Fintech
Legal tech Clio raises $900M at $3B valuation, plans to double down on AI and fintech
ClioA Canadian software company that aims to help law firms operate more efficiently with its cloud-based technology has raised $900 million in a Series F round that values the company at $3 billion.
The valuation is nearly double the $1.6 billion valuation the Vancouver, British Columbia-based company reached in April 2021 when raised $110 million.
Cliowhich describes itself as “the operating system for law firms,” recently surpassed $200 million in ARR, compared to $100 million ARR as of June 2022 and has been profitable (positive EBITDA) for several years, according to Clio founder and CEO Jack Newton.
The company works to simplify law firm management by centralizing client intake, case and document management, and payments, among other things. It is used by more than 150,000 legal professionals and has recently expanded into the APAC region, as well as acquiring more mid-sized law firms as clients, it says.
New Enterprise Associates (NEA) led the round with an investment of more than $500 million, its first in the company. New investors Goldman Sachs Asset Management, Sixth Street Growth, CapitalG and Tidemark joined existing backers TCV, JMI Equity, funds and accounts advised by T. Rowe Price and OMERS in also participating in the financing.
Notably, “a substantial portion” of the round was secondary funding that will be used to allow existing investors and employees to cash out some of their shares, Newton said.
With this investment, the total capital raised by Clio since its founding in 2008 reaches nearly $1.3 billion.
The mega-round is a significant amount but is, perhaps, particularly noteworthy in today’s environment where venture capital raises of this size are not all that common. For context, there were 105 mega-round raised globally throughout the first quarter, according to CB Insights.
The company has benefited from a couple of major tailwinds, Newton told TechCrunch in an interview.
“With COVID 19, we’ve seen explosive growth in the adoption of cloud technologies in general and Clio in particular,” he said. “We’ve also seen a huge boost from AI and the tremendous amount of interest that lawyers and the broader legal community have in AI and how AI can improve productivity.”
Payments and AI as growth drivers
In 2022, Clio began integrating payments into its offerings, a move that has increased its revenue beyond its core SaaS business, Newton told TechCrunch. Clio’s payments business now processes billions of dollars annually in fiat-specific transactions. The company earns “a small percentage” of every transaction recorded through Clio payments, Newton said.
“We’re really excited about the integrated payments opportunity with Clio and the broader fintech opportunity,” Newton said, “both for the growth it’s led to this point and what we think will be tremendous growth going forward.”
Payments in the legal sector are more complex than electronic payments in general, Newton stressed.
Image Credits: Clio
“For example, there are trust funds and trust transactions that have to be handled in a very specific way. And you can’t remove credit card transaction fees from a trust account transaction in the way that you normally would if you were, say, a small merchant using a Square account,” he said.
In other words, if a lawyer charges $100 for a trust transaction and subtracts $3 in processing fees and only $97 is deposited into a bank account, the lawyer is essentially making a mistake by not depositing 100% of the funds into a trust account.
“So the nuance with legal payments is that the fees have to be taken out of a separate operating account,” he said, adding that Clio’s offering is compliant with trust accounting requirements and is easy for lawyers to use. Clio also offers an accounting product to help businesses manage their finances.
In early 2023, the company also began working to integrate artificial intelligence into its offerings.
This year, it plans to release GA Clio Duo, an integrated generative AI assistant that aims to help lawyers “complete routine tasks and leverage their firm’s analytics to run a more efficient practice,” including an audit log feature for court discovery. It can also do things like make recommendations on which marketing channels a lawyer should use to best generate new leads. And Newton says the company has plans for more AI features in the future.
Clio currently has more than 1,100 employees. Its software is used by law firms in over 130 countries.
“The company has grown beyond its initial SMB market to become a leader in the mid-market, while also experiencing exponential growth in payments and leading the way in important product categories such as e-archiving, document automation and artificial intelligence,” said Amol Helekar, general partner at TCV and a member of the Clio board of directors.
Of course, Clio isn’t the only legal tech to benefit from the AI revolution. In April, UK-based legal tech startup Lawhive, which offers an AI-powered in-house “lawyer” via a software-as-a-service platform aimed at small law firms, raised $11.9 million in a seed round. Backed by companies like Lightspeed and Menlo, Eve has emerged out of hiding last October with a mission to harness the power of large language models (like OpenAI’s ChatGPT) to revolutionize the legal profession.
Lloyds Banking Group and Nationwide have joined an £11m Series A funding round in Scottish artificial intelligence fintech Aveni.
The investment is led by Puma Private Equity with additional participation from Par Equity.
Aveni creates AI products specifically designed to streamline workflows in the financial services industry by analyzing documents and meetings across a range of operational functions, with a focus on financial advisory services and consumer compliance.
The cash injection will help fund the development of a new product, FinLLM, a large-scale language model created specifically for the financial sector in partnership with Lloyds and Nationwide.
Joseph Twigg, CEO of Aveni, explains: “The financial services industry doesn’t need AI models that can quote Shakespeare, it needs AI models that offer transparency, trust and, most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, vetted by financial services experts for specific financial services use cases.
“FinLLM’s goal is to set a new standard for the controlled, responsible and ethical adoption of generative AI, outperforming all other generic models in our selected financial services use cases.”
Robin Scher, head of fintech investment at Lloyds Banking Group, says the development programme offers a “massive opportunity” for the financial services industry by streamlining operations and improving customer experience.
“We look forward to supporting Aveni’s growth as we invest in their vision of developing FinLLM together with partners. Our collaboration aims to establish Aveni as a forerunner in AI adoption in the industry, while maintaining a focus on responsible use and customer centricity,” he said.
Treasury Risk Consulting Firm White Matter Alert On Monday he announced the acquisition of a 90% stake in the fintech startup Fair payment for an undisclosed amount. The acquisition will help White Matter Advisory expand its portfolio in the area of cross-border remittance and fundraising services, a statement said. White Matter Advisory, which operates under the name SaveDesk (White Matter Advisory India Pvt Ltd), is engaged in the treasury risk advisory business. It oversees funds under management (FUM) totaling $8 billion, offering advisory services to a wide range of clients.
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White Matter Advisory, based in Bangalore, helps companies navigate the complexities of treasury and risk management.
Fairexpay, authorised by the Reserve Bank of India (RBI) under Cohort 2 of the Liberalised Remittance Scheme (LRS) Regulatory Sandbox, boasts features such as best-in-class exchange rates, 24-hour processing times and full security compliance.
“With this acquisition, White Matter Advisory will leverage Fairexpay’s advanced technology platform and regulatory approvals to enhance its services to its clients,” the release reads.
The integration of Fairexpay’s capabilities should provide White Matter Advisory with a competitive advantage in the cross-border remittance and fundraising market, he added.
The release also states that by integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.
Rakuten (Japan:4755) has released an update.
Rakuten Group, Inc. and Rakuten Bank, Ltd. announced a delay in the reorganization of Rakuten’s FinTech Business, moving the target date from October 2024 to January 2025. The delay is to allow for a more comprehensive review, taking into account regulatory, shareholder interests and the group’s optimal structure for growth. There are no anticipated changes to Rakuten Bank’s reorganization objectives, structure or listing status outside of the revised timeline.
For more insights on JP:4755 stock, check out TipRanks Stock Analysis Page.
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White Matter Advisory, which operates under the name SaveDesk in India, has announced that it is acquiring a 90% stake in fintech startup Fairexpay for an undisclosed amount.
This strategic move aims to strengthen White Matter Advisory’s portfolio in cross-border remittance and fundraising services.
By integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.
White Matter Advisory, known for its treasury risk advisory services, manages funds under management (FUM) totaling USD 8 billion.
Founded by Bhaskar Saravana, Saurabh Jain, Kranthi Reddy and Piuesh Daga, White Matter Advisory helps companies effectively manage the complexities of treasury and risk management.
The SaveDesk platform offering includes a SaaS-based FX market data platform with real-time feeds for over 100 currencies, bank cost optimization services, customized treasury risk management solutions, and compliance guidance for the Foreign Exchange Management Act (FEMA) and other trade regulations.
Fairexpay is a global aggregation platform offering competitive currency exchange rates from numerous exchange partners worldwide. Catering to both private and corporate customers, Fairexpay provides seamless money transfer solutions for education, travel and immigration, as well as simplifying cross-border payments via API and white-label solutions for businesses. Key features include competitive currency exchange rates, 24-hour processing times, extensive currency coverage of over 30 currencies in more than 200 countries, and secure, RBI-compliant transactions.
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