CLM company SirionLabs, which started in 2012, has just bagged $85m in new cash amid what is now a super-intense competition for inhouse clients – and as hundreds of millions of dollars pours into this market segment. But can all the CLM companies succeed?
For example, check out the investments in just some of the well-known companies below since 2021:
- CLM LinkSquares Bags $100m Series C Funding – April 2022
- CLM Ironclad Bags $150m Series E Funding – Jan 2022
- ContractPodAi Bags $115m in SoftBank-Led CLM Funding – Sept 2021
- ‘CLM 2.0’ Funding Increases as Malbek Bags $15.3m – Sept 2021
- NLP-Driven Contract Platform Evisort Bags $35m, Microsoft Fund Joins Again – Feb 2021
- CLM Lexion Bags $11m, Wilson Sonsini Invests Again – June 2021
- CLM Icertis Bags $80m – March 2021
As you can see, just this selection above shows funding of around half a billion dollars over two years in just this one field of legal tech – and the full figure is likely much higher given the number of players in this space, and also those companies that overlap with other aspects of contract management and enterprise legal management software, along with more startups entering this inhouse-facing field every month.
Then, as we saw just now, LexisNexis is wading into the battle with the purchase of CLM company Parley Pro. This giant company has huge resources to improve that platform and add plenty of NLP capabilities to it to make it very competitive.
And given the way things are going, we have to expect more and more such changes: more huge investments, more M&A, more link-ups with large consultancies and the Big Four…just lots more.
But, back to SirionLabs. The new cash, which comes in the shape of a Series D round led by Partners Group, with participation from existing investors Sequoia Capital and Tiger Global, brings the total raised to $157m. Although to put this in context, Ironclad raised $150m this year in just one round alone.
The company will use the money for ‘adding up to 200 employees to its global workforce, [and an] emphasis on product innovation in AI and user experience (UX) that will attract new customers while also better serving the SirionLabs current customer base of more than 250 companies’ they said.
LinkedIn currently lists around 700 staff, with the vast majority of them based in India, with smaller bases in the US, UK and Germany.
Commenting on the financial boost, Cyrus Driver, Managing Director, Private Equity, Technology at Partners Group, who will join the company’s board, said: ‘We are delighted to lead this fundraising round for SirionLabs and have strong conviction in the company’s future growth potential.
‘The addressable market for CLM is expanding rapidly as more organizations undertake digital transformation initiatives. We were attracted by SirionLabs’ leadership in this category, superior product offering, and blue-chip client base, and look forward to working with management on increasing scale-up capacity.’
Can they all succeed?
As ever, the big question is whether all this money is going to create companies with equally large revenues from a flood of corporate clients who all want to use CLM platforms at scale?
The challenge is that there are now so many CLM companies – and many overlapping companies offering parts of the CLM product range, e.g. just help with contract creation, or just contract storage, or just contract redlining.
It is true that there are literally thousands of large companies that could use a CLM system. There are also an increasing number of consultancy groups, whether via law firms, ALSPs, or the Big Four, or standalone ones, that are helping with CLM implementation. And of course we now have a surge of legal ops professionals and contract management experts inside companies – at least at the very largest – who were not there 10 years ago in many cases.
But, does that logically also mean success for all is guaranteed?
It seems that there will have to be some shake out and also some layering and separation of where companies fit into the market. I.e. a small handful will end up dominating among the largest global, Fortune 500-type companies, then another group for large national or regional companies, then another below that, and so on, all the way down to those that service very small SMEs that want a very light, affordable and easy to use system. And there are of course more small companies than large ones, by a huge factor.
It’s a complex global market and the CLMs will need to adapt their products, pricing and sales approaches to fit.
One other factor in all of this, is just how early everything is still. Even though the idea of a CLM platform is an old concept, the reality is that few companies have in the past really used them at scale. In many ways this is a ‘whole new frontier’ opening up, with companies focused on using NLP to extract data, no-code workflows to improve processes, and plenty of automation to help with everything it can amid this CLM 2.0 wave of change.
From Artificial Lawyer’s discussions with inhouse teams and legal ops groups, as well as consultants that help here, the answer is that probably they can all succeed. But…….as noted, they will have to find their places in the market. Trying to be all things to all types of businesses doesn’t often work out well – unless you are really a ‘winner takes all’ company, but that seems very unlikely in CLM.
So, the final question is: which companies will eventually dominate which market segments and which geographies? Ultimately, it’s too soon to tell.