Over $1.4B has been invested in the sector since 2010, with ~ $540M+ invested in 2015-16 YTD
While the adoption of technology in Legal Tech has been historically one of the slowest, the pace has surged in recent times. This has certainly reflected in the funding activity in the last three years, where a cumulative ~$1B was invested. 2014 witnessed the majority share, with startups raising a total $372M, with notable investments during the year including Legalzoom’s raise of $200M and Avvo receiving $37.5M.
According to our Tracxn Report on Legal Tech, over $1.4B has been invested in the sector since 2010, with ~ $540M+ invested in 2015-16 YTD. The report covers companies which develop and provide software for Law firms and Corporate Legal Departments. eDiscovery services which provide software solutions, as well as platforms for B2B and B2C lawyers’ marketplaces, have also been covered in the report.
In terms of the number of deals, 2013 saw the maximum with 56 deals where 53 companies received funding, the highest in the last 6 years. The year also witnessed the highest number of late stage and early stage deals, with notable investments happening in eDiscovery, IP Management, and Legal Document Services sectors.
2014, while seeing a relative decline in the number of deals, witnessed an increase in the funding total due to a large number of Seed and Series A deals. For instance, Ravellaw, Trademarknow, and CS Disco received Series A funding, while Everplans, Upcounsel and Contract Live received Seed funding.
2015 has seen a total 47 funding rounds, with the number of late stage rounds, and early stage rounds, both increasing from 2014. So far, 2016 till date has seen 10 rounds.
eDiscovery sector has received the highest overall funding
It is evident that most of the funding for the sector over the years has been contributed by the eDiscovery sector, with startups here, like Kcura, Catalyst, and Recommind, raising ~$464M. Epiq systems, which is a public company with $500M market cap, accounts for nearly 19% of the eDiscovery global market share.The software segment witnessed its highest funding volume in 2012 and the services space is rapidly consolidating globally as evident from the number of M&A activity in the sector. Some of the recent activity of 2016 includes Content Analyst getting acquired by Kcura, and Huron Legal getting acquired by Consilio by $134M. In 2015 Epiq systems acquired Iris Data Services for $134M and Microsoft acquired Equivio for $200M.
Other notable funding activities have been observed in Legal Document Services, Lawyers’ Marketplace and IP Management, which are hot upcoming sectors. Another upcoming sector is Natural Language Processing which, along with other AI technologies, is gaining traction for automatic contract review and identifying legal barriers in the contracts to avoid litigation scenarios, and significantly reduces the time and resources spent by lawyers in the manual process for reviewing contracts.
Bessemer Venture Partners and SV Angel are the Most Active Investors
Bessemer Venture Partners was the most active investor in the space with Anaqua, CS Disco, and Clio as part of its portfolio. SV Angel follows with investments in Upcounsel and Judicata.
Check out the report here: