In an unusual move for a serving legal tech company CEO, Jack Newton, the co-founder of Clio, has invested in another legal tech business, in this case entity management startup, Athennian. The move is part of a $7m extension to its recent funding round.
The Series A extension funding was led by Arthur Ventures and participants included well-known legal tech investor, Touchdown Ventures from San Francisco, as well as Clio’s Newton. Touchdown has also invested in: LawGeex, Casetext, and LinkSquares. Round13 Capital and other existing investors also took part. How much each investor provided has not been made public. In total, Athennian has raised $17m in VC funding since it launched.
As Athennian CEO, Adrian Camara, (pictured above) explained to this site in the Radio AL interview below (approx 5 mins – press play to listen), he had got to know Newton some time ago and they had developed a good friendship, with the Clio boss giving Camara advice. The investment grew from this relationship. Camara noted that Newton has not joined the board of the company – yet. (And it sounds as though that there is some potential for that to happen.)
‘I have frequently sought Jack’s advice……[and] we’d always talked about him coming into the company in a more meaningful way, so we both jumped at it,’ he explained, referring to the opportunity to join the extended funding round.
He added: ‘The financial commitment to each other will allow us to work together more meaningfully in the future.’
In January, Newton joined the advisory board of legal tech company, DealCloser, the transaction management platform. Meanwhile Clio, the practice management system used by many small- to medium-size law firms, and which launched back in 2007, has now around 350 staff and in September 2019 raised $250m in a Series D funding round.
As for cloud-based Athennian, it is used to automate subsidiary and entity management data, and can support compliance, governance, and transactional workflows. It will use the capital to ‘increase the size of its global team, invest in product development, and expand its cloud-based services’.
The company also has a team of legal professionals and certified paralegals. Among other things their approach allows users to generate documents for managing new or existing entities, such as share certificates, minutes, stock, and dividend transactions, and change of directors or officers.
But why all the interest in entity management?
As Camara explained to Artificial Lawyer, part of it has to do with increasing regulatory demands over capital flows across the world, often funnelled through a myriad of holding companies. The US, he added, has caught up with other regions, such as the EU, in demanding more corporate transparency as it seeks to stamp out the funding for illicit activities. This puts more pressure on corporates and their legal advisers to be 100% on top of who they are working with and where capital is coming from. And that needs better entity management.
Camara added in an earlier statement: ‘Companies clearly see the value in managing their entity management processes on our platform, so when our investors approached us with the possibility of raising more funding, we decided to accelerate our plans and invest significantly in supporting Athennian’s growth.
‘We are excited to welcome Touchdown Ventures and Jack Newton as investors. This additional capital reflects our rapid expansion of both revenue and results for our customers.’