Why legaltech Josef’s $1 million raise was more about securing experts than cash
Wednesday, May 22, 2019/
Legaltech startup Josef has just secured $1 million in seed funding, but as they start onboarding more customers and grow their footprint overseas, it’s the calibre of the investors, not the money in the bank, that will help them the most.
The round included investment from Aussie VC Jelix Ventures, headed up by Andrea Gardiner and former head of startups at Amazon Web Services Ian Gardiner.
Kara Frederick, managing director of Tiger Financial Group, and former partner at Reinventure also invested, as well as Ben Armstrong, former principal at Telstra Ventures.
Founded by lawyers Tom Dreyfus, Sam Flynn and Kirill Kliavan in May last year, Josef is a Software-as-a-Service legaltech solution allowing lawyers to build bots for solving legal problems.
Earlier this year, it partnered with fellow Aussie startup Luna to create a bot offering information and advice for other startups looking to secure investment.
Since then, the founders have been working on finalising their own raise and “consolidating on a pretty stellar first year,” Flynn tells StartupSmart.
“We had a lot of really big early wins with amazing clients,” he adds.
Now, about 40 clients are using the Josef platform, ranging from small firms all over Australia and the US, to some of the biggest law firms in the world, such as Herbert Smith Freehills.
It’s also used in community legal centres including the Consumer Action Law Centre, Flynn says.
More than 600 bots have been built using the platform, dealing with more than 30,000 legal problems.
Speaking to StartupSmart, Dreyfus adds the startup has seen revenue growth of 20% to 25% month-on-month “basically since launch”.
Wealth of experience
According to Dreyfus, now was the time for a seed-funding round because the startup was seeing some early traction.
“We’re probably not quite ready to call it product-market fit yet,” he admits.
“But there’s been enough traction in our target market that we were able to identify what it is about the product that our customers really love.”
The funding will allow the founders to start building out a technical team “capable of delivering on some of those more sophisticated and powerful features”, he explains.
However, it was also time to get people in the door who could add value in terms of expertise and advice, as well as in money.
All of the investors “do so much more than just giving money”, Dreyfus says.
“They provide their wealth of experience in the startup sector, in finance, in law, and we get to draw on that as we go.”
Flynn recalls a meeting the founders had with Vimeo co-founder Zach Klein, who had some advice on how to choose early-stage investors.
Klein advised the Australians to “find people who you can be completely open and transparent with at every step of the journey”, Flynn says.
And this stuck with them.
In Jelix Ventures, in particular, Dreyfus says the team found an investor “we felt we could trust from day one”.
Andrea Gardiner, a former lawyer herself, was “super excited” about the startup, he says.
“They were excited about the mission that drives us … making legal services accessible,” he adds.
“[Gardiner] had a really strong view about what it was going to take to get our company from where it is now … to a company that really can transform the way lawyers work the world over.”
The all-male founding team was also specifically looking to bring some diversity into the startup.
“Diversity is something that’s such a challenge all the time in the tech industry, especially in the legal tech industry,” Dreyfus says.
“We’re always focused on achieving that diversity, both in the people we hire and the people we work with.”
From vision to reality
As well as fuelling a spate of new hires, this latest funding will help Josef increase its international footprint, with a focus on the US.
Currently, the majority of clients are in Australia, but “an increasing number are in the US”, Dreyfus says.
In terms of product development, work will focus on what Flynn calls the “guiding principle” of Josef: “creating something that’s incredibly, truly easy to use”.
User experience is a big focus in most other tech industries, but hasn’t typically played a big role in legaltech offerings, until now.
“It needs to be that way in order to achieve that vision of distributed legaltech,” Flynn explains.
“We need any lawyer, anywhere, even if they’re technophobic, to be able to pick this up and start using it.”
According to Dreyfus, over the next six to 12 months the team will be focused on “starting to realise the big vision”.
This will mean technology “sitting in the browser of every lawyer everywhere, giving them the tools that they need to build bots to enhance the way they work”, he says.
And as the business scales, he sees this vision becoming “something closer to reality”.
This will hurt a bit
Having successfully raised their first batch of capital, the Josef founders warn other startups it’s not an easy road to tread.
“Be prepared for the ‘no’s — which you’re definitely going to get — to hurt a bit,” Dreyfus says.
However, founders can learn from these setbacks, as long as they make sure they get the feedback they need “so the next pitch you do is better”.
At the same time, it’s important to “make sure you have a support network around you”, Dreyfus says.
“The experience of fundraising is emotionally charged and draining, and you’re going to need those people around you to practice with, to give you that early feedback, and then just to support you through it,” he explains.
For Flynn, the key to making the startup journey “a really enjoyable experience, even in the hard times” is believing in the thing you’re setting out to do.
Josef is closely involved with the whole startup community, he says, and the team has seen many other ventures fall apart.
“The key difference between people who make it and people who might not is that real belief in the vision,” Flynn says.
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