A lead investor in the $62 million funding round announced this week by Everlaw says he believes the company is on a path to go public, possibly within the next five years.
Jesse Wedler, a partner in CapitalG, the independent growth fund of Google parent Alphabet Inc., and now a member of Everlaw’s board of directors, says his firm invested in Everlaw because it has a strong-enough business model that it will not be dependent on capital markets in the future.
“We strive for companies that have a path to be large independent businesses and a path to go public,” he says. “We’re not betting on an acquisition, we’re betting on it being on a path to go public.”
As an investment fund backed exclusively by Alphabet, CapitalG is able to leverage the people and resources of Google to make better investments, Wedler says. Its focus is on the long term.
“We are looking for entrepreneurs and companies who can transform over a long period.”
Being part of Alphabet also means the firm cares a lot about technology. “We think a lot about the quality of the product, how it uses machine learning and AI,” Wedler says.
With Everlaw, CapitalG made its first investment in a legal technology company. In legal, Wedler sees an industry where technology can make a big impact, and he sees that as particularly true in e-discovery.
As he investigated e-discovery, he tells me, he was blown away by the fact that there are vast amounts of data that people need to make sense of, the data is in an array of different formats, people are under intense time pressure, and there is a lot at stake.
“Yet the way that people approach these problems hadn’t changed in a long time, so the field is ripe for modern technology to come in and really drive impact.”
As Wedler further investigated the companies that provide e-discovery technology, Everlaw stood out for two principal reasons.
One was its technology, which Wedler believes has the potential to extend well beyond e-discovery and “create a functional cloud of the entire legal space.”
Everlaw’s core technology and collaboration tools make it ideal to drive widespread adoption within legal, and modules can be added to extend its functionality, he believes.
“We think of it as a platform that can extend more broadly into legal,” he says.
The other aspect of Everlaw that stood out to him was customer satisfaction. Talking to customers, he says, he was blown away.
“It was night and day in terms of how they talked about the product,” he says. “They talked about life before Everlaw and life after Everlaw. Customers can’t imagine life without it.”
Given this, Wedler believes that Everlaw and its CEO AJ Shankar have the ability to paint their own future. “Our approach is look for companies that have a path to determine their own future, that have a strong-enough business model that they won’t be highly dependent on capital markets in the future.”
Does CapitalG’s investment in Everlaw signal other legal tech investments to come? Wedler said he is a fan of the legal market and sees it as a great space in which to invest. But he downplayed the likelihood of other legal tech investments to come.
Rather than chart a long investment roadmap in legal, he said, he is eager to see how Everlaw and Shankar define that roadmap, and he looks forward to the opportunity to play a role.