Legal Tech Unicorn Clio Raises $900M, Valuation Soars to $3B

Legaltech Startup Clio Raises Whopping $900M At $3B Valuation

The new round was led by New Enterprise Associates and included new investors Goldman Sachs Asset Management, Sixth Street Growth, CapitalG and Tidemark. Previous investors who were involved in the round included TCV, JMI Equity, funds and accounts advised by T. Rowe Price Associates and by T. Rowe Price Investment Management and Omers Private Equity. Clio's software lets law firms automate processes such as client intake, accounting and document management. Not surprisingly, the startup also has embraced generative AI. Its Clio Duo generative AI solution helps lawyers complete routine tasks and leverage use analytics to run more efficiently. The AI platform includes audit log functionality for court discovery. "While we're immensely proud of our growth to date, the real opportunity lies ahead of us," said Jack Newton, founder and CEO. "AI is ushering in an exciting and important new era for legaltech, and Clio is leading that transformation. There's much to accomplish for the success of our customers so they can thrive in an economy that embraces technology in every interaction." Clio has grown beyond $200 million in annual recurring revenue and more than 1,100 employees. The company last raised a $110 million Series E at a $1.6 billion valuation. Founded in 2008, the company has raised a total of $1.3 billion. With the U.S. dominating the venture market, it can sometimes overshadow the Canadian startup ecosystem. Not this week however, with both Cohere and Clio going huge. In fact, Clio's new raise is the largest by a Canadian startup ever, per Crunchbase data. The round supasses Toronto-based 1Password's $620 million Series C that valued the cybersecurity startup at $6.8 billion.

Legal tech Clio raises $900M at a $3B valuation, plans to double down on AI and fintech | TechCrunch

Embedded payments helped double its ARR to over $200M in two years, founder says Clio, a Canadian software company that aims to help law practices run 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 company achieved in April 2021 when it raised $110 million. Clio, which describes itself as "the operating system for law firms," recently crossed over $200 million in ARR, up from $100 million ARR in June of 2022 and has been profitable (EBITDA positive) 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 over 150,000 legal professionals and recently expanded to the APAC region, as well as gaining more mid-sized law firms as customers, it says. New Enterprise Associates (NEA) led the raise with an investment of over $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 to also participate in the financing. Notably, "a substantial amount" of the round was secondary financing that will be used to allow existing investors and employees to cash out some of their shares, Newton said. The investment brings Clio's total capital raised since its 2008 inception to nearly $1.3 billion. The mega-round is a significant amount but is, perhaps, especially notable in today's environment where venture raises of this size are not nearly as common. For context, there were 105 mega-rounds raised globally in all of 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 saw an explosive growth in the adoption of cloud technologies in general, and of Clio in particular," he said. "We have also seen a huge tailwind thanks to AI and the enormous amount of interest lawyers and the broader legal community have in AI and how AI can enhance productivity." In 2022, Clio began integrating payments into its offering -- a move that has boosted its revenue beyond its core SaaS business, Newton told TechCrunch. Clio's payments business now processes billions of dollars annually in legal-specific transactions. The company makes "a small percentage" on every transaction that posts through Clio payments, Newton said. "The embedded payments opportunity with Clio and the broader fintech opportunity is something we're really excited about," Newton said, "both because of the growth it's driven to this point, and also because of what we believe is a huge amount of future growth." Payments in the legal industry are more complex than general electronic payments, Newton pointed out. "For example, there are trust funds and trust transactions that need to be managed in a really specific way. And you can't take the fees for credit card transactions off the top of a trust account transaction in the way that you typically would if you were, for example, a small merchant using a Square account," he said. In other words, if a lawyer charges $100 for a trust transaction and $3 comes off in processing fees and only $97 is deposited in a bank account, a lawyer is essentially committing malpractice by not depositing 100% of the funds into a trust account. "So the nuance with legal payments is that the fees need to get withdrawn from a separate operating account," he said, adding that Clio's offering is compliant with trust-related accounting needs and is easy for lawyers to use. Clio also offers an accounting product to help firms manage their finances. The company also began working on putting AI into its offerings in early 2023. This year, it plans to release GA Clio Duo, an integrated generative AI assistant aimed at helping lawyers "complete routine tasks, and leverage their firm analytics to run a more efficient practice," including audit log functionality for court discovery. It can also do things like make recommendations on which marketing channels a lawyer should be using to best generate new leads. And Newton says the company has more plans for more AI features in the future. Presently, Clio 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 also become the leader in the mid-market, while showing explosive growth in payments, and being at the forefront of important product categories such as e-filing, document automation, and AI," TCV general partner and Clio board member Amol Helekar said. Of course, Clio is not the only legal tech benefiting from the AI revolution. In April, U.K.-based legal tech startup Lawhive, which offers an AI-based, in-house "lawyer" through a software-as-a-service platform targeted at small law firms, raised $11.9 million in a seed round. Backed by the likes of Lightspeed and Menlo, Eve emerged out of stealth last October with a mission to harness the power of large language models (à la OpenAI's ChatGPT) to shake up the legal profession.

Legal software company Clio raises massive $900M round to power AI advances

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More The 16-year-old Canadian legal software firm Clio, which makes a cloud-based operating system for law firms that handles everything from client intake to court filings to accounting, announced today that it has raised $900 million in a Series F investment round. This massive round was led by New Enterprise Associates (NEA) and values the firm at a total of $3 billion. Clio is touting it as the largest transaction ever in cloud legal technology, and says the money will be used to further advance its tech offerings with AI and other features, as well as expand to new markets and firms. It already counts customers in more than 130 countries, though the majority of its 150,000 individual users are in the U.S. "We're able to dramatically simplify workflows and unify them into one system," said Jack Newton, CEO and Founder of Clio, in a phone interview with VentureBeat. "We put law firms of all stripes, all of the data of each firm, in their own centralized, secure system of record that they depend on as their source of truth." The Series F round saw participation from Goldman Sachs Asset Management, Sixth Street Growth, CapitalG, and Tidemark, joining current stakeholders TCV, JMI Equity, funds and accounts advised by T. Rowe Price Associates, Inc. and T. Rowe Price Investment Management, Inc., and OMERS. Tony Florence, Co-CEO at NEA, who has joined Clio's Board of Directors, commented in a press release: "Clio embodies everything NEA looks for in a growth-stage investment: an exceptional, purpose-driven team, market and product leadership, and stellar business physics. Clio is mission critical to law firms, and the company's best-in-class retention and NPS are testaments to the team's ability to continuously innovate, deliver immense value, and meet the dynamic needs of the legal sector. With the right foundation in place for continued market expansion and advanced AI capabilities, we believe the best is yet to come." Investment in AI and new features Clio plans to invest further in its burgeoning AI portfolio and integrated legal payments. Recently, the company announced Clio Duo, a proprietary generative AI solution designed to help lawyers complete routine tasks and leverage firm analytics for more efficient practice management. Clio Duo includes audit log functionality for court discovery, enhancing legal practice efficiency. "We're all in on AI," said Newton. "We're weaving it into many different areas of the product...it's something we've been investing in since the earliest days of large language models over a year and a half ago." He pointed to the launch of ChatGPT in November 2022 as the key turning point for interest among customers in AI, as it was for many industries. He also noted his own background was in machine learning. At the same time, Newton acknowledged that "there's a lot of anxiety around AI replacing lawyers among our customer base...but we really perceive the power of AI is to amplify them so that they're able to dramatically increase their productivity, and position them to better serve the huge amount of unmet legal demand." Newton added that statistics available to Clio showed that 77% of current legal issues annually are not served by lawyers -- with people going to other experts or simply going it alone to solve them, also termed as. "justice gap." He said that AI would help lawyers by giving them more time to find and serve more people who are currently doing without representation. Additionally, Clio offers Clio Accounting to manage firm finances, ensuring compliance, and a module specifically for personal injury lawyers, providing rapid settlement estimates for high-volume case assessments. The platform also includes Clio Draft for intelligent document automation and court form libraries covering 50+ jurisdictions, as well as electronic court filing services to streamline court interactions. Security is paramount Obviously, the legal sector is among those that have a consistent and dire need for security -- by the very nature of dealing with confidential material before trials and filings, whether it be pertaining to individuals or organizations and their goings on. Amid the recent outage of security provider CrowdStrike that left millions of airport travelers stranded and bank customers frustrated, questions have swirled throughout the tech and business worlds about enterprises being overly reliant on cloud software companies. But Netwon says Clio understands these concerns and takes security extremely seriously and has since the start. "We've made a very significant investment in security and compliance, and operate a dedicated security team that is larger than some of our competitors and their development team," the CEO told VentureBeat. "We're able to provide assurance to our HIPAA regulated customers [Health Insurance Portability and Accountability Act -- pertaining to healthcare firms]. That's something we've invested in since day one of our technical investments." A winning streak Clio's growth since its Series E funding in April 2021, which raised $110 million, has been remarkable. The company has exceeded $200 million in annual recurring revenue (ARR) and expanded its international footprint to the APAC region. Its all-in-one payments business, launched in 2022, now processes billions of dollars annually in legal-specific transactions. Clio's workforce has grown to over 1,100 employees, with hubs in North America, EMEA, and APAC regions. The company continues to hire across various areas, including product development, R&D, sales, marketing, and customer success, to support its expanding operations. A history of innovation Since its inception in 2008, Clio has made a major impact on the legal technology landscape. After recognizing the challenges faced by solo practitioners and small law firms, founders Jack Newton and Rian Gauvreau aimed to bring the practice of law to the cloud. Clio has hosted 10 Clio Cloud Conferences, presented 32 Reisman Awards, and published seven Legal Trends Reports. It is recommended by over 100 bar associations and law societies and has added more than 200 partners to the Clio App Directory. Clio also offers an Academic Access Program, providing free software to over 55,000 users at more than 200 schools.

Goldman, Alphabet back Canadian legal software firm in US$900 million raise

(Bloomberg) -- Legal software provider Clio clinched a $3 billion valuation in a funding round that brings in Goldman Sachs Asset Management and Alphabet Inc.'s venture arm as new investors. Headquartered in a suburb of Vancouver, the company raised $900 million in a Series F round led by venture capital firm New Enterprise Associates, according to a statement Tuesday. New Enterprise Co-CEO Tony Florence has joined Clio's board. Clio's cloud software helps lawyers manage their practices by automating processes such as client intake, accounting and document management. The company, which has more than 1,100 employees, plans to use the money to expand its current AI portfolio and legal payment technology and to grow internationally to more than 130 countries. "This historic raise was heavily oversubscribed, further demonstrating the overwhelming demand and confidence in Clio's future," Jack Newton, its founder and chief executive officer, said in the statement. The company billed it as the largest transaction ever in cloud legal technology. The software firm, which operates as Clio but has a corporate name of Themis Solutions Inc., raised $110 million in a previous round in April 2021 at a $1.6 billion valuation.