At first, we invested our own money, but we also allowed other accredited investors to participate. As with traditional venture capital, we receive a 20% success fee, provided TermScout is able to execute its vision, but unlike a fund, there is no management fee. To create the syndicate, we used AngelList, which charges a minimal setup fee, which is divided pari passu among all investors. This mechanism benefits us because it allows us to invest with leverage and allows regular lawyers to invest in venture capital transactions that they do not normally have access to. (For the growth of solo capitalists and unions, see “Ep 26: State of Venture Capital,” All In Podcast, March 19, 2021. Legal tech companies have already invested more than $1 billion in venture capital this calendar year, according to data from Crunchbase. This figure surpasses the $510 million invested last year and the all-time high of $989 million in 2019. The Series A expansion was led by Arthur Ventures. New investors Touchdown Ventures and Clio CEO Jack Newton also participated in the round, alongside Round13 Capital and other existing investors. To date, Athennian has raised $17 million, or about $14 million in venture capital per pitchbook. The sometimes icy pace of the legal world obviously doesn`t give the industry the opportunity to be disrupted by new technologies – but venture capitalists seem to be betting on it. The other challenge in setting up a venture capital arm in a law firm is convincing partners to provide capital. And while it`s hard to get the partnership to invest in a unique opportunity, it`s even harder to get a company to create a fund.
For example, 2021 was a turning point for law firms, but how many companies took advantage of additional profits to set up captive venture capital or invest in unique opportunities? Probably zero. Captive funds: It seems like an open secret, but Kirkland has a fund through venture capital partners Touchdown Ventures, who have invested in Casetext, LinkSquares, and Lawgeex. Touchdown Ventures works with leading companies to manage their venture capital funds, or what they call “venture capital as a service.” MDR LAB, which according to Crunchbase has made four investments in companies that have followed its program, is perhaps the most authentic form of captive funds, both because of its branding and the company`s close collaboration and alignment with its portfolios. The funding round was led by private equity firm Insight Partners, which invested in other legal tech companies such as DocuSign, Kira Systems and ContractPodAI, as well as large companies such as Twitter, Shopify and Hello Fresh. AirTree Ventures, an Australia-based venture capital firm, co-led Series A. This investment model for killer whales has many advantages of a captive fund as well as unique opportunities. For one thing, syndication instead of raising a fund does not create artificial pressure to find opportunities and deploy capital. We have the freedom to invest only when we find opportunities we truly enjoy.
On the other hand, the union should be able to act quickly, because instead of convincing a company to invest all the company`s money, it is enough to convince individuals to write smaller cheques. In other words, monitoring legal technology is different from separating money. For the most part, AmLaw has avoided 200 CVCs or investments in startups. By comparison, nearly 20% of the S&P 500 has a venture capital arm, and the $70 billion in CVCs invested in 2020 accounted for 25% of all venture capital deals this year. See Brian Rinker, “A Peek Inside the Hidden, Messy World of Corporate Venture Capital,” Insights by Stanford Business, January 20, 2022 (providing industry data and indicating an effective HVAC approach requires “a serious commitment to long-term investment”). With over 13 years of leadership experience, John has earned a reputation as a strategic thinker and creative problem solver. As Global Chief Innovation Officer and Partner at Dentons, John works closely with the firm`s lawyers and professionals to identify and deploy client service solutions that leverage the firm`s diverse legal expertise, thought leadership, global presence and entrepreneurial spirit. Prior to joining the company, he served as President Barack Obama`s Assistant Secretary of Commerce for Economic Development. During his tenure, he launched new coordinated federal initiatives to accelerate innovation-driven growth strategies, including the i6 Challenge and the Jobs and Innovation Acceleration Challenge. I call this method “investing like orcas” because of its collaborative approach. This is very different from traditional venture capital investments.
Contractbook, a Denmark-based contract lifecycle management platform, raised $9.4 million in its Series A investment round led by venture capital titan Bessemer Venture Partners in late 2020. In November 2019, Gradient Ventures, Google`s AI-driven venture capital fund, led Contractbook`s $3.9 million startup round. The chart below shows the trend, including records for deals and overall funding in 2021 (admittedly a pivotal and outlier year for venture capital investment in general). Unique opportunities: The best example is Clifford Chance and Latham & Watkins` investment in Reynen Court. As far as I know, neither company provided capital to regularly venture into promising legal startups, but they saw an opportunity at Reynen Court and committed serious capital. A similar example is Cleary`s investment in 10BE5, a new technology that automates the work traditionally done by lawyers in preparing financial market information (disclosure: I am an investor in 10BE5). Wilson`s investment in Lexion isn`t exactly the same as the previous two examples, as Wilson has funds that make a lot of investments in startups (not just legal tech), a central part of the company`s strategy.