base may look good on paper, but it also brings hidden risks. In today’s regulatory environment, companies must ensure that their platforms are not being used, knowingly or unknowingly, by individuals or entities subject to international sanctions or involved in financial crime.
Failure to demonstrate proper controls can undermine investor confidence and expose the company to reputational damage and legal consequences. Sanctions compliance is no longer a nice-to-have, it’s a baseline expectation.
Effective sanctions screening involves checking user names against official watchlists from global regulatory bodies. But when dealing with millions of user accounts and limited structured data, this can be a massive undertaking.
That’s where specialist providers step in. With advanced, AI-driven platforms, they can screen vast volumes of user data, minimise false positives, and highlight only those records that warrant further review. This ensures that compliance doesn’t slow growth and that due diligence becomes a competitive advantage, not a burden.
For any high-growth software firm looking to raise capital or go public, having a clean, transparent user base is critical. Investors want to know that compliance isn’t just a check-box exercise, but a core part of the company’s risk management framework.
Partnering with experienced compliance technology partners can streamline the process and offer confidence during investor due diligence. These tools can be integrated early and scaled with the business, saving significant time and resources down the line.
Due diligence isn’t just about regulation, it’s about trust. For software businesses on the path to IPO or significant funding, knowing your users isn’t optional. It’s essential.
If you’re preparing for the next stage of growth, now is the time to act. Partnering with sanctions compliance specialists can help you protect your platform, satisfy your investors, and scale with confidence.
If you’d like more information about any of the issues discussed here, contact us.