Investing in Petual
a16z invests in Petual
America | Tech | Opinion | Culture | Charts
Audit and compliance are among the most universal – and most painful – functions inside large enterprises. Every year, every public company has to perform audits at massive scale – and the room for error is practically zero, with personal liability for the CEO and CFO who sign off. Roughly 15,000 companies maintain internal audit teams, employing approximately 250,000 professionals and collectively spending over $30 billion annually.
The function became increasingly formalized through twentieth-century regulation and expanded significantly with the Sarbanes-Oxley Act of 2002, which mandated rigorous internal controls testing for all public companies. SOX testing alone accounts for $8 billion in annual U.S. spend. Internal audit teams dedicate roughly 60 percent of their hours to SOX requirements, and two-thirds of that time is spent on testing alone. This is not optional overhead. It is a permanent, recurring cost of being a public company.
What makes this market so compelling, and so ripe for disruption, is its combination of scale, uniformity, and pain. A single SOX program covers at least hundreds of controls, tested every period, adding up to tens of thousands of individual tests a year across public companies. For every test, a human auditor wades through piles of unstructured files to hunt down a few specific pieces of evidence, then names, timestamps, and cross-references each one into Excel workbooks and Word memos. This is all done entirely manually, consuming tens of millions of hours and billions of dollars across the enterprise landscape.
Historically, the only answer has been to throw people at the problem: outsourced consultants billing millions, or internal teams burning thousands of hours on manual testing and documentation. Audit workflow software helps manage the pain, but doesn’t remove it.
But the type of work that audit testing requires is perfect for AI to tackle. That’s why we’re excited to announce our investment in Petual.
Petual is a domain-specific AI platform built for audit teams. It automates the long tail of drudgery that internal audit teams must do. In doing so, it frees internal audit to do the strategic work that requires human judgment: identify novel risks to the company’s business, help define the controls that mitigate those risks, and guide governance with stakeholders to maximally protect against risk. That intellectual work is thoughtful, judgment-intensive, and genuinely strategic.
And SOX is just the beginning. Petual will turn every audit and compliance team into a proactive, AI-powered control system for the enterprise.
Petual has already had incredible success in a very short period of time, and is working with over a dozen large public companies, including multiple Fortune 500 and NASDAQ 100 companies. It’s incredibly rare for us to see an early-stage company be able to reach enterprises of that scale so early on. These customers vouch that Petual has driven dramatic time savings across audit workflows, has allowed them to reallocate teams toward higher-value work, and that they’re excited to expand Petual’s use to other parts of their audit and compliance work. Audit teams are not usually effusive, so we were struck when one customer described Petual as “utterly transformative,” and another told us they’d “cut budget to a quarter” of what it was before.
We’re also honored to partner with Snir, Petual’s founder and CEO. Snir has had an impressive career in Silicon Valley, as a second-time founder who has previously led engineering at Retool and held senior engineering leadership roles at Lyft. He’s a deeply technical builder with profound customer empathy, and he’s hired a fantastic team around him, including the former Chief Audit Officer of Lyft.
This is a world-class team transforming how the largest enterprises in the world function, and we’re thrilled to be backing them.
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