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Rethink Compliance Takes Investment Capital

By Kirsten Liston, Founder and CEO, Rethink Compliance

[This blogpost was originally published in the "Insights & Resources" section of the Rethink Compliance website which can be found here.]

Recently, we accepted investment capital for the first time in our eight-year history. We are proud of what this says about the strength of our business and excited about where it will take us in the future.

I wanted to share a little bit about our path to this milestone and what it says about how (and why) we do what we do.

Part 1: Why we self-funded

When I founded Rethink Compliance, I did it with the goal of remaining self-funded — indefinitely.

This means for the last eight years:

  • The only money we received was revenue we generated from selling our products and services
  • The only money we kept were the profits left after we subtracted the cost of delivering the work plus our overhead

This shouldn’t be a radical approach to running a business. In fact, it has some key advantages:

  1. You know, for certain, that your business model works and is profitable. (If it wasn’t, you would quickly close your doors.)
  1. As long as you keep bringing value to your market (sales = evidence), your business is truly sustainable. You can do what you’re doing as long as you want to.
  1. You are 100% in the driver’s seat. Your business model is up to you.

For me, #3 was particularly important.

I was there when private equity took over the compliance industry, and I watched as new owners and leaders squeezed out service, innovation, expertise, and quality — much to the detriment of our clients. (They object, but no one seems to be listening.)

I kept asking myself: How can it be good business to change your service model so clients like it less?

I couldn’t come up with one good reason — and that was a big part of why I started Rethink. I kept thinking: There has to be an opportunity here! The team members and leaders who joined me shared this vision.

As Rethink attracted clients and started to garner accolades and attention, I came into contact with institutional investors myself and started to learn more about their typical playbook.

Here’s what I learned:

  • In some businesses, your end customer is your client — and running a good business means you are focused on serving them well, ideally at a profit.
  • In other businesses, your clients are part of your business model but not the full focus. Instead, your real customer is the fund or company that is going to buy your business next. In this model, running a good business doesn’t mean serving clients better than anyone else — it means getting the highest possible valuation for the business.

This dynamic has created a fundamental problem in the compliance industry.

Giving clients what they want is good business. It’s profitable and sustainable. Otherwise, Rethink — with our high-quality, high-service model and our seasoned team with deep expertise — would not be here!

But most compliance companies are not choosing to pursue the same approach.

Almost since day 1, clients have said to us: “Don’t get bought. And don’t get too big.” Because they associate those things with a decline in so many things they value — rightly so, based on their past experience.

With this in mind, I have made it my personal mission to grow the company to a point where it’s clear to everyone that the Rethink approach is profitable and sustainable — even at scale. Yes, we served clients well when we were small. But today, we have nearly 145 clients, including some of the biggest companies in the world. And each of them still gets world-class service.

It’s not scale that crowds out quality, service, or human connection. Instead, it’s a deliberate choice — made in service of chasing higher margins and higher valuations. It’s a valid business choice. Many companies make it. But we are choosing something different.

Part 2: Why we took money now

Given everything I’ve said above, it may surprise you to hear I am pleased to announce that Rethink Compliance has, for the first time, taken outside investment.

Not only that, we’re excited about the prospect of partnering with the Dallas-based Cypress Growth Capital team. (See the link for a great write-up on the firm.)

For us, an infusion of capital gives us the ability to invest in what’s already working. We can spend proactively and confidently on the things we know will move the needle for our clients, like continuing to build the best compliance content library in the industry (350+ titles and counting). To support our high-service model, we can hire when the work comes in, not when the money follows.

Importantly, Cypress’s funding model doesn’t involve giving them voting rights or decision-making authority at Rethink. We, the leadership team, remain squarely in the driver’s seat — so if we say that absolutely nothing about our mission, product strategy, or delivery model is changing, then nothing is changing. Period.

Just as the Cypress team did its due diligence on us, we did ours, talking to several companies in the firm’s portfolio. Cypress has a track record of acting as a smart, trusted advisor to businesses at a similar size and with similar ambitions as Rethink, so we welcome and expect to benefit from the team’s input and advice.

If you are a client, serving you well remains our #1 focus.

If you are not yet a client, now would be a great time to check us out. We’re excited about Rethink’s next phase and we’d love for you to be part of it.