What happened: Burnaby-based Clio raised US$250 million in Series D funding from two American equity firms.
Why it matters: The deal represents the largest growth-stage financial transaction in Canadian history, according to the deal partners.
B.C. tech firm Clio (Themis Solutions Inc) has snagged what it calls the largest growth-stage financing transaction in Canadian history.
The Burnaby-based company announced Wednesday (September 4) it has raised US$250 million in Series D funding from two Silicon Valley equity firms: TCV, which has invested more than US$12 billion in technology companies and has offered guidance on more than 120 initial public offerings; and JMI Equity, which has invested in more than 145 businesses and has facilitated more than 95 exits.
Clio is best known for developing software that helps small law firms reduce the time lawyers spend on administrative tasks.
"Over the next decade, we intend to completely redefine the way legal services are delivered by creating the first operating system designed for the legal profession with their clients in mind," Clio CEO Jack Newton wrote in an online post the day the deal was announced.
Newton, a 2017 BIV 40 Under Forty winner, co-founded the company in 2008 with childhood friend Rian Gauvreau following a consulting gig with the Law Society of British Columbia.
Over the past five year’s Clio’s workforce has grown 207% to 320 workers and now ranks as the 22nd largest technology company in the province, according to Business in Vancouver research.
Prior to the latest funding round, the company had raised $26 million to date.
But Newton told BIV in 2017 that he nearly never raised the first $1 million, which he set out to do during what he described as the “nuclear winter of finance” otherwise known as 2009-10.
After pitching every angel investor they could find in Western Canada, Newton and Gauvreau were frustrated with the feedback they were getting.
Everyone liked the idea of a company that could provide management tools to small law practices to help them reduce costs, but Newton said no one wanted to invest at a time when they were afraid the financial system could collapse.
However, German investor Christoph Janz came across a blog post detailing Clio’s business model and immediately fired off an email to the company.
The message sat in a spam folder for two weeks.
“He was even more interested because of the delay,” said Newton, who specialized in machine learning while earning his master’s degree in computer science at the University of Alberta.
A second message was eventually discovered and the company now finds itself in the midst of the investment boom surrounding legal technology.
Investment in the legal-tech sector reached US$1 billion across 40 deals in 2018, up from US$233 million a year earlier, according to research from Israel-based legal-tech firm LawGeex.
Other B.C.-based companies diving into this sector include the Kikero Inc., a startup providing virtual consultations before clients decide if they need further legal assistance; and Qase Inc., which specializes in matching people with appropriate lawyers by offering an online platform that asks people about their legal questions before allowing them to book a free consultation.
Both startups launched earlier this year.
Clio, meanwhile, said it would use funds from its latest deal to accelerate the development of its products and expand its product portfolio.