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Legal software company Spellbook, specializing in contracts, announced on Wednesday that it successfully raised $20 million in a Series A funding round. Inovia Capital, a venture capital firm based in Montreal, was the leading investor in this round. Other contributors include The Legaltech Fund, Bling Capital, and Thomson Reuters Ventures, operated by Thomson Reuters, the parent company of Reuters.
Spellbook’s Innovative AI Contract Drafting and Review Tool
Spellbook offers a cutting-edge generative artificial intelligence contract drafting and review tool, leveraging large language models, including OpenAI’s GPT-4. The product is specifically designed for corporate and commercial lawyers in law firms and companies, providing suggestions for contract language and negotiation points.
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Increasing Momentum in the Legal Tech Sector
The legal tech sector is experiencing a surge in startups launching innovative tools and attracting capital, driven by the exploration and capitalization of generative AI. Despite the increased interest, a clear leader is yet to emerge in the dynamic legal AI market.
Diverse Customer Base and Notable Endorsements
Scott Stevenson, CEO and co-founder of Spellbook, revealed that the company’s core customer base consists of small and midsize firms and solo lawyers. However, Spellbook has successfully sold its services to larger firms and in-house legal teams. Among its notable customers are Addleshaw Goddard, a prominent London-based law firm; KMSC Law, a small law firm based in Alberta, Canada, Carbon Chemistry, a Denver-based materials supplier; and ATEM Capital, a New York-based life sciences venture capital firm.
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Evolution of Spellbook from Rally
Spellbook, initially known as Rally since its launch in 2019, underwent a rebranding in June 2023 after securing a $10.9 million seed round. The company’s focus shifted from automating routine legal tasks, such as sales agreements and employee hiring, to the development of its advanced AI contract drafting and review tool.
Noteworthy Shift in Investor Interest
Scott Stevenson acknowledged a significant shift in investor interest in legal technology, particularly since the emergence of generative AI in late 2022. This shift has been instrumental in attracting funding and support for companies like Spellbook.
Recent Developments in Legal Tech Funding
Similarly, Norm AI, a newly established company, announced on Tuesday that it raised $11.1 million in a seed round, unveiling a regulatory AI product for chief compliance officers. Another player in the legal tech arena, Robin AI, specializing in generative AI for contracts, recently disclosed a $26 million Series B round. In December, Harvey, a legal tech company, secured $80 million in a Series B round, valuing the company at an impressive $715 million. These developments underscore the legal tech sector’s dynamic and rapidly evolving landscape.
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