Remaking News of the Week: Jae Um on the state of play in legal innovation

Remaking News of the Week: Jae Um on the state of play in legal innovation features a recent piece in her fabulous analytical style posted on Bill Henderson’s Legal Evolution blog. (1)    

“You’ve all seen the headlines, and you’ve all heard the story: 2018 was a watershed year for legal startup funding. Yes, I absolutely agree it was — but I’m not sure we are putting that story in proper context.

“In 2014, a search on AngelList for companies identifying as legal startups would return somewhere in the neighborhood of 400 companies. Today, that number is 2,282. On its own, this isn’t conclusive proof that legal innovation is exploding, but it is a signal.

“Crunchbase reports over 600 venture deals in the past decade for 372 companies, with a total deal value of $2.5b.

“2018 saw an enormous uptick in early stage deal flow relative to 2017, and if you take Seed and Early Stage rounds

together, the Crunchbase data suggests higher values for both categories in 2018 relative to 2017. What this data point suggests is that 2018 may have produced a bumper crop of early stage startups. How these particular startups actually fare remains to be seen, but I tend to think these industry-wide trends are, on the whole, positive for the legal vertical. (see Deal Count by Stage, 2014 – 2018)

“We are almost 2/3rd of the way through 2019, and we are seeing enough movement to confirm that the frantic pace of activity from 2018 isn’t slowing down.

“Aside from the raw numbers though, my quick run through some of the marquee deals revealed a few other interesting trends:

• LegalTech is global: Of the nine deals highlighted above, at least four are based out of the US. Red Points is Barcelona-based, LegalStart is Paris-based, Farewill hails from the UK, and 164 is based in Hainan, China.
• Startups target diverse segments: While Farewill is the only startup in the above nine that is B2C, LegalStart is a one-stop operational platform for entrepreneurs and small businesses, Litify offers a full-stack platform solution for Small Law, and Nivaura is a end-to-end workflow solution for investment banks.
• Legal looking SaaSy: Red Points provides a platform solution for IP infringement detection and removal, while Litify is built on SalesForce.”

Graphic credit:
Buster Benson via Medium Cognitive Bias Cheat Sheet, Simplified

(1) The Current State of Play in Legal Innovation: A New Era of Evolution in the Making was written by Jae Um and published on Legal Evolution, August 11, 2019.