Clio tops $4-billion CAD valuation with largest software funding round in Canadian tech history

Already one among Canada’s highest-valued know-how startups, Clio claims its new Collection F spherical makes it essentially the most helpful cloud-based legaltech firm on the earth. Buoyed by sturdy income progress, the Burnaby, BC-based unicorn has closed the recent funding at a greater than $4-billion CAD ($3-billion USD) pre-money valuation.

Clio’s $1.24-billion CAD ($900-million USD) Collection F additionally marks the most important software program funding spherical in Canadian tech historical past, topping Toronto-based 1Password’s $744-million CAD 2022 Collection C spherical. Clio additionally claims it represents the largest-ever capital increase for cloud authorized software program, a prime 5 largest fundraise for a vertical market software program firm traditionally, and the most important progress fairness capital increase in Canadian historical past.

The authorized software program supplier’s all-equity Collection F spherical was financed fully by new United States (US) traders. New Enterprise Associates (NEA) led with help from Goldman Sachs Asset Administration, Sixth Avenue Development, Alphabet’s CapitalG, and Tidemark. It comes shortly after Clio crossed $200 million USD in annual recurring income (ARR), the corporate claimed, up from $100 million USD in 2022.

“We view Clio as a best-in-class, generational software program enterprise.”

Tony Florence, NEA Co-CEO

“We wished to convey on a bunch of traders that had experience and a demonstrated functionality to help corporations in … that subsequent a part of the scaling journey from $200 million [USD] of ARR to a billion {dollars} of ARR and past,” Clio co-founder and CEO Jack Newton informed BetaKit in an interview.

Per knowledge from the Canadian Enterprise Capital and Personal Fairness Affiliation and RBCx, the most important Canadian tech funding rounds on file embrace 1Password’s $744 million CAD Collection C, Wealthsimple’s $750 million CAD spherical, Cohere’s current $688 million CAD Collection D, and Trulioo’s $476 million CAD Collection D. At $1.24 billion CAD, Clio now tops that listing.

However large numbers don’t all the time inform the entire story; no less than 4 of these 5 rounds featured some type of secondary capital. Wealthsimple and Trulioo disclosed how a lot—$500 million CAD and almost $295 million CAD, respectively. 1Password has by no means publicly confirmed the degrees of secondary capital included in its $265 million CAD Collection A spherical, $125 million CAD Collection B spherical, and beforehand chart-topping Collection C spherical (sources BetaKit spoke with indicated that 1Password’s Collection A featured essentially the most important quantity of secondary). A Cohere spokesperson informed BetaKit that its Collection D spherical didn’t embrace any secondary.

Clio would solely verify to BetaKit that its Collection F was “considerably secondary,” making it troublesome to triangulate the true quantity of working capital being despatched to the corporate, in addition to the place the spherical ranks traditionally.

In response to Newton, Clio’s Collection F consisted of a mixture of main and secondary capital, “with a view to creating liquidity for current traders in addition to our workers.” Newton famous that Clio has achieved this earlier than: the late-stage legaltech firm additionally carried out secondary financings in 2019 and 2021 for related causes.

Clio’s current traders, which embrace TCV, JMI Fairness, funds and accounts suggested by T. Rowe Worth Associates and by T. Rowe Worth Funding Administration, and OMERS Development Fairness, stay shareholders. “No person is exiting on this spherical,” Newton stated.

In an interview with BetaKit, NEA Co-CEO Tony Florence known as Clio a “best-in-class” legaltech firm, and described Clio’s Collection F investor syndicate as “world class.”

“This represents a very large, essential strategic transaction for the corporate and clearly for the software program trade total, and we’re thrilled to be main it,” stated Florence, who will be part of Clio’s board as a part of the spherical, which NEA has contributed $688 million CAD (over $500 million USD) in the direction of.

Promoting cloud-based authorized follow administration software program, Clio goals to simplify legislation agency administration by centralizing consumer consumption, case administration, doc administration, and authorized funds, and different duties.

Newton attributed Clio’s progress since its $136-million CAD Collection E spherical over three years in the past to the work Clio has put into increasing its buyer base and its multi-product platform technique, which he stated has helped the corporate drive extra income from current shoppers.

Since April 2021, Clio has expanded to the Asia-Pacific area, moved upmarket, constructed out its management crew, rolled out a slew of recent choices, accomplished a few acquisitions, unveiled an funding fund, and launched a funds enterprise. At the moment, the corporate claims to serve over 130 nations around the globe, cater to greater than 1,000 mid-sized legislation corporations within the US alone, and course of “billions of {dollars}” yearly in authorized transactions.

RELATED: Legaltech unicorn Clio now additionally a centaur after hitting $100 million USD in ARR milestone

Clio got down to increase capital this spring amid “a reasonably powerful fundraising panorama” for startups and funding corporations alike, one which has seen traders put strain on tech entrepreneurs to ship a compelling mixture of progress and profitability. 

In response to Newton, Clio benefitted from its monetary profile to attain each. “We’re rising shortly, and we’re capable of drive that progress profitably … If you happen to’re capable of obtain profitability at [a] actual income scale whereas sustaining important, speedy progress, traders will put an actual premium on these varieties of companies,” he stated.

Clio plans to make use of this capital to maintain “constructing out the working system for authorized.” In response to Newton, this entails investing in Clio’s core platform, its FinTech providing, synthetic intelligence, and different new merchandise. “We’re going to proceed investing within the product initiatives which have been driving terrific outcomes for us over the course of the previous few years, and simply pour extra gas onto that fireside,” he stated.

The corporate additionally plans to speed up its worldwide enlargement and transfer upmarket. To help these efforts, Clio intends to develop its greater than 1,100-person crew with hires throughout all areas of its enterprise, together with product, analysis and growth, gross sales, advertising and marketing, and buyer success, with over 100 roles at present open.

RELATED: Clio doubles C-Suite with 4 new execs to help product, worldwide enlargement

As public markets have stagnated, many corporations are staying non-public for longer or ceasing to go public altogether, and in search of alternative routes to generate liquidity for current shareholders. Within the tech world, US funds large Stripe is an instance of this.

Clio was based again in 2008. Like its Canadian tech friends of roughly the identical age, 1Password and Vancouver-based Hootsuite and Trulioo, 16-year-old Clio has opted to stay non-public reasonably than go public.

Newton famous that whereas Clio is “regularly evaluating” and making ready for the potential of an preliminary public providing (IPO), this spherical offers the corporate some optionality. “As we’ve demonstrated with this spherical, you may obtain lots of the similar objectives that you simply would possibly attempt to obtain with an IPO within the non-public markets,” he stated.

Nonetheless, ought to Clio determine to pursue an IPO, Newton acknowledged that its lead Collection F investor has loads of expertise taking corporations public: in line with Florence, NEA has helped over 300 companies do exactly that up to now.

“As we’ve demonstrated with this spherical, you may obtain lots of the similar objectives that you simply would possibly attempt to obtain with an IPO within the non-public markets.”

Jack Newton, Clio co-founder and CEO

For his half, Florence doesn’t consider this spherical indicators any intention both means. “I don’t suppose they’re in any rush,” he stated. “We [at NEA are] not in a rush. It’ll be pushed by the market alternative on the time. However every part that we’re doing shouldn’t be mutually unique for that, together with elevating this large spherical.”

Newton stated that elevating fully from US traders “wasn’t a deliberate alternative,” however acknowledged that, “The variety of traders in Canada that may write the sort of cheques that we’re seeing from this consortium that’s on this spherical is fairly restricted.”

As to the place Clio suits into the legaltech area, Newton admitted that there could also be some bigger, extra highly-valued legacy corporations within the sector, similar to within the on-premise enviornment.

However amongst corporations Clio views as instantly comparable in cloud-based legaltech, Newton argued that Clio stands alone. Different members of this group embrace gamers like NetDocuments, MyCase, and Rocket Matter. In the meantime, corporations like Thomson Reuters and LexisNexis additionally personal software program companies or supply merchandise in the identical area Clio serves. “Of our peer set, we’re far and away essentially the most helpful firm in that phase,” Newton claimed.

Florence agrees, citing the energy of Clio’s platform method, merchandise, administration crew, and the progress it has achieved up to now. “We view them because the clear market chief,” he stated.

“We’ve bought a protracted, lengthy heritage of investing in best-in-class enterprise software program corporations, and we view Clio as a best-in-class, generational software program enterprise,” Florence stated.

Characteristic picture courtesy Clio.