Clio’s Massive Capital Raise
Clio’s massive capital raise ($333M) made me think I could be successful in staying in Vancouver. Prior to this, I always felt I needed to move to Toronto or New York, or I would never achieve much with my company. As soon as I heard the news that Clio had completed the largest growth equity raise in Canadian History and that it was in the legal industry, I booked my flight for the 2019 Clio Conference in San Diego, which happened last week.
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Clio is one of the most successful companies coming out of Vancouver, in my opinion, right behind Lululemon. I managed to pull some strings and speak to the Clio CEO, Jack Newton, at the conference.
It’s very hard to raise money in the legal industry, as most investors don’t see lawyers as attractive business partners. Most lawyers are risk-averse and therefore cannot innovate. Most people only use lawyers when things go wrong. But the large investment in Clio has shown venture capital that a market in legal investment does exist.
In the United Kingdom, law firms such as Knights and Keystone Law have been raising capital from non-lawyer investors for a long time. And they have grown to multi hundred-million-dollar valuations. In Canada, as always, it seems we are waiting to see how it goes in before other countries before we act. Canadians, just like lawyers, are way too risk-averse and should be opportunity seekers instead of risk spotters.
If you want to learn more about legal innovation, go see our videos.
Massive Capital Raise- $250M USD Raised Into Canadian Legal Tech
The $250M USD investment is an investment not just into Clio, but into Vancouver. It will create hundreds of new jobs. Companies like Axess Law (www.axesslaw.com) (which opened law firms inside Walmart’s) and ClearWay Law (www.clearwaylaw.com) (which created a 100% online law firm), are Canadian law firm’s that are now in a good position to attract capital and greatly expand their businesses using technology.
The major difference between legal technology companies like Clio and law firms like Axess and Clearway are lawyers. According to Mark Britton, the founder of Avvo who spoke at the event, lawyers are idea killers. To demonstrate this in Mark’s talk, he raised an innovative idea. He suggested an app where if someone got pulled over by police or got into a car crash, a lawyer app could instantly connect you to a lawyer prior to speaking to police.
Read more: Old School Lawyers Are In Trouble
The lawyers in the audience started explaining that police could pull you out of your car and “beat you up.” The business people in the audience started speaking about how to make it work. Mark’s point was that in order to innovate, you need to be able to take risks. Lawyers are great at idea spotting, which is why people hire them, but for innovation, you need to be an opportunity spotter. To further demonstrate his thoughts, Mark titled his speech “lawyers are from Mars, business people are from Venus.”
The key to the success of Canadian law firms or legal tech companies trying to find venture capital will be the ability to show that they can close the access to justice gap. Venture capital firms want to believe that the company can make massive changes.
My Talk With Clio CEO, Jack Newton
Clio was in a strong position to raise money because they didn’t need capital, they wanted it. For several years Clio was aggressively pursued by VC firms. They build a relationship with a handful of strategic partners. Clio was not just looking for capital, but mentorship and guidance.
According to Jack, Clio is now eyeing an IPO and it takes resources to get there. They are focusing on growing their sales and building out their internal corporate governance.
I wanted to know at what time did Jack feel that the company transitioned from the uncertainty of not being sure if his company will make it, to when he felt his company was going to be successful. This question was important because I dream of the day I feel that ClearWay Law is completely successful. I want to know when it switched from him chasing others for money, to VC’s chasing him.
VC’s Starting To Chase Clio | Massive Capital Raise
He said, in the beginning, they had a really hard time raising money because they started in 2008 and the market had just crashed. He saw the opportunity but couldn’t get the money in the bank. It all changed for him in 2010 when they were able to raise their first million. With that first million, they were able to build out their product and achieve some sales. Every round after that they had options for which money to accept, and from whom.
Clio was no longer chasing others, they were being chased. They showed that they had happy customers, scalable channels, and sales. According to Jack, raising the $333M was easier than raising that first $1M.
There are enormous stresses with taking $333M of someone else’s money, in that they don’t just want their money back, but a multiple of that. They have extremely high expectations for everything they do, and pressures on the CEO on public speaking.
Read more about how our law firm is different.
Jack Newton Learnt How To Deal With Stress
Overall, Jack Newton couldn’t imagine doing anything else and he feels every day is fun. He runs every day and hasn’t missed a day in 20 years. Even if it’s raining in Vancouver, or if he has a chest cough, he still laces up his shoes. That’s his daily mediation time. The rule is 2K of running, no matter what. But normally he enjoys doing 5K a day.
He also has a family of a wife and three kids that help support him. Getting home and playing with them around 6 pm helps him with stress. Once they are tucked into bed, he goes back to work by responding to emails. That work-life balance enables him to keep going.
I just attended Clio Conference in San Diego, where there were 2000 lawyers and attorneys, more than enough to screw in a lightbulb.
Clio is a Vancouver success story, having just raised the largest venture capital raise in Canadian history, a massive capital raise of $250M USD. The thing I found the most interesting is how a Canadian company could organize such a large event in the USA and have so many American fans.
In speaking to American attorneys, they didn’t even know that Clio is a Canadian company. I made sure to tell them. It seems rare that a company from Vancouver could dominate globally.
Mark Britton Key Teachings At Clio Con
At the Clio Conference in San Diego, Mark Britton gave an amazing speech on legal innovation about what it means to be a leader. Mark Britton was an executive at Expedia and founded a very successful company Avvo, a legal tech company. He is also good friends with Bill Gates, having worked at Bill’s father’s law firm when he started his career.
Most importantly, he connected Clio to American venture capital money. It is insanely hard to raise capital in Canada as Canadian are in my opinion far too risk-averse. Maybe that’s why there are so many lawyers in Canada?
After Mark left Expedia, he traveled to Italy to teach finance. He realized that people would call him asking for legal advice (since he had been a lawyer before) but never asked him for travel advice (being he worked at Expedia.) He realized this was because there was no easy way to get legal information about the law.
Italy To Seattle
He stayed up all night looking over Florence, Italy before moving back to Seattle to create Avvo.
Because of companies like Uber and Airbnb, client expectations for other industries have changed now as well. Industries that normally had low customer satisfaction, such as airlines and law firms, now must up their game.
The reason why most lawyers are terrible at business and customer service is that it’s not taught at law school. Lawyers get mad when people say they need to think about branding and client surveys. They say they didn’t go to business school for a reason. But Mark suggests that in order to have a law firm, you need to have a business license, so therefore lawyers are businesspeople. And in order for Canadian law companies to raise capital, they will have to become businesspeople.
What It Means To Be A Business Leader | Massive Capital Raise
The most important business qualities that a business owner can have are a tolerance for risk, being an opportunity seeker, simplifying everywhere they can, being obsessed about client satisfaction, and being curious.
Being obsessed doesn’t mean maxing out your credit cards. It means being obsessed with customer experience. Thomas Edison was obsessed with creating electricity. Jess Bezos is obsessed with creating systems. And Bill Gates was obsessed about putting a computer in every home.
Canadian legal companies, both technology and law firm’s need to be ready to innovate. It’s time to get on the bus and do their homework or they will be left behind.
Clio did a massive capital raise, now it’s ClearWay Law’s turn!
What Is ClearWay Law Doing?
We are empowering lawyers while providing life balance and giving access to professional lawyers who want to maintain their role in the profession.
If you want to discuss investing in our expansion, email the CEO at avigier (at) clearwaylaw.com … We have a very detailed proposal that was reviewed by business consultants, accountants, and lawyers. We are looking to raise $250K from six different investors in January 2020.
Over the next decade, ClearWay Law is committed to expanding operations throughout Canada and the United States and to putting all of its creative energies into improving its legal and client services by continuing to develop innovative, efficient and results-driven systems and procedures. The plan is to recruit highly productive, like-minded and client-centered lawyers and support staff.
ClearWay Law will start by offering family law services, and quickly expanding into “law for families” which will include real estate, small business law, and wills and estates.