The legal research company Casetext has raised $25 million in a Series C funding round, bringing its total amount raised to $64.3 million since its founding in 2013.
Although the company has not publicly announced the funding, it filed a notification with the Securities and Exchange Commission on Jan. 7, 2022, documenting the raise of $25 million in equity financing.
I reached out to Jake Heller, Casetext’s cofounder and CEO, who confirmed the raise and provided additional details.
The round was led by BuildGroup, and all other previous significant investors in the company participated, including Union Square Ventures, Canvas Ventures, Y Combinator, and Touchdown Ventures. Marks Baughan Securities LLC served as the exclusive financial advisor to Casetext.
“I am extraordinarily excited to work with BuildGroup, and specifically Jim Curry who is joining the board,” Heller said. “We were fortunate enough to have options on who to work with for this raise, and we were particularly drawn to BuildGroup because they aren’t just investors but also former company operators who know firsthand how to build and grow great businesses, and they invest over the long term to help make businesses successful.”
Heller told me that Casetext has been operating near profitably and didn’t “need” the money, but that it decided to raise capital for a few reasons.
First, the capital will help Casetext continue to create and improve products that help lawyers search the law and their own documents as well as to efficiently draft legal documents like briefs.
“We will especially be making further investments into AI technologies,” Heller said.
Casetext will also invest substantially in building out its marketing, sales, support, and customer success teams.
“We have a superior product already that is preferred by over 9,000 law firm customers, including over 40 of the AmLaw 200,” he said. “We’re finding now that our limiting factor in growth is awareness.”
Finally, Heller said, the raise is a message to Casetext’s customers: “We aren’t going anywhere for a long time. We will keep growing, keep improving, and keep innovating for you.”
Track Record of Innovation
Casetext has come to be known for developing innovative products. In 2020, the company introduced a first-of-its-kind product, Compose, that automates the drafting of litigation briefs. In 2021, the American Association of Law Libraries named Compose new product of the year.
In 2016, Casetext launched CARA, another first-of-its-kind product that uses artificial intelligence to analyze briefs and suggest relevant cases they fail to include. That, too, won the AALL product of the year award in 2017 and spawned a slew of similar products from other legal technology companies.
“Today on Casetext, an attorney doing legal research can type in a sentence or question and instantly find legal support — even if the best case contains none of the words searched for but shares the same concept — powered by our proprietary Parallel Search technology,” Heller said.
“We have found attorneys doing legal research on Parallel Search save 11.5 hours a week, conduct 47% fewer searches, and is preferred by 74% of attorneys to pre-AI search methods.”
The WeSearch product builds on this Parallel Search technology, and Heller said that, in 2022, Casetext will make that available broadly to the legal market.
Five large firms are beta-testing applying this search over their internal documents, transcripts, discovery, and much else, with impressive results, Heller said, and hundreds of firms, including two dozen AmLaw firms, subscribe to Compose to automatically suggest language and supporting citations for their legal briefs.
“This is just the tip of the iceberg of what AI technologies will do to support lawyers, and we’re excited for what’s to come,” Heller said.