When LawVu founder Sam Kidd started to approach investors to raise the company’s first round of capital he did not expect he would have offers to take out the legal tech company’s entire $US10 million raise.
Kidd, who hopes the business can become another New Zealand-born tech success story like Xero and Pushpay, realised he needed to be careful about how much money he took, and when.
LawVu co-founders Tim Boyne and Sam Kidd want their company to be the next Xero.
The business provides collaboration software to in-house legal teams letting them manage all matters, contracts, documents, e-billing, outsourced work, and reporting from a single cloud-based platform.
On the cusp of cracking the US market, which is set to overtake Australia as LawVu’s biggest revenue generator this year, Kidd opted to delay the company’s $US10 million Series A raise and undertake a substantially smaller $2.3 million convertible note.
The note was taken out by AirTree Ventures and Silicon Valley-based Shasta Ventures, as well as New Zealand’s NZ Growth Capital Partners and existing investors.
“We had a number of offers from people to do the full round,” Kidd tells The Australian Financial Review.
“The convertible note is something we’d talked about doing when we first started, but then we weren’t in a position to do that.
“If you can get away with it… it makes sense because we wanted to avoid the valuation conversation and we were looking at the traction competitors were getting in the US and knew that would benefit us.”
Undertaking the convertible note while pushing back the larger Series A raise to later this year has given the business sufficient capital to expand further in the US and hire vice-president-level executives who have experience in scaling companies.
The company has hired former Xero CFO and COO Ross Jenkins to lead its board and former Pushpay staff have joined its product team.
Kidd founded the business alongside Tim Boyne in 2015, after a career in online project management companies.
He says he discovered how unstructured the legal industry was when it came to client work, which relied predominantly on Outlook and occasionally Excel.
He says he thought he was being trolled when a lawyer on stage at a conference in Sydney explained to the audience how using Word templates could speed up processes.
After settling on in-house legal teams as its target market, LawVu won Telstra as its first major client and was propelled into the big business market.
“We saw ourselves targeting in-house teams of five to 20, but we got pulled into the enterprise space,” Kidd says.
“The global contract with Telstra really put us on the map. What separated us was the usability of the platform – it’s a sad state of affairs that that’s what differentiated us. But there’s lots of legacy systems and product bloat.
“We kept it simple, easy and intuitive. We can stand up a team in a matter of hours.”
Kidd says one of LawVu’s big advantages is that it targets in-house legal teams, rather than law firms. While law firms are secretive, in-house teams do not compete and regularly share information about what technologies they’re using.
In-house lawyers are too under-resourced to adequately advise companies on risk management.
“As horrible as a pandemic is, it was a catalyst for our growth,” Kidd says.
“[Until now] for in-house teams a lot just haven’t had the budget to actually invest in tech because they’ve been [seen as] a cost centre and they haven’t had the tools or people to implement it.”
Article originally published on The Australian Financial Review on 3 May 2021.