The law moves slowly, but legal tech startups aren’t.
In January of last year, legal tech startups raised a meager $1.25 million according to Crunchbase. But this year, the same group of companies have raised a touch over $49 million in just over a month’s time.
So what’s pushing such a strong start to 2018 in legal tech? It turns out making eDiscovery easier is a good way to attract funding in the sector. And two startups in the niche, CS Disco and Logikcull, are leading the way.
Founded in 2004, according to Crunchbase, Logikcull has been offering eDiscovery services for over a decade. Andy Wilson, its CEO, described his company to Crunchbase News as “the only fully featured, and entirely self-serviced, eDiscovery platform in the cloud.”
However, it wasn’t until 2015 that Logikcull looked to investors and raised a $4 million seed round with Storm Ventures leading the event. A year later, the eDiscovery platform raised an additional $10 million Series A, adding OpenView as a lead investor. The cloud-based eDiscovery platform has found itself one step away from being a late-stage startup with a $25 million Series B announced January 29th, bringing its total funding to $39 million. The round was led by New Enterprise Associates, with Storm Ventures and OpenView staying on deck.
According to a company blog post on the raise, it took Logikcull just over two weeks to raise the new capital. How it managed to do this likely comes down to the startup’s pace of growth.
In addition to growing its customer base by 500 percent in less than a year, Wilson told Crunchbase News the startup projects it will also “hit 10 TB uploaded/day” in the next two years. Currently, the company is nearing 1 TB of data uploaded a day.
It also doesn’t hurt that the company didn’t exactly need funding to keep itself steady.
“We weren’t looking to raise money. The business was well capitalized before NEA approached us about investing,” Wilson told Crunchbase News. “We took the investment because it will help us accelerate future product development—2020 bets—Chetan, the partner at NEA, has an amazing track record of helping to take companies public, one of our long term goals.”
He also added “this bull market can’t last forever,” a comment that would prove timely given recent market behavior.
But Logikcull isn’t without its competition. We only have to go south to find it.
Much like Logikcull, CS Disco offers software solutions to help with the eDiscovery process. CS Disco also augments its software with eDiscovery professionals, complemented by artificial intelligence the startup calls Disco AI.
The startup has raised a total of $50.6 million for its eDiscovery solution, with its latest Series D raise of $20 million announced merely one day after Logikcull’s $25 million Series B. Its investors include LiveOak Venture Partners, Bessemer Venture Partners, and the Arkansas-based Stephens Group.
The company, in a press release, labels its Series D as “growth financing.” CS Disco intends to “double its engineering and product team to continue investing in the eDiscovery solution DISCO Review while also beginning to expand the DISCO platform beyond eDiscovery.” Bessemer Venture Partners, which led the Series D round, noted it was “thrilled to have the opportunity to double down” on its investment due to its growth.
“In 2017, we grew revenue by 2.7x overall and by more than 3.3x in the AmLaw 200 segment,” said founder and CEO Kiwi Camara in a release. “Our accelerating growth is driven by both more and more firms switching to DISCO firm-wide and the tremendous loyalty of our existing customers, who grow their business with us every year.” CS Disco claims over 400 law firms as customers.
As noted in previous reporting, many legal tech startups are still in the seed and early-stage, providing a healthy pipeline for later-stage deals. Whether CS Disco and Logikcull represent a harbinger of more deals to come for legal tech’s early-stage cohort remains to be seen.
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