Legal Tech Startups: Separating Hype from Opportunity
Mar. 26 2014 (Mimesis Law) — David Perla, co-founder of Pangea3 and current CEO of Matterhorn Transactions, talks with Lee Pacchia about the rise of a ‘startup culture’ in legal technology. According to Perla, approximately $500 Million has been invested in legal startups as of 2013, with an additional $100 Million invested so far in 2014. Perla also notes that around 200 startups, tech-driven and otherwise, currently operate in the legal space.
While Perla points out that some investors are beginning to make money in legal tech startups, the significant majority of them, just as in other industries, will fail. To some extent, Perla thinks there is a bubble in legal tech startups and that some garner excessive valuations because they tend to be perceived as more scalable than other ventures and highly desirable among partners at large law firms in a low yield capital environment. In addition, “many more people today like the idea of funding startups…they want the opportunity to participate…they’re not looking at it in the clinical P & L terms that a venture capital fund would,” he says.
But Perla says the increasing popularity of startup culture doesn’t make him nervous as an investor. “The cream generally rises to the top, so the better funders, the better investors and the better partners usually get paired with the better entrepreneurs,” he said.
Asked when he expects lawyers to truly begin leveraging technology in the way they work, Perla thinks it could be a ways off. “I think we are still a decade off of significant acceleration in the rate of change,” he said.
Main image via Adlerweb