Stockholm-based Hybridity raises €2 million to automate regulatory compliance through AI

In today's highly regulated business landscape, compliance can be a major barrier to growth and success. It is estimated that European businesses spend over €150 billion annually on compliance-related activities. To address this issue, Stockholm-based startup Hybridity has developed an AI platform called Hy5 that automates complex EU regulations such as DORA, NIS2, and GDPR. And with its recent €2 million funding round, the company is ready to take the next step in commercializing its innovative solution.

Hybridity's new investors include industry heavyweights such as Henrik Ekelund of BTS Group, Hans Otterling, and Jörgen Bladh of Northzone. Family office Fonos, led by the Irinarchos family, and Björn Hovstadius, founder of Pagero and board member of the European Big Data Value Association, also joined the round. This follows the company's previous Seed round of €2.16 million in 2025, bringing its total funding to €5 million.

Magnus Sahlgren, CEO of Hybridity, explains the significance of this funding: "Compliance is one of the biggest operational barriers to growth in regulated industries. Our platform Hy5 enables organizations to manage complex regulations continuously and at scale with the help of AI, instead of relying on manual processes. The new capital allows us to take the next step in commercialization."

Sahlgren, who joined the company as CEO in February, brings over 20 years of experience in AI research, language technology, and applied machine learning. With his expertise, he is well-positioned to lead Hybridity's growth and expansion into new markets.

The need for automated regulatory compliance solutions is not unique to Hybridity. Other startups in the AI RegTech sector have also received significant funding, including Danish startup Formalize's €30 million Series B round and Dublin-based Dataships' €6.8 million Series A round. And in the environmental compliance segment, Germany's Tanso raised €12 million to expand its industrial environmental compliance platform.

Hybridity was founded in 2023 with the mission to simplify and streamline the way organizations work with regulations. The company's AI-native platform, Hy5, combines artificial intelligence with legal engineering to transform regulatory compliance. By automating the heavy lifting work, Hy5 allows businesses to grow faster, stay continuously compliant, and manage risk effectively.

The platform's capabilities include automatically reviewing contracts for compliance with regulations, identifying gaps and inconsistencies, generating action lists, and automating CSRD reporting and conducting GAP analyses. It can also ensure that policy documents remain up to date and generate AI-based handbooks from existing governance documents.

Hans Otterling, one of Hybridity's new investors, expresses his confidence in the company's solution: "Hybridity has developed a technically strong solution for a large and rapidly growing problem. The combination of deep AI expertise and a clear business focus positions the company well to scale internationally."

In addition to its new investors, Hybridity has also received support from tech industry leaders such as Noam Perski, Head of Europe at Palantir, Stefan Lennhammer, Chairman of the Board at Hybridity, former Chairman of the Board at Truecaller, and founder of Reeda Capital Family Office, as well as Simon Josefsson, former CTO at Yubico.

Key Takeaways:

• Stockholm-based startup Hybridity has raised €2 million to accelerate the commercialization of its AI platform, Hy5.
• The platform automates complex EU regulations such as DORA, NIS2, and GDPR to help businesses manage compliance at scale.
• The new investors include industry experts such as Henrik Ekelund, Hans Otterling, and Jörgen Bladh.
• The company's previous Seed round and this current funding bring its total funding to €5 million.
• Hybridity's CEO, Magnus Sahlgren, brings over 20 years of experience in AI research and technology.
• Other startups in the AI RegTech sector have also received significant funding for their automated regulatory compliance solutions.
• Hybridity's platform, Hy5, combines AI with legal engineering to transform regulatory compliance.
• It automates tasks such as reviewing contracts, identifying gaps and inconsistencies, and generating action lists.
• The company is backed by tech industry leaders such as Noam Perski and Stefan Lennhammer.
• Hybridity's new investors and previous support from industry experts demonstrate the company's potential for growth and success.

Source: Stockholm-based Hybridity raises €2 million to automate regulatory compliance through AI