LinkSquares, a contract management and analytics tool for legal and finance teams, today announced that it raised $40 million in a series B funding round led by Sorenson Capital. The company, whose total funding stands at $61.4 million, says it’ll use the financing to expand its workforce, advance its technology, and develop strategic business partnerships.
During the pandemic, legal departments and contract negotiators faced a critical period of transformation. Legal was expected to contribute data-driven analyses while contending with the gap between executed contract analytical platforms and legal request business process flows. More than half of the world’s major companies face lost revenue and missed business opportunities as a result of inefficiencies in their handling of contracting processes, according to an EY Law survey.
“Just this past year, legal and compliance teams raced to analyze their business exposure to major events across PDFs, paper contracts, and other documents. The pandemic caused a surge in interest from prospective customers who needed digital contract management. These companies couldn’t afford to use on-premises solutions locked away in an office anymore, and they needed our help to ensure fully remote implementations that were quick and painless, and we came through,” LinkSquares CEO Vishal Sunak told VentureBeat via email.
According to Sunak, the inspiration for LinkSquares came during his experiences with the manual work associated with contracts over the course of the acquisition business continuity firm Datto planned during Sunak’s time at Backupify, a cloud data backup company. Datto hoped to migrate Backupify’s customer data to its cloud infrastructure, but the team first had to understand each signed customer contract and determine if Datto had the right to move the data without permission.
Above: The LinkSquares platform. Image Credit: LinkSquares
“The idea to review each contract, read the provision related to data transfer, and store the answer seemed straightforward — at first. In reality, because Backupify had negotiated more than 2,000 contracts, the act of finding all the contracts and looking for the provision language was an impossible undertaking,” Sunak explained. “When our team explored the types of contract management products available for post-signed contracts, there was a spark of innovation: most of the tools that could surface answers and insights from executed agreements focused on contracts that hadn’t been finalized yet, mainly in the pre-signature stage. And so, LinkSquares and its AI for signed contracts was born.”
AI-powered contract management
LinkSquares’ platform performs searches for keywords, contract terms, and phrases across documents using AI. It extracts data from contracts (e.g., parties, effective and termination dates, payment terms, governing states, and limitations and liabilities), and its email-based notification function reminds teams of important dates and obligations. Optical character recognition transforms scanned PDFs into a searchable format, while custom user roles let admins control data access. And a clause library enables real-time searches for contract clauses.
“We’re starting to understand the real benchmarks of what is being agreed to — and how people are agreeing to it — in their contracts. Because we’re an AI company we’re starting to see macro trends in legal language emerge,” Sunak said. “Modern legal teams need to be data-driven and move beyond their perception as a cost center and gatekeeper. Corporate counsels and mergers and acquisitions teams rely on LinkSquares to elevate their internal value, reputation, confidence, and productivity by eliminating time spent on manual and ineffective processes.”
LinkSquares’ customers include over 400 brands like Fitbit, Twilio, TGI Fridays, Wayfair, and Cogito. Growth over the last two years exceeded 1,000%, and the company recently announced a technology partnership with Xerox PARC (Palo Alto Research Center), the R&D lab behind laser printing and electronic ink.
“Cogito estimates saving $30,000 per year [with LinkSquares, while] Asurion reduced time spent on searching for information by 50%,” Sunak said. “We overcame a lot of adversity this past year — with employees and customers — and we needed new levels of empathy and flexibility for a workforce that was 100% remote overnight. And we had customers who had a lot of uncertainty about their financial situations, so I personally worked something flexible out with several. That way, no one had to choose between paying their own employees and maintaining access to their critical legal insights.”
Sunak expects that Boston, Massachusetts-based LinkSquares’ annual recurring revenue will grow 100% year-over-year by the end of 2021, up from “well over” $10 million. Other backers in the company’s latest round included Catalyst Investors, Xerox, Bottomline Technologies, DraftKings’ founders and key legal and compliance executives, Hyperplane Venture Capital, MassMutual Ventures, and First Ascent Ventures.
There’s no shortage of startups developing AI-driven contract creation and management tools. Others in the $2.9 billion market include Concord, which raised $25 million for its digital contract visualization and collaboration tools in 2019. That’s not to mention Icertis, which recently snagged $115 million; DocuSign, which invested $15 million in AI contract discovery startup Seal Software; and Evisort, which nabbed tens of millions to develop its solutions.