These 10 VCs are making the biggest bets in legal tech - Josh Loe

These 10 VCs are making the biggest bets in legal tech


  • As the legal industry is being propelled toward digitization and innovation, venture capitalists are pouring more investments into legal tech.
  • The total value of legal tech deals clocked in at $1 billion globally in 2019, double the amount from the previous year, according to data from PitchBook.
  • Here’s a list of 10 of the top VCs leading the charge in legal tech investments, from titans like Accel and Bessemer Venture Partners to Peter Thiel’s Founders Fund.
  • Visit Business Insider’s homepage for more stories.

All signs seem to be pointing toward digitization in the legal industry — and venture capitalists are taking note.

The last few years has seen a growth in VC investment deal activity in legal tech. Last year, there were 124 deals valued at around $1 billion in the space globally, up from 84 deals valued at $500 million in 2018, according to data from PitchBook. This year, there have been 80 investments, with a total value of $490 million, to date.

This year’s deal activity from VCs lags behind 2019 for two probable reasons, said Scott Mozarsky, who focuses on legal and compliance markets as a managing director at the investment bank, JEGI. While Q3 and Q4 to date have been “extremely active,” Q2 this year was not due to the pandemic.

Mozarsky added that the last couple of years saw very large investments in a select few legal tech companies that pushed up the deal value figures. For example,  cloud-based legal software provider Clio raised a blockbuster $250 million in its Series D round last year, while private equity firm Hg Capital acquired the end-to-end document management system, Litera, in 2019 as well. While it didn’t disclose the terms of the agreement, Hg did announce that it would invest $42 million in Litera.

As for investments this year, DISCO, an AI-fueled platform that helps lawyers gather evidence quickly without using third-party providers, raked in $60 million from top VCs like Georgian Partners and Bessemer Venture Partners in October. Another up-and-coming startup, DoNotPay raised $12 million in its June Series A, led by hedge fund Coatue Management, from Andreessen Horowitz and Peter Thiel’s Founders Fund.

Legal Tech Investments PitchBook



PitchBook


Law firms seeking greater efficiency, clients wanting to cut costs, and in-house counsel needing to validate their work have all led to a drive for innovation in the legal industry, several VC investors previously told Business Insider.

Read more: The notoriously old-school legal industry is finally warming up to tech. Here are the winners and losers as law firms turn to startups to cut costs.

The coronavirus pandemic, which has propelled most corporations toward remote work, has only accelerated the drive toward technology, from cloud data storage to contract management platforms.

The 2020 Legal Trends Report, released last month by Clio, one of the largest tech companies in the legal industry, found that there were measurable benefits to firms that more readily innovated during the pandemic: Law firms that employed certain types of technologies earned 40% more in revenue in August, and generated 27% more new casework from May to August, compared to firms that didn’t.

As investors are increasingly eyeing legal tech, Business Insider used data from PitchBook and Crunchbase to compile a list of the VC players that have made the most investments in the legal tech market. Some VCs invested in the same companies multiple times, and the deal counts below reflect this number.



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