Midship Secures $4.15 Million to Transform SOX Compliance with AI Technology

Transforming SOX Compliance with AI

In a notable development for financial governance, Midship, an innovative platform focused on automating Sarbanes-Oxley (SOX) testing and internal audit workflows, recently announced a successful seed funding round of $4.15 million. The investment round was spearheaded by Costanoa Ventures, with contributions from Seguin Ventures and a number of angel investors, emphasizing the increasing importance of technology in overcoming audit complexities

Challenges in Current SOX Compliance

Currently, U.S. public companies grapple with significant financial burdens, averaging $2.3 million annually just on SOX audit services. However, the actual costs are believed to be even higher, as internal teams often face hidden expenses that can be tenfold due to inefficient processes in finance, IT, and operations. Despite a history of compliance tools, SOX testing processes remain predominantly manual. This not only hinders the effectiveness of internal audit teams but also detracts from value-added advisory endeavors.

Midship addresses this issue with its cutting-edge agentic AI, which streamlines the entire SOX testing lifecycle. The platform’s AI agents autonomously execute audit plans, delve into complex documentation, perform control testing, and produce audit-ready work papers. This ensures a seamless and comprehensive evidence trail, significantly reducing the manual workload while ensuring that human auditors remain engaged and informed.

Founder's Journey to AI-Driven Automation

Founded by a talented trio—Kieran Taylor (CEO), Aahel Iyer (CPO), and Max Maio (CTO)—Midship is a brainchild of individuals who have encountered first-hand the challenges of SOX audits at scale. The founders boast experience with audit and compliance teams at illustrious firms like Instacart, Deloitte, Amazon, and Lyft. Their journey to create Midship was inspired during their tenure at Instacart, particularly while prepping for its IPO. The significant demands of first-year SOX compliance prompted an internal hackathon, leading to the realization of the necessity for automation in SOX testing.

Kieran Taylor highlighted the need for transformation, stating, “SOX was meant to address core risks, not overload audit teams with busy work.” In essence, Midship seeks to fundamentally change the narrative, allowing AI to handle documentation and testing tasks, thereby enabling auditors to focus on judgment and risk assessment.

Distinguishing Midship from Traditional Approaches

What sets Midship apart from longstanding SOX platforms is its ability to go beyond simple workflow management. Tools such as AuditBoard and Workiva primarily focus on administrative tasks related to SOX programs. In contrast, Midship's automation capabilities tackle the actual testing process itself. While many automation tools focus narrowly on specific tasks, Midship’s agentic approach effectively navigates the complexities and unstructured data commonly found in enterprise audit work.

As pointed out by Amy Cheetham, a Partner at Costanoa Ventures, Midship enables teams to maintain controls in their native language while allowing AI agents to determine the necessary steps for task completion.

Real-World Implementation and Impact

Early adoption of Midship’s innovative approach has already taken root among prominent public companies, including leading social media and fintech firms. By leveraging this technology, internal audit teams can significantly scale their capabilities without proportional increases in headcount. The outcome is a reduction in the manual effort required and an enhancement of the teams' overall impact.

To learn more about Midship's game-changing solutions in SOX compliance and how their platform can elevate your organization’s audit processes, visit www.midship.ai.

About Midship

Midship aims to revolutionize SOX testing and internal audit workflows through its powerful AI-native platform. By utilizing agentic AI, which follows audit plans, performs control tests, and generates comprehensive work papers, Midship empowers audit teams to manage their processes more efficiently while preserving thoroughness and accountability. With a founding team that has hands-on experience at Instacart and Dashworks, Midship is setting new standards for efficiency and effectiveness in audit work.