Data residency-as-a-service is HOT

Note: this is a bit of an experiment to share technology market trends we're observing on CB Insights. This might be one of many or the last one depending on response.

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The EU’s GDPR ushered in a wave of evolving national and regional regulations requiring strict adherence to customer data privacy rules and, in some instances, requirements around where data for local customers resides (aka data residency).

And as recent fines highlight, a lack of compliance can become very expensive.

• Google fined €50M ($57M) by French data privacy body CNIL
• British Airways fined ￡183M ($230M) over a 2018 security lapse
• Marriott fined ￡99M ($124M) for a customer data breach

Data protection regulation, however, has not just come to Europe.

Russia, China, and India are all talking about or have implemented data residency requirements. The California Consumer Privacy Act (CCPA) was among the first in the US, with other states following suit. 

As a result of this regulation, a number of data residency-as-a-service and data privacy technology firms have jumped into the fray to help companies deal with the regulatory compliance requirements and also provide consumers with comfort around how their data is being stored and used.

InCountry is one of the technology companies in the data residency-as-a-service space that has raised most recently. But, it is far from alone. In just the last 3 months, 7 different companies in the cross border data compliance sector have raised financing or been acquired (with 9 transactions in 2020) as the screenshot below highlighting InCountry's competitors' highlight.

The smart money has shown up with Index Ventures and Accel investing in this company, Coatue and Insight Partners investing in this firm and Warburg Pincus investing in this player.

The list ofcorporate investors jumping into the market is long as well with HSBC investing in this firm and Citi and Dell investing in another company attacking the data residency market.

Channel partnerships are going to be critical for these companies. InCountry's investors included Accenture and a look at the firm's customers & business relationships highlight a channel partnership with Accenture in addition to the investment.

Here are the customer & business relationships in the space (not InCountry). They highlight the clear focus on channel partnerships as can be seen below.

If you're evaluating vendors, partners or investment/M&A targets in the data residency-as-a-service space, CB Insights can help. Some existing related research on the space for clients is here and here.