Smart Contracts Photo: Shutterstock

 

It's not a bad time to be in the legal contract AI game—just ask LinkSquares. The company's latest round of financing netted $4.8 million, which in turn bumps its venture funding total up to $6.9 million. Participants included MassMutual Ventures, the venture capital arm of Massachusetts Mutual Life Insurance Company.

According to LinkSquares CEO Vishal Sunak, the timing of this latest round of fundraising coincides with increased interest from corporate legal teams looking inside the AI marketplace.

“I'd say over the last year, the pace and the momentum of conversations we're having with in-house counsel and in-house teams that are having a lot of pain around figuring out what they've agreed to in their executed agreements, it's really quickened,” said Sunak.

In other words, corporate legal departments are dealing with a preponderance of contracts, and if you have absolutely have to look for a needle in a haystack—in this case perhaps a specific clause or term—it helps to be carrying some kind of a magnet.

Eric Emmons, managing director at MassMutual Ventures, believes the ability to address pain points such as good governance, managing legal exposure and the reduction of unnecessary legal spend by small or mid-sized companies will provide the opportunity for LinkSquares to grow substantially into the future.

“We think that this is applicable not only for the inside counsel of rapidly growing software startups, but is actually applicable to any industry or any company that's got a large number of vendors and has to keep track either because of an M&A or legal exposure situation,” Emmons said.

Services like LinkSquares, which operates as kind of a virtual repository or cloud, allow users to peruse their contracts manually and keep track of certain milestones or renewal dates looming in the not-so-distant future.

The idea is to spend time that would otherwise be invested in reviewing documents manually and reapply it towards more lucrative ends. But are legal teams actually biting? Based on the conversations that the team at MassMutual Ventures had with some of LinkSquares' biggest clients during their due diligence process, the answer is “yes.”

“We got comfortable that the customers were seeing a lot of value from the product, and that's really a very substantial indicator that a company is going to be successful and that's something that we always look for when committing capital,” Emmons said.

LinkSquares isn't the only legal tech company focused on contracts to attract investor attention. In February, Evisort raised $4.5 million in a round of seed funding led by Amity Ventures and Village Global. Last fall Kira Systems raised $50 million in venture capital, the first time that the company has received outside financing. And almost a year ago, LawGeex brought a Series B funding round to a close with $12 million dollars.

Speaking of LawGeex, LinkSquares could be looking to follow in the footsteps of that company and other providers who are employing former corporate counsel. Per Sunak, a portion of the funding that was raised will go towards building out key roles within the team, including lawyers who can apply their legal expertise towards continuing to train and refine the AI.

“That's a kind of key role as that sort of focus of truth,” Sunak said.