Exterro Inc., a data risk and compliance software maker, on Monday is expected to announce a new round of investor financing that lifts its market value above $1 billion, a milestone that has the 14-year-old firm considering a public-market debut as soon as 2023, company officials said.

The latest funding round brings in a group of new institutional investors, co-led by Coller Capital and Glendower Capital. Terms weren’t disclosed.

Until four years ago, Exterro ran solely on its own revenue, with no investor funding, said Chief Executive

Bobby Balachandran.

Leeds Equity Partners, the company’s first outside investor, came on board in 2018.

“We’re getting ready for an IPO, and this is a time to really build and grow, even when everybody else is trying to put the brakes on,” Mr. Balachandran said.

Exterro’s cloud-based software is used by corporate legal departments and information-technology teams in data governance, risk and compliance efforts. Its platform is designed to help companies ensure growing stockpiles of data are stored safely and comply with industry and government regulations around privacy, security, forensics and other issues.

Those efforts have been supercharged in recent years by corporations’ insatiable appetite for data, gathered everywhere from sales, marketing outreach, customer emails, manufacturing processes, weather reports and countless other sources.

The drive for more data is fueled in part by the rapid spread of digital tools across operations but also by the availability of near-limitless data storage in the cloud, industry analysts say. A growing number of companies are also feeding giant datasets into artificial-intelligence algorithms, hoping to mine insights and steer business decisions.

“Data is the most powerful asset of any organization,” said Mr. Balachandran. “Without it you’re flying blind.”

Mr. Balachandran, who formed the Portland, Ore.-based company in 2008, said the injection of new capital—which he called a “pre-IPO round”—will go toward boosting growth through acquisitions and an ongoing expansion across global markets. Exterro has more than 3,000 global customers, the company said.

Exterro’s recent growth reflects booming demand for data risk and compliance capabilities, which intensified as companies shifted to remote work and collaboration apps during the Covid-19 pandemic.

“Late 2020 and early 2021 is when we saw a huge shift from on-premises to software-as-a-service deployments for governance, risk and compliance,” said

Alla Valente,

a senior analyst at IT research firm Forrester Inc. “In addition to risk and compliance processes, agility and business resilience became paramount,” Ms. Valente said.

The global market for governance, risk and compliance software is expected to reach $15.2 billion by 2025, up from $11.3 billion in 2020, according to research firm International Data Corp.

Amy Cravens,

a research manager who oversees governance, risk and compliance technology in IDC’s security and trust group, said the market is growing quickly “because risk is growing so quickly.”

She cites risks not only from cyberattacks but also outside suppliers’ and service providers’ access to company data. There also are sweeping new laws aimed at protecting consumer data, such as Europe’s General Data Protection Regulation. “The breadth of risk and potential repercussions continue to expand at a rapid rate,” Ms. Cravens said.

Global corporations are expected to spend an estimated $6.3 billion this year on risk management software, up 11.6% from 2021, according to

Gartner Inc.,

an IT research and consulting firm. That includes software tools designed for data risk and control assessments and documentation, incident management, risk mitigation, risk reporting and monitoring and analytics, among other apps.

Exterro and other risk and compliance vendors are increasingly using artificial intelligence and machine learning to automate repetitive and manual data-entry tasks. “For highly regulated industries like banking, financial services and insurance or pharma, automation of this process can be beneficial,” said

Elizabeth Kim,

a principal analyst at Gartner.

In the past, Mr. Balachandran said, most companies handled data governance, risk and compliance through a mix of competing services and applications, which didn’t always work together. That created digital silos, leaving risky gaps in data security and other vulnerabilities, he said.

Exterro set out to solve that problem, he said, by developing a more holistic platform that not only links data-risk software tools within a single system, but also acts as a bridge between legal departments and IT, “with oversight from CIOs.”

Write to Angus Loten at [email protected]

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