FiscalNote To Make Next Legal Tech IPO, Values at $1.3BN

FiscalNote, an AI-driven legal and regulatory data platform, is to become the next legal tech business to go for an IPO, following its purchase by a SPAC. The expected market valuation will be $1.3 billion, and its stated post-IPO strategy is to make buyouts across the market.

It would appear to be the fifth legal tech IPO, following DISCO, Nuix, LegalZoom, and Intapp.

While you might say: ‘OK, so another IPO, big deal….’ the most important part of this news for the legal tech market is this statement: ‘The proceeds from the transaction will further strengthen FiscalNote’s ability to execute on significant near-term organic and inorganic growth opportunities globally as it continues to develop and deliver products to serve the regulated industries of the future.’

I.e. it could fuel a series of new purchases of other companies in the legal data and compliance space, driving further consolidation in the market.

Next, you probably want to know what FiscalNote actually does. The short version is that it scours new legislation in the US, EU and elsewhere, to help keep companies appraised of legal changes they need to be aware of. It also offers help with areas such as ESG.

The company explained it this way: ‘FiscalNote’s cloud based software and information feeds leverage patented AI capabilities to collect and analyse vast amounts of legislative and regulatory data from international, federal, state, and municipal governments.’

I.e. it’s a kind of regulatory update service on steroids. It’s also backed by investors such as billionaire Mark Cuban.

Now to the deal. A SPAC, or special purpose acquisition company, operates in the following way, as explained by PwC: ‘A SPAC raises capital through an initial public offering (IPO) for the purpose of acquiring an existing operating company. Subsequently, an operating company can merge with (or be acquired by) the publicly traded SPAC and become a listed company in lieu of executing its own IPO.’

In this case, the SPAC is Duddell Street Acquisition Corp, which is currently listed on the Nasdaq. The plan is that FiscalNote will undergo its own IPO in the first quarter of 2022. Upon closing, the M&A transaction will provide approximately $275m to the combined company, it will then list under its own name, and as mentioned above go on a major growth drive, which includes buying other companies in the legal data market.

FiscalNote Co-founder and CEO, Tim Hwang, said: ‘When we founded FiscalNote in 2013, we set out to build a category creating technology company that would change the way organisations understand and act on the legal, policy, and regulatory issues that mattered most to them.’

We look forward to this transaction accelerating our efforts in both US and global markets to build additional data feeds and software to provide further transparency to the regulated sectors of the future, especially as wide-ranging and complex regulatory issues emerge in areas such as cryptocurrencies, the gig economy, cannabis, autonomous and electric vehicles, online sports betting, ESG, and other sectors that are changing the landscape for how companies around the world operate.’

FiscalNote has more than 3,000 customers including 3M, AstraZeneca, Blackstone, FedEx, Lyft, Microsoft, Nestlé, Netflix, Tesla, Uber, Zillow, the United States Supreme Court, to name a few.

The total addressable market for legal and regulatory information solutions globally was approximately $37 billion in 2020, according to Outsell, the company added, a data point that the likes of Thomson Reuters and LexisNexis are no doubt also very interested in.

FiscalNote added that: ‘The market is driven by strong structural tailwinds, including the proliferation of regulatory complexity, demand for workflow efficiency and automation, need for aggregation and standardisation, and the democratisation of analytical capabilities in law.

Last word goes to Manoj Jain, CEO of Duddell Street Acquisition Corp., and Co-Chief Investment Officer of Maso Capital, who said: ‘With a strong track record of value creation through acquisitions and M&A integration, we are confident FiscalNote will be further positioned to disrupt, consolidate, and provide transformative technology applications to the legal tech sector.’

FiscalNote is headquartered in Washington DC, with operations in eight countries and approximately 650 employees globally.