Magic circle firms Linklaters and Allen & Overy have co-invested in UK startup Nivaura, which is aiming for the wholesale automation of capital markets' transactions.

The two firms formed part of a $20m seed round investment alongside The London Stock Exchange Group, Santander, Aegon and US law firm Orrick, Herrington & Sutcliffe.

The news follows Clifford Chance and Latham & Watkins taking part in a $10m investment round for legal tech 'app store' Reynen Court, three months ago.

Nivaura, which was founded in 2016 and has worked from A&O's Fuse tech space since 2017, says it has created a tech platform that can automate and process financial instruments from start to finish.

The platform is aimed at all types of financial institutions involved in capital markets transactions: banks, infrastructure providers, clearing systems and law firms.

Linklaters and A&O will be working with Nivaura, as well as investing, to help develop the product.

Nivaura general counsel Richard Cohen, who was a senior associate in A&O's capital markets team until leaving to join Nivaura last month, told Legal Week that the buy-in by law firms was essential as the Nivaura platform requires them – initially at least – to help tag capital markets contracts in a "legal mark-up language" so they can then be easily digitalised and automated.

"The law firms are very important for us because if they're willing to adopt the language, they can drive this automation in the market. This also allows the law firm and the lawyers to very much put themselves at the centre of that process," he said.

"Tech is going to change the way this market operates. Part of the reason for the law firms to invest is that they can get a seat at the table and decide the direction of travel so that they can adapt their practices to best service their clients. Investing in startups like Nivaura give them the best opportunity to do that, and certainly from my time at A&O that was the strategic thinking behind it," said Cohen.

A&O capital markets partner Phil Smith said in a statement: "We have been working with the team at Nivaura since they first joined Fuse and it is evident they are going from strength to strength. We have incorporated their platform into the work we do for our clients, resulting in very positive outcomes."

Linklaters UK fintech head Richard Hay, who has worked closely with Nivaura, said in a statement: "We see Nivaura's platform as having a potentially significant effect on the broader capital markets ecosystem. That includes law firms, as their platform places legal documentation at the centre of the drive towards automation."

Nivaura said the $20m seed round took place in three phases beginning in October 2017. A&O participated in the first two phases – in October 2017 and January 2018 – with Linklaters and all other investors joining for the third and largest phase, which closed this week.

In addition to its investment, Orrick provided legal counsel on closing the investment round.

Nivaura has also worked with Eversheds Sutherland and Latham & Watkins while a part of other tech incubation programmes.