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Speak to any lawyer and you’ll soon discover that the job is a far cry from the fevered excitement of a courtroom drama. Behind the scenes, there’s an endless amount of laborious and typically manual tasks like drafting, reviewing and negotiating contracts and other legal documents that have to be done manually daily.
It was this realisation that led four product managers at dating app giant Tinder, frustrated by what they saw as a lack of AI adoption at the company, to jump ship and found Belgium-based LegalFly last year. The startup is building a generative AI copilot for lawyers which eventually, it says, will be able to automate entire workflows in the legal profession.
“We were looking at what GenAI was good at, which is synthesising data and generating content,” says founder and CEO Ruben Miessen. “What industry works like that? Law, and it does it all in a very manual way.”
LegalFly — which has just raised a €15m Series A — isn’t the only European startup to spot a big opportunity for GenAI in the legal sector, and investors are increasingly pulling out their cheque book as they look to outcompete each other to pick winners in the space.
In the UK, in the past six months alone, Luminance raised $40m, Robin AI picked up $26m, Definely $7m and Wordsmith AI $5m. Sweden’s Leya Law also raised $10.5m.
Those rounds have attracted some notable names in VC.
Revolut’s Nik Storonsky’s family office QuantumLight, the founder-led firm Plural and Episode 1 have backed Robin AI. Notion Capital — which counts unicorns like fintech GoCardless and SaaS platform Paddle among its portfolio — put money behind LegalFly. Index Ventures and General Catalyst invested in Wordsmith AI. Leya Law got backing from Benchmark.
So why all the attention?
“The legal industry is a global behemoth that’s seen minimal innovation since the advent of Microsoft Word in the 90s,” says Carina Namih, partner at Plural. “GenAI — especially with a human in the loop to keep accuracy high — is ideally suited to drafting, editing and negotiating legal documents.”
That’s got VCs on the hunt for a horse to back.
“We [had] been looking at making an investment in the [GenAI legaltech] market for sometime,” says Jos White, general partner at Notion Capital — which led LegalFly’s Series A.
Law firms and legal teams have cottoned onto the opportunity, too, says Miessen. “Everyone is hiring a head of AI. Why? Because they’re ready to buy [AI solutions] now.” It amounts to what the LegalFly founder calls a “generational market opportunity”.
But the sector is heading for a showdown.
Glance at the homepage on the site of any of the GenAI legaltech startups mentioned in this column and you’ll notice they’re all promising to do similar things — like review and draft contracts and legal documents.
“It’s a race at the moment,” Definely CEO and cofounder Nnamdi Emelifeonwu told Sifted in May. “There will be winners and losers.”
It’s why LegalFly went back out on the fundraising roadshow just months after closing a €2m seed round in November 2023. Players in the market need to act quickly to snap up as much market share as possible ahead of the competition, Miessen says.
So which startups will come up trumps in the sector? How long will it be until we see a European GenAI legaltech unicorn? Get in touch and let me know.
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Read the orginal article: https://sifted.eu/articles/genai-legal-sector-startup/
