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Raymond Blyd

  • Raymond Blyd

Breach: New Players in Contract Management
Breach: New Players in Contract Management 1920 1080 Raymond Blyd

Update 2: April 19, 2019

Traditionally, managing contracts was a byproduct for lawyers. The real money was in drafting new or reviewing existing ones. Not anymore and here’s why.

Gates

Our society is glued together by agreements. Contracts are the engine of our economy. At the top we have treaties and at the lowest level, we use courtesy. In between these levels, we have thick layers of agreements drafted by legal professionals. Ranging from the simple employment contracts to the endless user agreements we all click thru. The more money is at stake, the more intricate the contracts become and the harder they are to manage.

Understanding contracts and their financial impact are vital to any successful enterprise. Most company revenues depend on having signed contracts with their customers. Likewise, the value of a company is measured by the signed agreements with the correct stakeholders. Therefore, two essential economic elements are the text in the agreement and the signature of the parties.

Barbarians

While the text part sat comfortably in the realm of the lawyers, the signature section provided an opening for everyone to storm the gates. We previously discussed the DocuSign IPO and Dropbox acquisition of Hellosign in the larger context of LegalTech.

Update 1: Docusign invested $15 million in Seal Software

Better yet, even Apple demoed their eSign solution on stage back in July 2017.

However, there are more pathways into this universe of contracts and these are provided by the text sections. More precisely: the facts and figures parts of a contract like names, dates, and amounts can be fed to a machine. New entrants armed with machine learning skillset are now able to fire at this fortress for lawyers called contract.

Breach

These new players in the contract management space can also draw on great entrepreneurial skills. They position themselves more attractively as a Google for your enterprise and appeal to a broader market. This enables them to raise a war chest of capital.

Managing your contract has now become this juicy add-on for any text or data analytics company in the world. Any data point which can harm your enterprise is a risk to be analyzed with SmartTech. So after millennia of dominating contracts, attorneys may have to capitulate to machines on reviewing and managing them.

Arena

Now once we took this lens and calibrated it to find contract management solutions, we discovered dormant LegalTech companies. We started looking at these creatures in May 2018 and revealed the first draft landscape in December. Like Jane.ai, their ammunition is hidden in mission statements, product descriptions, use cases or customer testimonials.

If we round them up and calculate their collective investment capital, you see the numbers in the image below. We mentioned the battle-harden gladiators from the Sales (Quote to Cash) and Customer Relations Management (CRM) arena in the Exits analysis.

LP Contract Landscape 2

Unchained

Now every Cloud Storage, Document Management or Machine Learning solution looking for a problem will have a peek at contracts. It will get tougher to explain to an engineer that a contract is not a math problem. Especially when lawyers created endless fields of text for a machine to mine.

Update 2: Google came to party

In the end, this should not be a clash but a collaboration between industries. For the sake of a safe society, having more clarity in contracts would be beneficial to everyone.

Especially when we realize that this legacy mechanism of a contract in text is in a race against a smarter competitor on Blockchain.

  • Raymond Blyd

Exits: Actual $ Value of LegalTech [Infographic]
Exits: Actual $ Value of LegalTech [Infographic] 1296 421 Raymond Blyd

We’ve collected 194 acquisition exits since 2016 to find out: what is a Legal Tech company actually worth?

Law vs LegalTech

Dropbox bought HelloSign for $239 million to kick start the year. Crunchbase unpacked the deal and estimated that HelloSign’s latest investors got 2 times their investment back. Some may not consider HelloSign a “LegalTech” company but if you do, is it a profitable investment? Let’s run the numbers..

Most of the merger and acquisitions action happens in the non-technology space aka Law. In this space law firms get acquired or litigation support services buy up court reporting or translation companies. We also encountered online marketplaces buying the last mile by acquiring boutique litigation firms (Divorce Online > UK OLS Solicitors) (DepoTexas > Jensen  Litigation Solutions).  

Even consultancy firms are getting into the game of buying vanilla legal (Norton Rose Fulbright > Chadbourne & Parke LLP). We even saw the reverse where a LegalTech company bought a law content provider (Fastcase > Law Street Media). 

However, if we look at the sum of spending per disclosed acquisition transaction in each area, most of it is spent in technology impacting law aka LegalTech & RiskTech. LegalTech racked up $3.91 Billion in buyouts. RiskTech $3.34 Billion with just 23 transactions as seen in the image below.

LP activity vs spend

Moreover, the new owners of legal technology companies aren’t Law Firms. Consultancy firms are frequent shoppers for LegalTech (Ernst & Young > Riverview Law, Citizen,  E-STET) and RiskTech (Ernst & Young > Aspect Security).

LegalTech vs The Rest

As many legal experts are staring one-eye straight at the middle of the legal pie others, like Dropbox, are biting off the crust. Google and Facebook are creating, investing or acquiring technology with an impact on society and the law. These other area’s we classify as either CivicTech or RiskTech. Facebook made a couple of acquisitions such as Bloomsbury AI to combat fake news (CivicTech) with AI and Confirm.io to combat fake people with biometric ID’s (RiskTech).  

One of the more interesting acquisition patterns we witnessed was by Tyler Technologies who acquired Modria. From afar, it seems scattered across practice management (CaseloadPro), IoT data (MobileEyes), law enforcement  (SceneDoc), security (Sage Data Security), and raw data analytics ( Socrata). If you stack these technologies the right way, you’ll get the perfect law firm. CivicTech may offer us the best window into the future of the legal profession. Governments and the legal industry both suffer bureaucratic inefficiencies stemming from procedures. However, one has a commercial incentive to keep it as-is, while the other has a civic duty to speed things up.

If you’re going up the ladder of risk, security companies are buying vision technology to beef up their biometric tech (Two Hat Security > ImageVision). Downstream they can then serve financial institutions with protection against fraud and money laundering. Just ask ING why they had to settle their money laundering case with a $900 million fine, the largest in Dutch history.  

Other players, with a more practical angle, are swooping in and go straight for the cherries in LegalTech. 

Conga, a Quote to Cash service surfing on top of Salesforce, acquired Counselytics and made 5 other acquisitions in a space of 2 years. All of them geared towards helping those in sales to contract faster. Fiverr.com bought AND CO to help freelancers draft contracts and pay taxes. Stripe build their own legal stack to onboard entrepreneurs to their payment platform by incorporating their company, assisting in accounting and taxes.

Exit

Now to our initial question: what is a Legal Tech company actually worth? In very few cases it can be worth a lot. Here’s why: out of the 194 transactions we tracked, we could only trace the sale price for 86 companies. From these 86 acquired companies, we could only find 27 listing how much investment they had raised before the buyout. 

Stay with me: out of the 27, we could tag 21 as LegalTech. And out of the 21 LegalTech, only 8 had a positive return on investment. Meaning: the sale price was more than the sum of all disclosed investments in that company. 

Here’s the key: those 8 acquisitions were huge payouts if you ignore burn rate and debt the acquired company may have had sitting on its balance sheet.

There is some debate on how these numbers are compiled and perceived so see them as proxies to the truth. Here’s a good article to start understanding the mechanics behind investment data. In any case, these numbers provide one more data point we’ll put to good use in our engine for world peace.

By doing this analysis here’s what we learned:

  1. LegalTech acquisitions are increasing in frequency;
  2. Outsiders buy more and spend more;
  3. Compliance (RiskTech) is increasing in value;
  4. Government Technology and CivicTech may be a perfect role-model for the Legal Industry.

And here’s what my gut tells me: Salesforce, Microsoft, Apple, and many others are ready to get in on the action, and we’ll first notice it by their strategic acquisitions in..RiskTech. 

Enjoy the Infographic and send me questions on Twitter, LinkedIn or email. 

Legalpioneer Exits
  • Raymond Blyd

Why I left my job? To power world peace
Why I left my job? To power world peace 1650 873 Raymond Blyd

If I could ever offer a small contribution to world peace, then this data-driven approach may be my best chance yet.

Sentry Syria is an early warning system for air strikes based on crowdsourced intelligence. It is one of the 170 CivicTech examples harvested in the Legalpioneer dataset. Bark, another company in this category, is battling cyberbullying and also registered as one of the best-funded CivicTech ventures of 2018. Finally, Google pledged about $300 million to fight fake news. But considering its revenue of $31 billion, it hardly seems enough compared to the damage misinformation can inflict on its customers.

Conflicts usually start with a misunderstanding or miscommunication. Nowadays our communication channels aren’t private but ruled by commercial interests. Channels that tyrants can purchase to bully citizens and eliminate dissent. If we could avoid being misled and expose bullying at any level, maybe we wouldn’t need air strike warning apps.

While the above CivicTech enterprises offer us a graphic example, LegalTech and RiskTech usually camouflage their impact on a fair society. They’re technologies that infuse the law across industries and help them to distinguish right from wrong. They ensure legal principles are embedded into operating systems. Principles like privacy by design or decentralizing authority aren’t just efficient, they are essential human rights. If we don’t implement them we’ll end up confused and at war with each other when using any service.

We now have more data and facts at our disposal than at any time in human history. We have better communication channels and more computing power than any generation before us. Maybe we just need a smarter way to find the best ideas and concepts that help keep us safe. With an analytical approach to constructing a startup idea, maybe we can insert more civility across services we use daily. I sincerely believe a world, not at war is a good long term investment. And we can incentivize those who pioneer peace in their respective areas.

We started looking for pioneers in 2016 and collecting data. Now we have gathered enough to start building a tool to empower the next generation of entrepreneurs that aim to build an ethical aware enterprise.

What if we had a way to craft and then test unique business ideas. What if you could benchmark your concept against a dataset of over 7000 startups. Find similar ventures based on market, location, and technology. By matching existing companies, to your own startup, you can calculate costs and estimate the investment needed. Imagine a tool to assess the strengths and weaknesses of competitors based on mentions and traffic. Finally, an app where you can shop for pricing, terms, use cases, business models and customers on comparable companies. Wouldn’t it be magical if it helps you craft a pitch, generate a business plan and slide deck in just 3 clicks?

Thanks to Nathalie Dijkman, the new incubator at the Amsterdam Law Hub from the University of Amsterdam will be one of the first to pilot this platform. It may hopefully inspire fresh minds to strategize their ideas, estimate their value and tweak until it is unique. By providing a statistical basis we can empower pioneers to contribute to the impossible: world peace.

Why now? Our numbers show that legal startups have been declining for a second year in a row. Moreover, funding of legal ventures is skewed towards mature later stage companies that only tend to serve traditional models.

After realizing the potential impact and the work that lay ahead, I couldn’t treat this as a side project any longer. This cause matters so it deserves to be a mission with a full-time dedication. I’m one startup willing to help more start up and keep the peace.

Will you join me?

  • Raymond Blyd

2018 Rewind: Facts, Fantasy and The Future of LegalTech
2018 Rewind: Facts, Fantasy and The Future of LegalTech 1060 560 Raymond Blyd

The year 2016 was the hottest year in Legal Tech and 2017 was all Blockchain. This year was about the investments. And that may have been a distraction.

Facts

Fact is, 2018 was pretty weird and much of it was caused by the enormous injections of capital into the industry. It also revealed the investors behind the scenes fueling the fans of LegalTech. However, news about the funding rounds has diverted attention away from numbers that would have cause to dampen our exuberance.

Status 2018

If we forget the finance fountain for a moment and focus on three trends which defined our year:

  • The continued decline of new LegalTech ventures;
  • The robust growth of RiskTech and CivicTech;
  • Contracts won the popular vote.

In our charts, we kept track of new startups created each month since 2010. We’ve been enjoying steady growth of new legal startups up until 2016. This year we dropped near the 2013-14 levels as you can see in our animation below.

slowdown 2018

The metric that actually made us aware of the steady decline was the number of mutations we perform on the dataset every year. In 2017 we performed 4184 mutations on the data which translates to 11.5 changes a day. The majority of the mutations consist of adding new companies, the rest was updating existing listings.

This year we had 2722 mutations in total which translates to about 7.5 changes a day.  This 35 % reduction cuts across most markets except for two: RiskTech and CivicTech.

Mutations20172018
LegalTech1775933
Law576114
Tax27052
RiskTech618612
CivicTech8783

CivicTech doubled in size this year probably inspired by the #MeToo movement and the US midterm elections. In RiskTech, the main driver could be the fact that these companies receive more investment on average than any other type of venture impacting the legal industry.

They say: an ounce of prevention is worth a pound of cure.

The chart below illustrates this disparity between LegalTech and RiskTech in terms of average worth each year since 2010.

[chart id=”8114″]

In 2017, the biggest splashes were made by LegalTech companies supporting the entertainment industry by managing copyrights. This year’s bright spots was on services who managed legal documents for a broader customer base. At closer inspections of the companies receiving cash and clicks this year, we notice they literally revolve around the management of contracts.

Fantasy

Let’s face facts, our reality is dominated by misinformation and the sad truth is that it is mostly by our own design.

In order to keep us enthralled, companies increasingly create fake doors, concierge services, use slick demos and content to test markets and experiment with business models. Blockchains startups used these techniques to the extreme to prop up demand for their initial coin offerings. And Artificial Intelligence startups aren’t angels either.

The magic we witness most often belies the fundamentals of the technology required to build these concepts. With A.I. in particular, the principles underlying its creation puts it only within reach of a couple of companies and nation states. In contrast, Blockchain is blue-collar tech that can legitimately finance itself. I’m therefore so saddened by the greed destroying its credibility.

The premise of Blockchain has more real value than the promise of Bitcoin.

In short: while many can do blockchain, only a few have the funds, talent, and data to do A.I. We’ll always applaud the magicians that get to pull off “A.I” and make us believe. And Legalpioneer will be the first to seek front-row tickets to that show.

Ambition 2018

But hey, it’s 2018 so let’s not dwell too much on facts and celebrate the little discoveries that delighted us this year. Found our first A.I. research platform in Africa called: Judy. Bots are on the decline throughout the tech industry except for a curious new species called: Telegram Bots. We found about 9 LegalTech Bots on Telegram originating from Moscow and Kiev.

Two other tidbits that tickled my brain :

  • Netdocuments (Software company) acquires Chapman and Cutler’s (Law Firm) Closing Room deal management application (Software).
  • Elevate (Software company)  secured investment from Morgan Stanley (Financial Institution) and went on a spending spree to acquire Lexpredict and Sumati for contract lifecycle, mitigation, and diligence capabilities.

These storylines exemplify how surreal the legal industry has become and may signify the direction we’re heading. However every year, the universe shuffles our deck of expectations, deals us a new hand of assumptions, dares us to play the prediction game and asks: wanna bet?

Therefore next year I suggest we rely more on data and facts. I hope to see more growth in LegalTech. But above all else, I wish you all a prosperous year with lots of magic.

And here’s how you properly rewind an extraordinary year: just click on the “Previous post” below and keep clicking until you get to the 2017 Review.

Press Play

  • Raymond Blyd

Investor Landscape of the Legal Industry [Infographic]
Investor Landscape of the Legal Industry [Infographic] 1917 844 Raymond Blyd

Update April 22, 2019: 2018-2019 infographic

In 2018, we found 1941 individuals and organizations as an investor in companies impacting legal. Who is funding the legal industry? And Why now?

The Investor

If you kept an eye on the legal industry this year, you may have noticed something brewing. It started with an ICO craze we detailed in February and resulted in some outrageous announcements. Such as, Block.one raising $4 billion and then getting something extra from Peter Thiel, the billionaire founder of Legal Tech company Palantir. Fun fact: Peter is the most cited figure in articles on this blog.

But things really got weird in June and prompted this: First Half of 2018 Legal Tech Raised $1.2 Billion in Cash. Stories began to appear that revealed stars like Mark Cuban and Kobe Bryant also dabbling in Legal Tech. Steve Balmer, the former CEO of Microsoft, is a charitable CivicTech investor who poured $59 million more into the sector this year. Atrium LTS had 95 investors for a record-setting first round in 2017 and doubled down with two more rounds this year to close at $75.5 million. To put this into context, the average number of investors in the legal industry is almost 6 per company. And it wasn’t just Legal Tech companies, RiskTech also got some love like Assent Compliance getting $100 million.

To keep pace, there is a new chart up on Legal Startups Charts with amounts raised each month. However, after absorbing these shocking numbers, I had more questions about the wave of cash and coin injected into this niche.

Why Now

I suspect a combination of several factors that make this year different. First, I came across a good tip a while back:

One of the most reliable startup investing strategies is looking at where people spend a ton of money but hate the experience.

If we view the legal industry through this lens I would imagine money to be flooding the sector every year. Our estimate of total funding raised in 2017 was around $385 million. But here’s what happened: this year kicked off with 34 fundraising rounds in January with a total of $123 million. That is about a third of the entire previous year and we’re talking about a single month. In hindsight, January actually was the slowest month so it may have set off another famous investment credo called FOMO (Fear Of Missing Out).

In April we had another trigger with the successful IPO by DocuSign, the first pure Legal Tech exit to the stock market I have witnessed. They also acquired SpringCM for $202 million to move deeper into the corporate legal workflow. Then LegalZoom dropped a $500 million round in July as a sign of a strong consumer legal market. This could have been the catalyst for another monster month in September with a total of $796 million.

Questions?

It took four months and two new datasets to answer some of these questions. Like how many received seed capital (109) and which investors (e. g. Goldman Sachs) don’t mind betting on experimental ventures. And which sector got more early investment? To my surprise, it’s a dead heat between RiskTech and LegalTech (47 each) and we still have a couple of good weeks left in this year.

There also is a new ‘Data’ page which we’ll use to explain the general approach to our datasets. And if you were wondering why I abandoned our black & red scheme for this infographic, it’s because I was inspired by the real exit investors are looking for.

Do you have questions? Just reach out on @Legalcomplex or Linkedin

Enjoy!

  • Raymond Blyd

RiskTech: Will This Save The Legal Industry?
RiskTech: Will This Save The Legal Industry? 1920 975 Raymond Blyd

Since 2016, the only sector impacting the legal industry which showed measurable growth of new ventures and funding is RiskTech. So is this the new “LegalTech”?

What is RiskTech?

RiskTech is technology that is helping you avoid prosecution from the government, litigation from anyone or bankruptcy by stupidity. We’ll get to the stupidity in a bit.

Originally the term RiskTech is derived from the more broad sector term RegTech which stands for Regulation Technology. RegTech was used to describe the companies and technologies that assisted FinTech companies in implementing financial regulations. How did RegTech become an industry in itself? I once studied the number of laws per sector in the Netherlands and the financial sector was a clear winner with the most number of rules.

We quickly realized that RegTech wasn’t limited to the financial sector during the analysis of profiles. We discovered a breed of technology companies managing risk and regulations in heavily scrutinized areas like Cannabis and Health. Recently Snoop Dogg backed Metrc raised $50 million to track weed. Other popular topics companies are tackling are Identity, KYC (Know Your Customer), Fraud and Privacy.

Not only the companies that prevent risk but also the ones that are insuring against it are considered RiskTech. While a lawyer may offer a legal product, like a contract, to cover a defined set of risks. Insurance companies use complex calculations on data to issue you a blanket coverage on the same set. Therefore almost everyone regularly pays for some kind of insurance policy but few have a legal counsel on speed dial.

Last but probably the first RegTech in human history is Tax. Everyone needs to pay taxes and not paying them puts you on a likely path towards bankruptcy.

There are over 170 unique labels we managed to put on RegTech companies in the Legalpioneer dataset. Here’s how we aim to make sense of the landscape:

SectorMarketAnd they do?
LegalLegalTechdoes legal work
 Lawfind legal work
RegTechRiskTechavoid legal work
 FinTechcomply with regulations
 WealthTecha (rich) FinTech subset
 Tax..obviously..
 CivicTechinfluence the law

Why is RiskTech growing?

First, we were digging for gold, then we were drilling for oil, now its hoarding Data. Tim Cook’s blistering attack on the ‘data industrial complex’ wasn’t just an indictment of “free” services such as Google and Facebook. It actually was the best marketing for the RiskTech industry.

This simple dynamic of danger in data has driven the growth and there is a metric that revealed this: Valuation. The average valuation based on our data set is calculated by taking the total number of companies in each sector and dividing them by total dollars raised in their sector. The horizontal ax shows the year a company was founded. By this measure, RegTech companies started in 2010-11 are now hitting full stride and for “as little“ as 14 million dollars in the bank, you have a fair shot in this market.

[chart id=”4881″]

How does RiskTech work?

Just like your email spam filter, RiskTech uses smart technologies to filter risk in data. A straightforward way to achieve risk-free data is to anonymize it. The latest 2018 funding dashboard featured two FinTech companies that offer to process payments anonymously in crypto or cash transactions.

Another approach to minimizing risk in data is to lock it up cryptographically with Blockchain. In our analysis of Initial Coin Offerings (ICO’s), we discovered that the second most popular use case for Blockchain was securing user data to monetize it. Ventures like ONO Social and Yours collectively raised 61.7 million dollars this year alone which is part of 133 million dollars raised in this area.

Finally, as an individual, you would like to avoid having a lapse in judgment send you to jail. It took Elon Musk a single tweet with two specific words (“Private” and “Secured”) and one $ amount (“$420”) to almost accomplish this.

If tech could have stripped any of these terms from the tweet before it hit the net, the Tesla board would have been very happy. This tech is already in use but, unfortunately, not for this purpose.

Saving A Fair Society

This post started as another RiskTech love story since the numbers showed more money sits in RegTech as opposed to Legal. However this year, all markets have been receiving a firm handshake from investors.

We all enjoy free but it comes at a price and giants like Facebook are slowly coming around to regulation. Therefore, RiskTech is making Legal great again.

So when you need to diffuse a bomb or clean up the damage, you hire a lawyer like Elon or testify before Congress like Mark.

But if you like to avoid the hassle or contain the drama, you build or buy RiskTech.

  • Raymond Blyd

What is Legal Research?
What is Legal Research? 1639 557 Raymond Blyd

[update: July 28, 2018]

Download PDF “What is Legal Research”

We added a pdf version which includes 69 links to some of the coolest technology companies in legal research.

[orginal post]

Recently a friend asked us how many legal research portals Legalpioneer has in the dataset. Here’s how the conversation went:

Me: Well, we have about 163 both private and acquired companies we were able to tag as offering research for legal- or compliance professionals. These are companies founded after 2010 and serve both the Legal or RegTech market. However, this overlaps with the 12 companies offering search on intellectual property filings and especially the 63 in the patents space.

“Naah, not exactly what I meant,” He said.

“Ok, but how about 57 search-engines that can find legal information in corporate documents and contracts or the 36 eDiscovery vendors who perform legal research on non-legal or unstructured documents.”

“Nope, also not what I’m looking for” He answered.

“And the 55 research portals where you can look up legislation and regulation globally in sectors like the automotive or real estate industry.”

“Hmmm, we’re getting close” He acknowledges

“We also have 52 legal analytics companies and bots which use Natural Language Processing (NLP) to offer insights on legal questions” I countered.

“And the ones that monitor government- and parliamentary documents or news that influence lawmakers and therefore the law?”

“May be I just want to punch in a few keywords and have cases or codes pop up…I’ll take it from there”

“…take it where?”

[..to be continued..]

  • Raymond Blyd

First Half of 2018 Legal Tech Raised $1.2 Billion in Cash
First Half of 2018 Legal Tech Raised $1.2 Billion in Cash 1148 468 Raymond Blyd

[update: October 24, 2018] 

Added the line graph from the LegalTech Funding Landscape infographic to LegalTech Charts.

Two FinTech companies impacting legal are payment providers primarily focused on protecting customer privacy. Their core feature is to process payments anonymously in cryptocurrency or regular payments transactions.

The line chart below only displays funding in Legal Tech and Law. The LegalZoom round (August update below) inflated the law category and ballooned July. See the more bubbles in Law with the “Others” interactive chart. The below categories are present in the infographic line graph (pdf).

[chart id=”8082″]

[update: September 5, 2018] 

Kira systems just pushed us passed $3 Billion in funding for 2018..yup, it’s the new normal.

Download: LP-LT Funding 2018-v9.pdf

[update: August 9, 2018] 

LegalZoom raised $500 Million and DocuSign acquired SpringCM for a reported $202 million. While the SpringCM acquisition is not the same as raising venture capital, it does express a vote of confidence in a turbulent market. Therefore, July just bumped June as the richest month Legal Tech has ever seen.

But wait..there is more. This month also saw the announcement of Block.one receiving funding from Peter Thiel, after it raised $4 billion (!) with an initial coin offering back in February.

So we had to update the initial infographic to include the elephants.

[orginal post]

In the first half of 2018 Legal Tech raised $1.2 billion in cash. If that isn’t crazy enough, we are ignoring a possible $3.7 billion raised with initial coin offerings (ICO). We previously discussed those blockchain startups impacting legal but we didn’t talk about the elephant.

What’s more amazing is that we are only half-way 2018 but surpassed the amount raised in all of the past 3 years combined. Bear in mind, @Legalpioneer also registered 6 undisclosed rounds by private companies this year and we aren’t perfect so we could have missed others.

YearTotal rounds raised
2017$385 million
2016$280 million
2015$366 million
Total $1.03 billion

A little nuance: some of the larger rounds were debt financing which is a bit odd but not unusual. The other concern is that seed financing in 2018 is trending downwards compared to previous years. It seems Venture Capital (VC) is more attracted to mature Legal Tech.

Year# startups receiving seed or angel funding# startups receiving later stage funding
20181025
20172848
20163940
20152331
20142713

The Elephant

Also note: RiskTech startups grew not only in numbers mainly nudge by GDPR, their funding generally did as well.  Check out the huge rounds by privacy apps Signal and Orchid lab. Both dwarfed by the elephant called Telegram which raised a ridiculous ICO of $1.7 billion.

We still have 6 more months in 2018 but it seems we all value a fair society a little bit more these days.

  • Raymond Blyd

How To Find New Legal Technology
How To Find New Legal Technology 2543 1009 Raymond Blyd

Since January the Legal Industry has seen a flurry of maps, meetups, hackathons, awards, and conferences. All these activities are aimed at sizing the market and finding the next big hit. But what are we really looking for? And are we looking in the right place?

What is legal technology? More then Core

Before we can answer the question where and how to find Legal Technology, we have to address what it is. In general, there are two schools of thought on defining legal technology. First is the technology that makes legal work more efficient for experts or non-experts alike. At its core, it is the technology that infuses lawyers with superpowers. Software such as eDiscovery, Draft- and Research Assistants enable professionals to process more legal work with fewer experts. For consumers, there are marketplaces and Do-It-Yourself (DIY) services that provide exclusive legal support at fixed or lower costs.

Second is a broader view of Legal Tech which looks at whatever technology impacts the law in a meaningful way. Looking at areas where engineers develop smarter ways of protecting legal rights. The same protections previously provided by law experts using contracts, litigation, and regulation can now be resolved with technology such as Blockchain. Here are 11 examples out of 209 we found, ranging from protecting ownership of personal data to securing transactions for anything of value. If we could digitally own our personal data by locking it on the Blockchain, we wouldn’t need the EU General Data Protection Regulation (GDPR).

Data revealed how this trend slowly emerged in the areas that face the most regulatory scrutinies like Finance or Health. Better yet if you measure by either institutional investment, acquisition or initial coin offering (ICO), the most lucrative Legal Tech sector is managing Intellectual Property rights with technology. If we want to effectively document this displacement of the legal industry, we have to take a broad view of what legal technology is.

Where is legal technology? Beyond the Beacons

The quickest way to get up to speed with core legal tech companies is to follow the industry beacons. Here’s what we use to follow new tech:

  • Newsletters;
  • Bloggers (and their Twitter streams);
  • Legal Tech Maps & Country lists;
  • Accelerators & Incubators;
  • Awards;
  • Hackathons & Tournaments;
  • Conferences.

We previously shared some samples from the list above. This year we joined the Global Legal Hackathon in Warsaw, Poland and we were the unexpected keynote speaker. Another highlight is our Dutch Legal Tech map collaboration which garnered over 15,000 views on LinkedIn. It also provided inspiration for this monster collection of Legal Tech maps.

Yet, if the news and announcements zip by too fast, you can always stop and search company directories like Angellist, Crunchbase, or Producthunt. Most databases include a tag for Legal or Legal Tech. If you like to dial back the noise, there are a couple of legal industry lists like Stanford or Robert J. Ambrogi. The Germans even went as far as to locate Legal Tech companies on a map by address. Something we also twice experimented with in Barcelona (video) and in New York (video).

However, one challenge most databases face is how to classify the different types of companies. Something we uncovered while hunting for legal apps is that fixating on categories may limit us from finding more. There is a risk of creating an echo chamber of Legal Tech because protecting our rights goes beyond technology. It isn’t driven by one specific business model or destined to be practice by one profession. You’ll find it in many places and in the weirdest forms.

How to find legal technology? Robots & Reason

Once you sailed past the beacons, you’ll discover the sea of Facebook, Linkedin, and Twitter. Especially Twitter is a pretty rewarding space to find new Legal Tech so we partnered with Orhan Yalcin to build a special machine to find Legal Tech. We dubbed our bot Legalpioneer Recon and ran it a couple of times for it to reveal the other challenge databases encounter: duplicates. The first time we unleashed our baby on Twitter it was like drinking from a fire hydrant. But once you start filtering out the duplicates, the subsequent passes become nothing more than just a drip. Recon now processes between 300 to 400 startups each month to sniff out at best 22 or at worse 6 Legal Tech startups.

If you noticed some dark spots on the Legalpioneer Where map and wondered why that is. It is because our bot learned from us and we only taught it English. When we started Legalpioneer, our mission was to be a global community. One reason is that locals have a much better shot at discovering gems. Something we call the Holger Effect. This strategy resulted in us doubling the size of startups in Russia and Eastern Europe this May. And there was an additional side-effect: Telegram bots doing legal work. We found 9 of this new species of Legal Tech running wild in the Caucasus.

We’re still tweaking the algorithm on what to include in the Legalpioneer dataset. We started with private companies founded after 2010 which should at least have a unique domain name. With CivicTech and Hackathons, we have extended this to communities and projects on Twitter, Facebook, WordPress.org, and Github. We are contemplating incorporating App Store and Google Play apps just as Slack, Messenger, and Telegram bots.

Why look for legal technology? Rather be Safe, than Sorry

Legal Technology is actually an answer to a human riddle: what is fair? At some point in the future, we may trust Google Duplex to give us the best answer. Legalpioneer aims to estimate when we’ll reach that point, calculate our ETA and plot the safest route.

Course set, buckle up!

  • Raymond Blyd

ICO: Fascinating Fields of LegalTech Dreams
ICO: Fascinating Fields of LegalTech Dreams 1980 703 Raymond Blyd

I looked at 304 Initial Coin Offerings (ICO) to find the ones impacting the legal industry. I was simply fascinated and slightly fearful seeing all the beautiful solutions on the Blockchain. Here are my notes and numbers.

Fields

I see Blockchain as a technology that is naturally suited to improve the law. If legal contracts were drafted to create trust, contracts on the Blockchain is a 10x improvement. To clarify, I’m still learning what Blockchain is and I quickly discovered that it isn’t synonymous with an ICO. Not every company raising funds through an ICO necessarily uses Blockchain in their proposition. Some just use the tokens to raise money.

My goal was to find the ICO startups impacting the legal industry. I did not see any that could help legal professionals do their jobs more efficiently, I did find many that make entire legal frameworks obsolete. One framework that is imminently threatened: Intellectual Property (IP) law, also known as the rules that help you monetize your data, knowledge, and anything in between.

[chart id=”7097″]

Here are samples of how many we found that promise to help you earn money with Intellectual Property rights on the Blockchain:

A former 2014 Miss Iowa started her own coin to protect..cannabis. And it wasn’t her first cannabis tech company either. It’s why I called these the Fields of Dreams.

Dreams

Out of the 209 I ultimately ended up including in our dataset, about 32 claim to be either unique or first. To be fair, some are clearly category-defying concepts which we can not shoehorn into existing contexts. Doc.ai describes itself as “Blockchain based AI that performs deep learning computations on quantified biology for predictive analytics and personal health”.

Ok, take a deep breath. Whatever it means, they’ll have to develop some HIPAA compliant, privacy technology in order to operate successfully. While I classify it as ‘RiskTech’ and tag it with ‘Privacy’, it actually could be ‘LegalTech’ since they choose to use Blockchain.

In any case, they raised $11 million with their ICO to pursue this dream of a virtual doctor. And while I was flipping through their site, I couldn’t help but replace the words ‘Health’ with ‘Legal’ in front of ‘care’. It shouldn’t be farfetched to use the same principles to alleviate legal risks as it is to avoid health risks. One can always dream.

This brings me to my other point: these 209 offerings collectively represent a value of $4.37 billion. 

To get a better perspective, on Legalpioneer Where select Market ‘LegalTech’. On the Stage toggle click on ‘Seed’ and ‘Known’ and then drag the date slider to January 2017, you’ll see 28 LegalTech companies that collectively raised $110 million in cash.

Now just click on ‘ICO’ in the Stage toggle for the same period, and you’ll see 55 LegalTech startups raising up to $1 billion via coin.

ICO Cash

ICO Coin

*Numbers in image reflect dataset at publish date*

Woke

After eyeballing a hundred or so Token sales pages I started noticing a pattern. First, each site was meticulously designed to evoke trust. Every single one we included in our dataset had HTTPS-encryption. Crisp team photo’s, gorgeous roadmaps, cute videos and the omnipresent particles Hero. Social channels like Facebook, Twitter, Slack, and Telegram all had activity. This is a tip for any LegalTech company aspiring to launch a trustworthy product, check out the ICO playbook.

However, most sites were generous in communicating every detail except one: a known location. In some cases, it was extremely difficult to distill where their main operations were based. While I do understand that they’re all “distributed” and “decentralized”, you may still need a physical address to receive that 105″ curved 4K display..for the office. Trust starts with the ability to locate you and it’s one of the reasons we go to great lengths to map it in Legalpioneer Where.

Since I only looked at initiatives were the Initial Coin Offering already ended, I got an eerie empty feeling after visiting each site. It felt like I was part of the cleaning crew coming in after a wild beach party. But while I may have been wandering a wasteland of promises, I did feel a sense of missing out on something special (FOMO).

An EY research reported (PDF) that most white papers were heavy on buzz and light on substance. I only glanced at a couple of white papers to lookup their elusive whereabouts.  But the EY report was correct that the ones I saw were written in such a way, I felt stupid and smart at the same time. Using terms like “Turing complete” and “oraclized“. Well, I let you Google them yourself. While you’re at it, below are some links you could use to start exploring these fields of ICO’s. Let’s dream.

In memory of Geert

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