Not to be outdone by Kira Systems’ piddly $50m fundraising last week, Justin Kan’s one-year-old legal tech startup Atrium yesterday (10 September) announced that it has raised $65m and says it is making good progress in realising its vision of transforming the legal industry, or, as TechCrunch’s headline puts it somewhat hysterically, replacing lawyers with machine learning.
The funding round, which follows a $10.5m fundraising last year, was led by Andreessen Horowitz with General Catalyst, YC Continuity Fund, and Sound Ventures as co-investors. Andreessen partners Andrew Chen and Michael Seibel will be joining the board, and Marc Andreessen will be joining as a board observer.
Atrium, which this summer acquired deep learning voice transcription startup Tetra, currently provides tech-led legal services to startups and scaleups and says it has helped hundreds of companies with everything from drafting and reviewing commercial contracts to raising over $500M in new capital.
Atrium itself isn’t so heavy on the ‘end of lawyers’ angle but says: “We are empowering our top legal professionals by building machine learning software to understand legal documents and automate repeatable processes, allowing them to spend more time advising and solving problems for clients.” Which is being replicated far too slowly across BigLaw, led, notably, by vendors such as Kira. *For US law firms that specialise in Series A business as a loss leader, Atrium is problematic, and one longstanding legaltech vendor told us: “If you are in the company side series A business I would be afraid. This was generally done by these firms on the company side as a loss leader. The hope is that the company grows and they gives the profitable work later on. Atrium is a true disruptor as they aim to use tech to make the loss leader profitable. The Atrium business structure that has been set up gets around US practice regulations. The law firm side pays a fee to the tech company and the tech company raises the money. The tech company can lend money to the law firm. The lawyers can be employed by both.”
In a blog post setting out the reasons behind the investment – which we recommend you read – Chen says: “Atrium’s approach allows them to deliver a legal experience that’s been made completely modern and efficient — from on-boarding to service to account management and more. Atrium’s software platform uses machine learning to ingest documents and convert them into structured data, and product UIs to support common workflows for both attorneys and companies. Prices are given upfront, and repetitive tasks are automated. This all empowers lawyers to spend more time actually advising their clients, in turn enabling them to deliver complex services that aren’t automatable (such as venture financings) faster and better. In short, the widespread use of technology can unlock a much better experience for both businesses and lawyers, making both more productive and able to focus on the most important work.
“The Atrium team has impressed us with their amazing progress since the start. In the past year, Atrium LLP has helped 250 clients raise a total of over $500M in financings. They are now over 100 employees, with a notable client roster including Alto, Bird, MessageBird, and Sift Science, who have raised tens of millions and more. These strong early results convinced us of the company’s momentum, and proved there is a hunger for their services.”
In a post yesterday Kan, who previously found Justin.tv (which became Twitch) said: “This is incredible news for Atrium. We’ve always been focused on becoming the most client-centric platform for legal applications for fast-growing companies and it feels great that we’ve received such strong support from others. Andreessen Horowitz is one of the world’s most prestigious VC firms. They have backed amazing companies and founders, making early investments in companies including Airbnb, Facebook, Lyft and Skype.”
As with Kira’s Series A, where founder and CEO Noah Waisberg told Legal IT Insider that the funding was as much about gaining the expertise and guidance of investor Insight Ventures, Kan placed a lot of emphasis on the new board members. “I’m excited to welcome three board members who I know will help accelerate the vision of our business, each in their own way,” he said. “Marc is someone that I’ve looked up to for a long time, and I know I’m not the only one. I’ve always admired his strategic mind, and drive to push founders to think bigger. When I made the list of all the investors I wanted involved with Atrium, Marc was at the top.
“Andrew has been a supporter of Atrium since day one, when he angel invested in our first round last year. When I first told him about Atrium and the problem we were looking to tackle, he understood it immediately and asked to help.
“Michael and I have been friends for decades. He joined me in founding Justin.tv (which later became Twitch). Since then he’s gone on to become a leader in the startup community, advising hundreds of founders, and is currently CEO at Y Combinator. I can’t think of a better voice to help represent the needs of startups as we build Atrium into a company that helps startups grow faster.”
Atrium’s growth rate to date is fairly astonishing and, using some of the same stats as Chen, Kan said: “Since launching Atrium 14 months ago we have made great strides. We’ve helped over 250 clients raise a total of over $500 million in primary financings, and have built the A-team into over 110 great employees who are motivated to change this industry.”
According to TechCrunch, that 110 doesn’t include co-founders CTO Chris Smoak and BeBe Chueh., who have left the company, leaving Kan to run it with co-founder and former Orrick partner Augie Rakow and former McKinsey analyst Nick Cortes.
At the International Legal Technology Association conference in Washington in August, the interest of private equity investors in the sector was notable and while there we broke the news that Iridium Technology has received substantial undisclosed sum from Polaris Partners.
We forecast many more funding rounds to come but the size of this one will be hard to beat.