After working in the compliance team of stablecoin infrastructure company Paxos, Lawrence decided to ride the generative AI wave and entered one of the first Y Combinator batches after the launch of ChatGPT. His thesis is that anti-money laundering and know-your-customer compliance operations are one of the breakout use cases for the use of AI in financial services. Lawrence’s bet turned out to be prescient. Less than three years ago, his startup Bretton AI (then called Greenlite) announced its $75 million Series B funding round led by Sapphire Ventures, with participation from its seed and Series A backer Greylock, along with Thomson Reuters Ventures and Citi Ventures.

Lawrence says the world of financial monitoring has two layers. The first is risk reduction, which can be solved with more basic machine learning. In other words, if a user starts sending $50 million a day, a system should quickly get that it needs further investigation. The second layer, risk recovery, is more difficult. There the complex investigation took place to determine the background of the parties involved in the suspicious transactions and whether they violated a company’s internal risk policies—and that’s where Bretton focused.

As AI increasingly commoditizes software (and likely renders countless SaaS startups and public companies obsolete), Sapphire managing director Rajeev Dham said the sensitivity of a product like Bretton, which must be traded on the trust infrastructure of many financial institutions, “feels more protected.” Seth Rosenberg, general partner at Greylock, added that instead of using Anthropic to develop their own applications, a bank like JPMorgan could benefit from having a third party. “When compliance businesses get to scale, sometimes they can be smarter because they’re seeing data across the industry,” he said. Currently, Bretton is focusing on financial services companies as its customers, from fintech startups such as Mercury, Ramp, Robinhood, and Coinbaseas well as many regional community banks.

Financial services has long been a thorny arena for vertical AI companies. An AI system that fails to develop software or design can lead to a bug. The stakes are higher financially, but the difficulty is part of the mission.

“The easy ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​easy to go is going to sell marketing AI,” Lawrence joked. “The hard thing is to solve the things that really matter.”

Leo Schwartz
X: @leomschwartz
Email: [email protected]

Submit a deal for the Term Sheet newsletter HERE.

Joey Abrams curates the deals section of today’s newsletter. Subscribe here.

VENTURE DEALS

– tema London, UK-based AI-native energy transaction platform, has raised $75 million in Series B funding. Lightspeed led the round and was joined by Hitachi Trades, Voyager Trades, Schroders capitaland Allianz.

– Neara Sydney, Australia-based digital twin modeling platform for critical infrastructure, has raised $60 million in Series D funding. TCV led the round and was joined by Colleagues group, EQT, square The peg capitaland skipping capital.

– Aerskaa Dublin, Ireland-based developer of RNA drugs for central nervous system diseases, has raised $39 million in Series A funding. EQT Dementia FUNDS and age1 led the round and was joined by Jesus Trades and existing investors.

– Modveonis an operating system developer based in Palo Alto, Calif. which is designed to modernize how governments and citizens communicate with each other, has secured $10 million in funding from the Coinbase Trades, Firebolt Trades, bees Trades, Strategic Cyber ​​Venturesand so on.

– Allonica Budapest, Hungary-based designer and producer of robotics hardware, has raised $7.2 million in pre-seed funding. Visionaries Club led the round and was joined by First Day Capital.

– Donoa West Palm Beach, Fla.-based AI-powered property records platform, has raised $6.5 million in seed funding. Link Trades led the round and was joined by lol and Alumni Trades.

– Mozart AIa London, UK-based developer of AI-powered music creation tools, has raised $6 million in seed funding. Balderton capital leading the round.

– ZeroDrifta compliance enforcement platform based in New York City, has raised $2 million in pre-seed funding. a16z leading the round.

PRIVATE EQUITY

– TPG agreed to take a majority stake in Saber Industriesis an Alvarado, Texas-based provider of critical infrastructure for power utilities, data centers, and telecoms. Financial terms were not disclosed.

EXITS

– NatWest group Obtained Evelyn Colleaguesa London, UK-based wealth management company, from Permira and Warburg Pincus for £2.7 billion ($3.7 billion).

– Haveli Investments agreed to take Budget Studiosis a children’s entertainment company based in Montreal, Canada, from general ATLANTIC. Financial terms were not disclosed.

PEOPLE

– Gemspring Capitala Westport, Conn.-based private equity firm, initiated to Grossman and Zubin Malkani as co-heads of the investment.