Legaltech startup SpotDraft raises $26M to streamline contracts
Reading Time: 4 minutesSpotDraft, an Indian legaltech startup that has built an AI-powered Contract Lifecycle Management (CLM) solution, has raised $26 million in a funding round led by Premji Invest.
As a company grows, so does the need for business contracts. Whether it’s with employees, clients, investors, or regulatory authorities, contracts become an essential tool for expansion. However, managing contracts at scale can become resource-intensive and cumbersome. Additionally, sharing contracts with various departments, such as legal, sales, marketing, human resources, and business operations, can further complicate matters.
SpotDraft has its in-house solution to simplify this process. It uses a mix of legal expertise and technology to let teams quickly create, manage, review and execute contracts, store and organize agreements, submit legal requests and approvals and generate risk reports from a unified dashboard. The platform also uses AI on top to automate the process.
After working as a Wall Street lawyer in the U.S., Shashank Bijapur co-founded SpotDraft in 2017 with Carnegie Mellon computer scientists Madhav Bhagat and Rohith Salim. The trio met at a Diwali party in New York and moved back to India in 2016.
‘One day, we realized that cars were driving themselves, and we were all still copying and pasting words and contracts. So we are here to change that,’ Bijapur, who handles the execution of SpotDraft, said in an interview.
SpotDraft is not the only player in the emerging market of CLM solutions. However, the Bengaluru-based firm, which has a U.S. subsidiary, does have some differentiators to stand out.
One of them is the malleable and integratable nature of the platform, Bijapur said.
The web app integrates with tech stacks such as Salesforce, HubSpot, Slack and Google Drive to let teams easily work with contracts without requiring them to use a specific platform.
Bijapur said the platform also ensures to offer the ‘best in class implementation’ to companies. ‘As much as 85% of contract development products fail because either if it’s not implemented or not adopted. So we ensure that implementation and adoption is our headache,’ the executive said, adding that the last major differentiator for SpotDraft is its top-notch customer support.
SpotDraft utilizes existing AI technologies including GPT-3 along with its in-house intelligence to speed up the contracting process. Bijapur said the AI system works hyper-specific to understand a very condensed piece of text in a modularized way.
‘The most complex piece of text you read after Shakespeare was a contract that SpotDraft can understand. So we ended up understanding those pieces of text in a much better way because we’ve purpose-built it to understand legal language and context,’ he said.
As agreements and contracts are highly private and require robust security, Bijapur said SpotDraft ensures that the data it takes from customers does not intermingle while offering them a fast, AI-driven experience.
‘We have all the necessary bells and whistles that are required to ensure that your data security is maintained,’ he said.
SpotDraft also has its Vulnerability Assessment and Penetration Testing (VAPT) testing and a bug bounty program to maintain data security. To improve the AI system and keep it up-to-date, the firm uses behaviors and patterns, Bijapur stated.
To date, SpotDraft has processed more than 1 million contracts and freed up over 1.5 million hours previously spent on tedious paperwork for customers such as Airbnb, Notion, Panasonic, Strava and Chargebee. The firm has a team of 170 people with decades of combined experience in legal and product development fields.
‘Contracting has multiple stakeholders including legal, sales, finance, and it is important to create a seamless experience for all of them,’ said Atul Gupta, Partner at Premji Invest, in a statement. ‘We invested in SpotDraft’s world-class team because they’ve elegantly solved this business problem and created a product that is loved by teams across the organization.’
The all-equity Series A round also saw participation from Prosus Ventures, 021 Capital, Arkam Ventures, Riverwalk Field and 100x Entrepreneur Fund.
‘While leading organizations around the world are already investing in automated CLM tools, the overall level of adoption is still relatively modest,’ said Ashutosh Sharma, Head of India Investments for Prosus Ventures. ‘Further, there are few good quality, modern, end-to-end CLM solutions for the mid-market segment. SpotDraft has addressed this gap efficiently with their strong value proposition and demonstrated strong early traction and significant cost advantages.’
SpotDraft plans to leverage its fresh funding to hire new talent for its go-to-market and research and development teams while continuing to improve its product offerings.
With 65% of its revenue coming from the U.S., the legaltech startup intends to expand its U.S. customer base by bolstering its go-to-market strategy in the country. Co-founder Bijapur shared that the remaining 35% of revenue is generated from other regions, with 20% from India and 15% from markets such as Singapore, the U.K., and the Middle East.
Although SpotDraft has not disclosed exact revenue figures, Bijapur said the startup has experienced significant growth in recent years, tripling its yearly revenues over the last three years.
So far, SpotDraft has raised a total of $30.5 million, including $4.5 million in pre-seed and seed rounds.
SpotDraft has not disclosed its valuation following the recent funding round. However, Bijapur indicated that it is likely to be one of the highest valuations for a legaltech Series A funding round.
Reference: https://techcrunch.com/2023/03/02/spotdraft-funding-india-legaltech-startup/
Ref: techcrunch
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