iManage, a US ‘Work Product Management’ solution, has bought the UK’s first major legal AI company, RAVN, in a move that surprised the market.
Founded in 2010, RAVN quickly became synonymous with the growing field of commercial legal AI applications, moving from enterprise search to document review and more recently an array of other cognitive applications.
The company is understood to have been, even until very recently, mostly held in the hands of its original founders: Peter Wallqvist, Jan Van Hoecke, Simon Pecovnik and Sjoerd Smeets. The recent CEO and former Tikit boss, David Lumsden, is also understood to have gained an equity share upon becoming the new head of the company.
The company’s last accounts show a total of 14 shareholders. The four founders each held 5,000 shares apiece. The other major shareholder is Adam Wilmer, who also works at RAVN, and has 1,000 shares. The total number of shares as of Jan 2017 was listed as 22,890. This means that the four main founders owned about 87% of the company and presumably, depending upon the total paid and how it was paid, i.e. cash, promises of future cash based on projected earnings, swaps for shares in iManage etc, then it’s likely the four main founders may not need to work for a while.
The next big questions are: why…..? And, as has been very apparent on social media and among other legal tech companies…..how much was paid?
As to why, more info will follow shortly, but it did seem that something would happen of a strategic nature once Lumsden took over the corporate direction of RAVN, given his background of working in far larger companies.
iManage CEO, Neil Araujo, said of the deal: ‘There are certain technologies that can fundamentally impact the trajectory of industries, such as industrial robots in manufacturing or self-driving cars in transportation.’
‘We are constantly looking for opportunities to drive significant productivity gains for our customers and have looked closely at AI technology. RAVN has bridged the gap between the potential of AI and its application to real-world business problems. Together we will accelerate the adoption of practical AI solutions across the legal and corporate markets.’
And, one of RAVN’s clients, Reed Smith said, via Lucy Dillon, Chief Knowledge Officer, ‘The iManage acquisition of RAVN will allow us to apply AI to not only contract analysis but also thousands of high-value legal documents that reside within iManage.’
In short, iManage does documents, RAVN does data analysis, it seemed like a natural marriage.
As for RAVN, more detail will arrive shortly, but this is what Peter Wallqvist, said: ‘From our inception, the entire RAVN team has been motivated to bring the power of AI to practical problems at scale.’
‘Joining iManage will make it easier to adopt our technology and grant us access to additional resources, new channels to market and direct access to over 3000 iManage organisations worldwide. Our existing customers, many of whom also use iManage, will benefit from improved capabilities, iManage global support and accelerated investment to deliver new, high-value content aware solutions.’
Perhaps the most important word in that statement is ‘scale’, because iManage will provide a much larger platform to scale up RAVN as a business. It will also, naturally, make the US a much closer market for the UK-based team. And with the US as the largest legal market on the planet, one can see why RAVN jumped at it when iManage made them an offer.
So…how much was paid? Well, at present neither company is saying. As RAVN is a private entity, in fact so small that it does not even have to publish full financial accounts with the UK’s Companies House, it’s hard to know. iManage will have paid a multiple of RAVN’s revenues and taken into consideration future earning potential, perhaps even its brand value, its IP, goodwill and other factors.
Artificial Lawyer would have loved to have seen the estimates as to future market share of the legal AI market. But, this pricing work has been conducted behind closed doors….though hopefully we’ll get a steer eventually. That said, iManage is also privately owned and so has no obligation to cough up the information on offer price or how it came to its valuation either.
It’s interesting to note that Owler, the tech company data site, has an estimate that RAVN’s revenues are around $2.7m, (£2m approx.), which seems quite low to Artificial Lawyer, especially given the number of employees the UK company has, which was around 50-ish, at least a few months ago.
And staff is a key issue here. RAVN is its founders. If they walked then the company iManage had bought would not be worth as much. Yes, they’d have the IP, but who would run it all and develop new iterations of the AI software?
Chicago-based iManage is at a larger scale. It says of itself: ‘Over one million professionals at over 3,000 organizations around the world—including more than 2,000 law firms and 500 corporate legal departments—rely on iManage to help them deliver great client work.’ Now that is a lot of potential clients for RAVN to talk to….
iManage was founded in 1998 and merged with Interwoven in 2003. Interwoven was then acquired by Autonomy and Autonomy acquired by HP. On July 21, 2015, iManage announced a management buyout of the company from HP. Since the buyout from HP it has been focussed on expanding into new markets.
This also means that both RAVN and iManage came, in part, from the Autonomy mothership (as RAVN’s core team also started out in Mike Lynch’s multi-billion dollar tech enterprise).
More to follow.