Current economic instability may halt some investors from funding companies, but not all. Today, contract review platform LexCheck announced it secured $3 million during its series A seed round.

The investment was led by Kli Capital, First Round Capital retired co-founder Howard Morgan, Clover Health CEO and co-founder Vivek Garipalli, LexCheck founder and CEO Gurinder "Gary" Sangha and others, according to a press release provided to Legaltech News.

To be sure, new legal tech companies currently seeking investment may face a steep challenge, Sangha noted. Still, he argued his investment highlights what all legal tech companies must do in order to succeed in this environment: work hard and develop a solution that provides value and efficiency. It also helps if one has a proven track record.

Investment talks began earlier this year but Sangha acknowledged the COVID-19-induced economic downturn added an extra layer of uncertainty to the funding deal.

"In this environment any investor can back out and who can blame them given the circumstances," he said. "I think what gives our investors strength even in this environment is … I have a record with running a legal tech company during an economic downturn."

Indeed, Sangha launched the compliance analytics platform Intelligize in 2008 during the Great Recession. By 2016 Intelligize was acquired by LexisNexis and in 2018 was combined with LexisNexis' other acquisitions for its Lexis Analytics suite.

Sangha described launching a legal tech startup in 2008 versus today as "night and day; back then starting a legal tech startup was unheard of." Still, while the market for legal tech tools has grown, there's stiffer competition as the economy struggles and investors evaluate companies more closely.

"I think the balance has shifted. Not only is it going to be more challenging and a lot of existing companies that aren't profitable, I think, you will have a lot of competition from new entrants and existing companies that haven't broken even yet," Sangha said.

Despite weathering the last economic downturn, Sangha said legal tech newcomers and veterans all face significant sales challenges when marketing tech to a notoriously skeptical audience as their budgets tighten.

"A lot of folks in legal have a wait-and-see approach to technology so it becomes harder," he said. "Companies are looking for efficiencies and cut big-ticket inefficient solutions. If you're a nimble startup there's still a path to survival, [though]."

Sangha explained that such a path includes concentrating on developing a compelling product is crucial in the current climate. "It takes hard work and you've got to show value."

Currently, AI-powered LexCheck assists corporate legal departments during the negotiation process by automatically correcting provisions, highlighting issues for user review and proposing potential fixes, Sangha explained. With its latest funding, LexCheck will enhance its software to address the other "pain points" of contract negotiation and expand its sales team, Sangha said.

To be sure, LexCheck isn't the only contract review platform to raise funds this year. In late February, LinkSquares raised $14.5 million with plans on expanding its tech capabilities across the entire contract life cycle.

Other legal tech companies operating in markets beyond contract review have also secured multimillion-dollar investments in recent months, including Everlaw's $62 million and  Casetext's $8.2 million, announced in March, and legal spend analysis platform Bodhala's $10 million, announced in April.