Legal tech funding fell 74% in first half of 2016 when compared to the same period in 2015.

While financing activity to startups targeting financial services has spiked over the past five years, startups in the area of legal services have seen no such boom. Since 2011, global legal tech companies have raised just $739M in aggregate funding through 2016 year-to-date (despite the ostensible opportunities in the multi-billion dollar legal industry).

We used CB Insights data and analytics to dig into the data surrounding legal tech investment trends, including deals and dollar breakdowns, deals by US state, and most well-funded companies.

We defined legal tech as all tech-enabled companies offering services and products to those in the legal industry. That includes technology catered to individual lawyers, larger corporate law firms, and other key stakeholders in the law industry.

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Deals and dollars

The first half of 2016 saw a 74% drop in financing activity (when compared to the same period in 2015) with just $44M in funding deployed across 25 deals.

But that doesn’t tell the complete story as 2015 funding was largely buoyed by the $125M growth equity round to Iconiq Capital-backed kCura and a $71.5M Series E round to Technology Crossover Ventures-backed Avvo.

Deal activity has grown over the last four years with each year notching at least 44+ deals. At the current run-rate, 2016 is on track to hit roughly 50 deals to legal tech startups.

Legal.tech.ANNUAL_funding.figures_2016_v4

Quarterly trends

In Q2’16, legal tech companies raised $16M across 9 deals.

Q2’16 deal activity is down 44% over the previous quarter while funding levels dropped 43% on a quarterly basis. Despite a disappointing quarter, there were some notable deals in Q2’16 including Notarizewhich raised an $8.5M Series A, and Page Vault which raised a $1.75M seed financing, among several other deals.

Legal.tech.QUARTERLY_funding.figures_2016_v3

Deals by top US state

Its no surprise that California-based startups have seen the most legal tech deal activity.

However, what’s most impressive is the representation of activity among states not traditionally known as tech hubs. For example, Oregon (tied at 3rd) is the home of electronic discovery company Zapproved and Washington (tied at 3rd) is the home of legal marketplace Avvo.

Other states to represent significant deal count includes Texas and Illinois.

Legal.tech.deals.by.STATE_2016_v2

Most well-funded companies

Despite being a nascent industry, there are already 2 legal tech startups that have raised more than $100M in total disclosed funding including Avvo and kCura.

The list below ranges from e-discovery companies like Renew Data Corporation to legal services provider Axiom, among various others.

Most Well-Funded Legal Tech Startups Q1’11 – Q2’16
Company Total Disclosed Funding ($M)
Avvo  $        132
kCura  $        125
Rocket Lawyer  $          53
Renew Data Corporation  $          51
AccessData  $          45
Axiom  $          36
Catalyst Repository Systems  $          32
Clio  $          26
Zapproved  $          17
Peppermint Technology  $          15

Want more legal tech data? Check out our venture capital database below.