Summary List Placement
Contract tech is the frontrunner in the legal tech space, as companies across industries seek to streamline their contract creation, negotiation, and management processes.
Evisort, a contract lifecycle management (CLM) platform, raised $35 million in its Series B announced late February, bringing total funding to $55.5 million. The private equity firm General Atlantic led its latest funding round, with participation from existing investors Amity Ventures, Microsoft’s venture firm M12, and Vertex Ventures.
Founded in 2016, Evisort uses artificial intelligence to help businesses categorize, search, and act on documents.
Its CEO Jerry Ting founded Evisort while he was still attending Harvard Law School. He spent one summer working at Fried Frank, but soon realized that he didn’t want to be a lawyer because he didn’t want to spend excruciating hours manually reading fifty-page contracts. He did, however, recognize how important they are to corporations, and co-founded Evisort as a tool to locate and track valuable information like a contract’s expiration date and obligations like payment dates.
The coronavirus pandemic has turbocharged the growth of CLMs, as remote work has necessitated the digitization of work and businesses across industries have sought to ensure they’re complying with contractual obligations. Ironclad’s January Series D valued the contracts platform at $1 billion, while e-signature company DocuSign has been making strategic acquisitions and investments to boost its portfolio.
Evisort’s plans for growth — and an IPO down the road
Evisort’s recent $35 million Series B is another milestone for the CLM space. The company said it’s quadrupled its revenue and signed multiple Fortune 500 customers, like Microsoft, Fujitsu, and NetApp, over the past year alone.
According to Ting, Evisort retains, on a per dollar basis, over 150% of net-dollar retention. In other words, customers are nearly doubling their spend with Evisort as they buy more of its “very sticky” products, expanding their use of the platform from the sales department to the legal department, and so on.
The company is “on track” for an IPO in the next four to five years, Ting told Insider. He said Evisort chose the private equity firm General Atlantic as its partner because it wanted an investor that has deep enough pockets to finance the company until they go public.
General Atlantic’s investment is also a “huge vote of confidence” for the CLM space, Ting said.
A significant portion of Evisort’s fresh $35 million in funding will be used to develop and “democratize” its AI technology, making it so easy to train that a fresh college graduate could use it. It also plans to scale its business and go to market by more than doubling its sales team. The company has declined to disclose specific numbers.
Evisort acquired a legacy CLM company last year, and Ting said that they have enough cash to potentially integrate smaller companies in the contracts space. He declined to disclose specifics of the deal, the terms of which are not public.
Evisort is aiming to at least double its revenue this year, which is a target that Ting thinks will continue for the next four to five years. “We’re still at the first inning of a very long baseball game,” he said.
Ting walked Insider through the 11-page pitch deck that Evisort used to impress investors.
Evisort’s title page
Why it matters
Contracts are stored in many different places — an average of at least four to five separate locations, such as Google Drive, SharePoint, Dropbox, and Salesforce, said Ting. As a result, there’s not “one single source of truth,” since several different versions of each contract are scattered across various places within a business.
“Companies are living in the dark once the contract has been signed,” Ting said. “There’s no one place where they can go and say, show me all of my contracts that are expiring in the next 90 days, or show me all my contracts where COVID impacts the validity of the contract.”
This fragmented system can slow down deals — it can take three to four weeks to get a contract approved — leading to missed quotas and lost revenue. Post-signing, it can also lead to hundreds of millions of dollars lost simply because a company overlooked an expiration date of a contract.
“We’re moving the stock prices of the companies that we work with because we can actually generate a ton of savings for these organizations,” said Ting.
Ting then introduces Evisort’s vision for solving the problem that companies are facing.
Evisort’s roots are in the post-execution part of the contract lifecycle, organizing and centralizing all the documents that sit in different systems like Salesforce and Oracle in a unified platform. Because it does this automatically, clients don’t have to manually migrate them onto Evisort.
It also automates data entry by using AI to pull information like the expiration date and party name from the contracts. Ting explained that this is a “huge pain point” for virtually any business department, from accounting and procurement to legal and operations.
Evisort’s end-to-end platform was specifically designed to be integrated with these existing solutions.
“There’s not one company that manages the paperwork and actual documents behind the platforms that have been built for sales, procurement, human resources, and finance,” said Ting. “We can be the fifth system that manages all of these.”
The promising legal tech market
Legal tech is a rapidly growing market. Ting saw DocuSign’s $41 market cap billion valuation as a “shocking” sign of corporations’ sudden appetite for CLM software.
“It’s a solution that’s just gone through the roof for the last three or four years. And now with COVID everyone’s working remotely, and a lot of companies are hungry for collaboration tools and analytics tools because they want to drive savings,” he said.
Ting sees DocuSign as Evisort’s primary competitor, especially after it acquired Seal Software, which itself was Evisort’s main competitor in the contracts AI space, in May 2020.
There’s “lots of green field” for legal tech startups dealing with contracts: 80% of companies still don’t have a CLM solution, per Evisort.
The shortcomings of existing solutions
Need to revamp the CLM industry
The reason 80% of companies haven’t implemented a CLM is that the traditional solutions fall short, said Ting.
“When I went to my law firm to work, I was absolutely shocked by the technology they had. It looked like it was built maybe 20 years before and never got updated,” he said. These legacy solutions are often so wieldy that they require specialized consultants to help manage, racking up costs.
The recent swell of newer legal tech companies — what Ting refers to as “Gen 2” — are more modern than their predecessors, but are focused more on small-to-medium businesses, which are easier to sell to.
Evisort aims to do what Gen 2 solutions do, but for bigger, older companies. It also aims to provide a truly end-to-end platform for the entire contracting process, rather than the individual contract analysis, management, and e-signature companies out there.
“If you combine Kira with Ironclad and DocuSign, you have a pretty good company, but each of them by themselves is focusing on one part of the industry. So my goal was to combine these companies into one,” said Ting.
Evisort’s AI platform
Though Evisort initially began with contract management, which sits in the post-execution part of the contracting process, it expanded to the pre-execution portion in July 2020, when it launched Contract Workflow, a no-code product that automates contract creation, negotiation, and approval all the way through e-signature.
The AI technology used for both the pre-execution Contract Workflow and post-execution Contract Management products can solve 80% of use cases right out of the box, without any training, said Ting. The network effect comes into play, too: The AI, which can analyze a 30-page contract in nine seconds, is only getting smarter as Evisort adds more customers.
Evisort also has access to more than 10 million contracts that it feeds into its AI model.
Evisort’s value to customers
Matching value with clients’ need
By integrating with and centralizing the contracts and data from different systems, Evisort aims to add value to companies.
“CEOs of large companies are not going to get rid of Salesforce,” said Ting. “I think that’s the difference between us and other [software-as-a-service] companies is that we’re more of an AI company. So we’re more focused on the data, which is the most valuable thing.”
In this way, Evisort is “more an AI player than a CLM player,” one that offers a machine learning-enabled contract creation and workflow management solution that’s easy to implement and integrate within a business.