According to CBInsights, Legal tech startups have already reached a high in deal count in 2017. Legal Tech gains investor attention as the digital transformation of the legal industry has picked up speed.
Investors are, according to CBInsights, especially attracted to companies attacking the category offer e-discovery and legal research, consumer and business-facing online legal services, legal practice management software, and intellectual property invention disclosure software, among many other use cases.
The following trends have been observed:
Financing trends
On an annual basis, investors have deployed $226M across 74 deals through Q3’17. Funding through the first 9 months of the year is already up 43% over 2016. At the current run-rate, 2017 is on track to see $306M invested across 100 deals.
On a quarterly basis, $41M was invested across 23 deals in Q3’17. This was down from a massive Q2’17, in which $129M was invested across 28 deals; the most since Q1’15. The spike in funding was driven in part by a $96M financing to Zapproved, a cloud-hosted legal discovery software tool.
Overall, deals to legal tech startups saw a big bump in mid-2016 and activity has stayed above 20 deals per quarter since then.
Compared to 2016, seed-stage funding has decreased by 14 percentage points as a percentage of total deal share, the second straight year of decline, as the category matures.
Series A deal share has grown so far in 2017, from 14% in 2016, to 17% so far this year. “Other” rounds, which include convertible notes and corporate minority financings, grew 11 percentage points to 29% of overall deal share this year. 
