eDiscovery Daily Blog
Is VC Investment in the Legal Tech Market on the Decline?: eDiscovery Trends
Last week, we took a look at whether the eDiscovery market is growing, shrinking or shifting. This week, let’s take a look at whether venture capital investment in the legal tech market is rising or falling.
That’s what Kevin O’Keefe, CEO and founder of LexBlog, examines in this Above the Law article (Investment In Legal Tech Is Slowing While Legal Tech Is Booming).
Kevin noted that he was surprised to read Holden Page’s story at Crunchbase that investment in legal tech startups “hit a hard peak in 2015 and has since been on the decline.” Here is the graphic from the Crunchbase article that illustrates the trend:
Of course, as Kevin notes from the Crunchbase article, 2015’s peak was made by a couple big investments. $125 million in Chicago-based Relativity and $71.5 million in Avvo. So, if you take that out of the equation, 2015 is pretty much in line with the other years (at least dollar wise).
On the other hand, in the Crunchbase article, Page notes that seed-stage funding (smaller investment until business can cash flow or until it is ready for further investment) in legal tech companies has risen in 2017. “From 2011 to 2014, over 50 percent of the funding rounds made in legal startups were in the seed stage. And while the percentage of seed-stage deals dropped from 2015 to 2016, 2017 YTD has seen a rebound with nearly 45 percent of known funding rounds being made in the seed stage. This is bucking the overall trend seen in 2017, especially in the US, where seed-stage investment has experienced declines in favor of late-stage deals.”
As I’ve noted before, Rob Robinson keeps track of the eDiscovery mergers, acquisitions and investments in his excellent Complex Discovery blog (here is the link to all of those transactions he has tracked since November 2001). While 2017 has been a relatively quiet year (so far) from an investment standpoint, 2016 was certainly a busy year. And, this year isn’t over yet. :o)
So, what do you think? Is investment in the eDiscovery market growing or shrinking? As always, please share any comments you might have or if you’d like to know more about a particular topic.
Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.