The aptly-named ‘The LegalTech Fund’ (TLTF), has bagged $28.5m in capital, exceeding its $25m goal, they have announced. Officially closing the raise in November 2021, TLTF attracted investment from Kapor Center Investments, McDermott Will & Emery and Orrick, as well as DocuSign – and other investors.
TLTF has now invested in thirty companies to date. Typically, the Fund provides initial investments of up to $1 million to startups. Investments include: Lawmatics, Josef, Nexl, CoParse, and Aumni.
‘We invested in The LegalTech Fund as part of our DocuSign Ventures initiative which reinforces the company’s existing strategic investments and partnership efforts across the startup ecosystem,’ said Eric Darwin, Head of Corporate Development at DocuSign.
While Zach Posner, General Partner & Co-Founder of TLTF, added: ‘The LegalTech Fund invests in companies transforming the world of law. We are seeing the legal industry intersecting with financial, regulatory, consumer, privacy and technology, meaning that legal is a crucial pivot point for many businesses and individuals.
‘Our early success stories have shown us that legal tech has tailwinds that accelerate even in poor economic times, and during a global pandemic. We are excited about our investors and the companies we are supporting, realising our vision of creating a vibrant community of legal tech growth and innovation.’
McDermott Chairman, Ira Coleman, concluded: ‘We want to fund the best ideas and leverage the exceptional experience of the team behind The LegalTech Fund to shape the legal technology market moving forward. Our phenomenal growth over the last few years has put us in the position to make this happen, and we are doubling down on that success as we look to the future.’
This suggests that despite some speculation in the market, there is still a strong appetite for legal tech investments, at least at the smaller end of the scale. However, there is one important caveat here – the Fund bagged most of this cash by around November last year. That capital will carry them onwards for some time to come, but as to the long-term future – it’s unclear.
If there is a recession, combined with slumping tech stocks and disappointing results from the several legal tech IPOs recently, then one wonders what the overall picture will be by the time we reach late summer / autumn?
That said, if the main VC focus is on startups looking for $1m-approx investments then it seems likely there is still plenty of cash chasing opportunities across the market. It may instead be the very, very large rounds that suffer.
Though, that said, the recent surge in $100m+ investments into CLM companies in effect demands that the next rounds are going to have to be even larger – as rounds tend to be progressively bigger and bigger. The ultimate question is: will a VC crunch have a significant impact, or will legal tech’s great momentum just carry it through?
So far the answer has to be: we need more data.