Sphinx

Happy Monday.

We’re ramping up for Boston and NY Tech Week. But first, we have an announcement to make.

We just launched a new dinner series: AI Champions. We’re hosting intimate, curated dinners for product/engineering/design executives, senior ICs, and founders who are championing AI at their organizations.

Our first dinner (in partnership with bolt.new and MiniMax) was on Thursday. We’re hosting in Boston and NYC, as well as SF again.

Want to join? All registration links are below.

• Tues. May 26 - Founding GPs VC Omakase (Boston)

• Wed. May 27 - AI Champions Dinner (Boston)

• Tues. June 2 - Founding GPs VC Omakase (New York)

• Wed. June 3 - AI Day (New York)

  • Bolt Founder Fireside

  • Becoming an AI Champion Fireside

  • Graphite Founder Fireside

  • AI Champions Dinner

  • The Afterparty ft. Ian Asher

• Tues. June 23 - AI Champions Dinner (San Francisco)

Ethan and Arek 🦄

Sphinx builds AI systems that perform compliance work inside financial institutions. It focuses on areas like anti-money laundering, know your customer, and know your business, which are still handled largely by human analysts.

In most financial institutions, this work is done case by case. Analysts review alerts, gather information across systems, make a judgment, and document the outcome for internal teams and regulators. As transaction volume grows, the process becomes slower, more expensive, and harder to manage.

Sphinx replaces that workflow with a system that handles cases directly. It reviews the input, pulls the relevant context, reaches a decision, and produces a record that can be audited later. The product can run end to end or in a human-in-the-loop setup, depending on how much control the customer wants to keep.

Check it out: sphinxhq.com

Sphinx sells through a demo-led enterprise process. It offers a free data test on five to 10 real case samples before any commitment. In production, customers are seeing up to 4x cost reduction compared with its previous human-led approach.

• Raised $7.1 million seed round in February 2026, led by Cherry Ventures

• Took part in the Y Combinator F24 batch 

• A Series D fintech automated more than 250 hours of manual compliance work per month without adding headcount

• One client cleared a 12,000-alert backlog in a single week

• Customers report up to 10x faster resolution times, and Sphinx says it is automating up to 92% of compliance operations in production

• Equals Money, a London-based fintech, went live in a week with zero engineering work

• Axos Bank, a digital bank born in 2000, is deploying Sphinx across its compliance organization

• Member of Technical Staff, San Francisco

• Forward Deployed Engineer, San Francisco

• Product Engineer, San Francisco

• GTM, San Francisco

• Head of Content, San Francisco

• Founding Sales, San Francisco

• Compliance Solutions Architect, San Francisco

Alexandre Berkovic and Chrisjan Wust met at a braai, a South African barbecue, at OceanHub Africa, supporting African-led ocean-impact startups, and ended up living together for a short period in 2021. Two years later, they ran into each other again in a small town near Lisbon, Portugal. That second meeting led to Adorno AI, a generative AI audio and video post-production company they built together.

After about a year, the duo recognized that market circumstances weren't in their favor, and Adorno wouldn't scale into a billion-dollar business. So they made the pragmatic call to find a clean acquisition path and channel their energy into something new. The next company came from a problem Wust already knew well. As employee No. 1 and head of engineering at RelyComply, a risk management and compliance company, he had spent more than four years watching compliance teams work through slow, manual processes with systems that felt far behind the scale of the problem.

The gap had become harder to ignore. Analysts were spending weeks on cases that should have taken minutes, while fraudsters were using AI-generated documents, and legacy systems were still missing obvious signals. Berkovic brought a complementary lens from his background in Design Engineering at Imperial College London and machine learning at MIT Sloan. In 2024, together, they created Sphinx, pivoting from audio to compliance, and three weeks later, were accepted into Y Combinator. 

More transactions create more alerts, more reviews, and more manual work. Compliance scales with volume, and, in most institutions, that still translates into additional analysts, with little improvement in fiscal or operational efficiency over time.  

The root cause is poor data quality and outdated rule-based systems, which generate over 100 million false alerts per year in the U.S. alone, according to Sphinx. An estimated 95% of all AML alerts are false positives, meaning the systems designed to catch suspicious activity are almost never flagging actual threats. At scale, that inefficiency adds up to a massive operational burden. Global AML compliance costs are estimated at over $274 billion annually, much of it spent managing low-quality alerts rather than catching criminals.

That is the system most compliance teams are still operating in today, relying on analysts to move cases across disconnected systems, gather evidence, and document decisions. Traditional RegTech, or compliance software, improved visibility. Outsourcing added capacity. Neither changed how the work actually gets done.

Sphinx is building AI compliance analysts that work through cases, produce decisions, and leave behind an audit trail that can hold up under review. It operates as the analyst itself inside existing systems. That is a much bigger claim than workflow assistance but it is also where the upside is.

It stops scaling compliance in a straight line with volume, reducing the need to add analysts as they grow. The early production numbers point in that direction. At Alviere, an embedded financial products provider, Sphinx achieved 86.1% false positive detection and 88% automatic case closure, saving about 17 days of analyst work in a single month. That is the shift: less manual review and faster resolution without adding headcount.

The category is still forming, but it will not stay that way for long. Incumbents will add AI features, newer companies will attack pieces of the workflow, and internal teams will try to assemble their own versions. But most of those approaches will still be centered around the analyst. Sphinx is more ambitious because it is trying to replace the work itself.

Compliance has always scaled linearly with volume, with more activity requiring more analysts. That model is starting to break as fraud accelerates (with AI-generated docs, synthetic identities, deepfakes, and so on), transaction volumes expand (think about high-throughput blockchains, agentic commerce, and tokenization of real-world assets), and regulatory pressure increases. The institutions that adapt will be the ones that can break that relationship.

• Sphinx Raises $7.1M to Build Every Financial Institution’s Last Compliance Hire [Business Wire]

• Y Combinator Profile [Y Combinator]

ICYMI: We recently announced our official investor syndicate. Check out the announcement post for more details on how to invest in our deals.