EarlyStage LegalTech Funding Soars, But Law Firms Absent From Cap Tables
BY
Steve Glaveski
Early-stage legaltech companies (pre-seed and seed) raised a combined US$73M globally in 12 months to 30 June 2021. According to Crunchbase, there were 96 deals done during the period for an average deal size of US$760K per company, and an average funding rate of just under 2 startups per week.
Leading the charge was Los Angeles’ XCLAIM, which digitizes the financial market for selling bad debt receivables, with US$6.6M. They were followed closely by cloud-adoption company Reynen Court (US$4.5M), contract management company Leeway (US$4.2M), London’s Orbital Witness (US$4.15M), and Glasgow’s Exizent (US$4.1M).
The deals cut across areas such as compliance and risk management, artificial intelligence, blockchain, digitization of traditional legal services, online law firms, sustainability reporting, practice management, and myriad other areas.
The breadth and depth of early-stage legaltech solutions raising money points to the growing demand for and openness to such solutions from both law firms and the general public - the latter evident by LegalZoom’s staggering US$7B IPO.
Curiously though, while law firms have traditionally helped to broker venture capital deals, they remain absent from the cap tables of most early-stage legaltech startups. A cursory scan of the cap tables of legaltech deals done in the past 12 months reveals the usual suspects - traditional venture capital firms and prominent angel investors.
While corporate venture capital (CVC) continues to grow, with funds plowing over US$73B into startups in 2020, law firms have typically remained reluctant to establish their own funds - perhaps owing to a conservative nature and an “if it ain’t broke, don’t fix it” mentality.
But as law firms face growing competition from online competitors, tech-driven peers, and ALSPs, they will have no choice but to look for new opportunities to differentiate. Investing in tech startups and scale-ups might offer law firms a low-cost path to improved competitiveness and financial diversification with a significant potential upside.
Since 2015, we’ve been partnering large corporations with startups and scaleups from around the world. If you’d like to learn more about how we might partner with your law firm to help it do the same, get in touch.
Early-stage legaltech companies (pre-seed and seed) raised a combined US$73M globally in 12 months to 30 June 2021. According to Crunchbase, there were 96 deals done during the period for an average deal size of US$760K per company, and an average funding rate of just under 2 startups per week.
Leading the charge was Los Angeles’ XCLAIM, which digitizes the financial market for selling bad debt receivables, with US$6.6M. They were followed closely by cloud-adoption company Reynen Court (US$4.5M), contract management company Leeway (US$4.2M), London’s Orbital Witness (US$4.15M), and Glasgow’s Exizent (US$4.1M).
The deals cut across areas such as compliance and risk management, artificial intelligence, blockchain, digitization of traditional legal services, online law firms, sustainability reporting, practice management, and myriad other areas.
The breadth and depth of early-stage legaltech solutions raising money points to the growing demand for and openness to such solutions from both law firms and the general public - the latter evident by LegalZoom’s staggering US$7B IPO.
Curiously though, while law firms have traditionally helped to broker venture capital deals, they remain absent from the cap tables of most early-stage legaltech startups. A cursory scan of the cap tables of legaltech deals done in the past 12 months reveals the usual suspects - traditional venture capital firms and prominent angel investors.
While corporate venture capital (CVC) continues to grow, with funds plowing over US$73B into startups in 2020, law firms have typically remained reluctant to establish their own funds - perhaps owing to a conservative nature and an “if it ain’t broke, don’t fix it” mentality.
But as law firms face growing competition from online competitors, tech-driven peers, and ALSPs, they will have no choice but to look for new opportunities to differentiate. Investing in tech startups and scale-ups might offer law firms a low-cost path to improved competitiveness and financial diversification with a significant potential upside.
Since 2015, we’ve been partnering large corporations with startups and scaleups from around the world. If you’d like to learn more about how we might partner with your law firm to help it do the same, get in touch.
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about the author
Steve Glaveski is a Harvard Business Review contributor on all things high-performance at work. He is the author of Employee to Entrepreneur (Wiley, 2019), and co-founder of Collective Campus, the boutique consultancy behind NewLaw Academy that has generated millions of dollars selling discretionary services to many of the biggest organizations in the world - without the benefit of an established brand,pre-existing relationships, a corporate card, or a large team. Steve previously consulted to the likes of King & Wood Mallesons, Mills Oakley, and Cornwalls, and worked in consulting for EY and KPMG.
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