The legal AI market is heating up. Legora, which builds AI tools for law firms, is in talks to raise funding at a $1.8 billion valuation, according to six sources familiar with the deal. The startup is raising between $100 million to $150 million.
Bessemer Venture Partners is leading the investment, according to one source familiar with the round. The startup’s revenue has grown from $4 million to $23 million in annual recurring revenue, but only $1 million of its revenue comes from U.S. based customers, this person said. The startup expects to book $40 million in ARR this year, two sources said. Legora declined to comment. Bessemer Venture Partners did not immediately respond to a request for comment.
The fresh investment comes just four months after Legora raised $80 million in Series B funding at a $675 million valuation from venture capital heavyweights including Iconiq, General Catalyst and Redpoint Ventures. Forbes first reported the round.
Legora develops AI software to help lawyers save time on repetitive tasks like document review and contract drafting. It integrates into everyday tools like Microsoft Word and allows users to analyze thousands of documents at once, conduct in-depth research across databases and write and edit contracts as part of their daily workflows.
Cofounded in 2023 by 25-year-old Swedish entrepreneur Max Junestrand, the startup touts 300 law firms as customers including Cleary Gottlieb, Goodwin and others, and has grown to 100 employees. A Y Combinator alum with no legal background, Junestrand started out by interviewing some 100 lawyers to learn more about the inner workings of the profession. He would send LinkedIn messages to lawyers, asking them to meet for lunch and offer to pay them their hourly rate, Junestrand said during a recent podcast.
While legal tech has traditionally been considered drab and unsexy, investors are excited about how artificial intelligence can be applied to it. In the past few months alone, a flurry of legal AI startups have picked up funding. In June, early AI darling Harvey raised $300 million at a $5 billion valuation to expand its team and in August announced it had more than $100 million in annual recurring revenue. Eve, AI for plaintiff lawyers, announced today that it has raised $103 million at a $1 billion valuation and claims to have more than 450 law firms as customers. AI startups in the legal sector have raised $2.4 billion in funding this year alone, according to Crunchbase data.
Because of the sometimes tedious and repetitive nature of legal work, law is quickly becoming an area of massive opportunity for new AI companies. A 2023 Goldman Sachs study estimated that 44 percent of legal work could be automated. Even though AI was expected to impact low skill jobs, fields like programming, law and medicine have become the test bed for AI tools with the promise of reducing workload and increasing efficiency.
Read the full article here
