AI Legal Tech Startups Raise a Billion-Dollars

TECH IN THE NEWS

Counting Losses - Insurer Parametrix estimates the CrowdStrike outages caused $5.4B in losses to Fortune 500 companies and $1.9B losses in the healthcare sector alone.

SearchGPT - OpenAI is testing its prototype AI search engine with a small group of users and publishers before a wider release within ChatGPT.

Tesla <> xAI - An Elon Musk proposal for Tesla to invest $5b into xAI got 68% support on X. And, xAI just activated a ~$4b supercomputer cluster with 100k Nvidia GPUs, it’s the most powerful AI cluster in the world.

Dynamic Pricing - The FTC demanded to know more about how Mastercard, Chase, Accenture and others are using AI to set dynamic pricing based on customer behavior.

NBAmazon - The NBA announced $77b of TV and Streaming rights deals with Amazon, Disney (ESPN) and NBCU for 11 years from the 2025 season.

ETH ETFs - The first spot Ethereum ETFs saw over $1b of trading volume on Tuesday’s launch.

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THE HOTTEST THING IN TECH
AI Powers Legal Tech Boom

The once-overlooked legal tech sector is experiencing an unprecedented surge in funding, fueled by generative AI. This year, investment in the sector has already topped $1 billion, eclipsing the $960 million raised in 2023. New legal tech company formation is growing 100% year-over-year.

This epic growth is driven by AI's potential to streamline legal processes and reduce costs for firms and consumers. It’s also a reflection of investors favoring startups taking a measured approach to AI, emphasizing gradual integration with existing services.

Two Massive Raises this Week

Canadian cloud software provider Clio is aiming to be “the OS for law firms”. It secured a massive $900M Series F, doubling its valuation to $3b. NEA led the raise with $500M and Goldman Sachs, Sixth Street, CapitalG, Tidemark,TCV, JMI, T. Rowe Price and OMERS all joined. The funding builds on impressive ARR of $200M (a 100% YoY rise). Clio is expanding into fintech to solve the complexities of embedded legal payments (think legal billing).

San Francisco GPT-powered legal Copilot startup Harvey raised a $100M Series C led by Google's GV, reaching a $1.5b valuation. It also had input from OpenAI, Kleiner Perkins, Sequoia, Elad Gil and SV Angel. Harvey is already used “daily” by tens of thousands of lawyers at firms including Allen & Overy, Macfarlanes, Ashurst, CMS, Reed Smith and PwC. Both its ARR and its workforce have tripled since 2023 demonstrating enormous demand.

Challenges For Legal Tech

The need for precision in legal work means AI ‘hallucinations’ and errors are a major concern for investors. Its hard to balance AI's efficiency with the legal profession's traditional quality control practices. Despite these challenges, the sector's trajectory points to continued growth and disruption.

Legal Tech Companies and Trends to Watch

San Francisco startup Eve emerged out of stealth last October with a $14M Seed round backed by Lightspeed and Menlo. Eve is using customizable AI apps to automate low-value legal tasks, like document creation and management, which it believes consumes a lot of labor hours for firms.

As AI technology matures and investor confidence solidifies, the legal profession is poised for a profound transformation, opening up new opportunities for entrepreneurs, investors, and legal professionals alike.

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1. AI Agent Employees - New York - Sophisticated workflow automation for businesses towards fully autonomous organizations. Previously-exited founder. Backed by Tribe & Kenetic. (Seed)

2. Outbound B2B Campaign AI Co-Pilot - Lexington, MA - Turn any CRM into an AI optimized sales agent for personalized customer campaigns. Founder previous exit to PE. Notable Angel on board. Top Hubspot App. Post revenue.(Seed)

3. Therapy for Baldness - Los Angeles, CA - Developed by ex-Kythera R&D Leader. Virtual development model and world class team seeking to fund POC study. (Seed)

TRENDING TOOLS AND BUZZY TECH
Tools

Meta - Llama 3.1 405B is world’s most powerful open foundation model.

Mistral - 123B pm LLM on par with Llama 3 405b - on permissive license.

BofA - CashPro business payments app handled record $500b in Q1.

Apple - Horizontally foldable iPhone could be released as early as 2026.

Tech

Microsoft - Collab advances AI foundation models for medical imaging.

DeepMind - Models perform at silver level in high school Math Olympiad.

UK Met Office - AI makes advances in weather and climate modeling.

DEALS WE’RE WATCHING
Closed Deals:

Autonomous Vehicle Software - California startup Applied Intuition closed a $300M secondary sale just four months after it raised a $250M Series E. Fidelity & Research Company joined the latest sale.

Next-Gen Satellites - San Francisco startup Astranis closed a $200M Series D to build its 24 unit p/yr ‘Omega’ program. A16z led with support from BAM Elevate, BlackRock, Fidelity, and Baillie Gifford.

Online Security & Compliance - San Fran startup Vanta raised $150M led by Sequoia at a valuation of $2.45b and backed by the VC arms of Goldman Sachs and JPMorgan.

Deals to Watch:

Waymo - Alphabet pledged to invest another $5b over the next few years. It’s delivering 50k+ rides p/week, arguably leading the U.S. robotaxi space.

Cyabra - Israeli AI cybersecurity startup to go public on Nasdaq via a SPAC merger with Trailblazer at a valuation of 70M. Raised $16M privately and clients include U.S. State Department and Singapore's Mediacorp.

Lumen - Shares jumped after Microsoft tapped it to boost its capacity for AI workloads. Lumen will save $20M over 12 months by switching to Azure as it aims to restructure $18.59b in long-term debt.

Funding Buzz Watch:

Liberty Mutual Strategic Ventures - Boston firm launched its second VC fund, committing $200M to support startups “reshaping the future” of the property and casualty insurance industry.