Burnaby-based Clio has announced a behemoth US$900M Series F funding round. This makes it the largest-ever software fundraise in Canada’s tech sector till date. The company’s release mentioned that Clio’s Series F funding values it at over US$3 billion. The Tech Factor digs deeper into this significant development for Canada’s tech sector.
Canadian legaltech unicorn, Clio, has disclosed a new funding round that makes it the most-valuable cloud legal software company globally. Clio’s Series F funding round is about US$900M in size and values the company over US$3 billion. The company claimed that this was one of the top-five biggest financings in the history of vertical market software companies. This is significant for Canada’s tech sector and brings some good news in an otherwise subdued funding environment for months.
New Enterprise Associates (NEA) has led Clio’s Series F funding round with a substantial cheque of over US$500M. Goldman Sachs Asset Management, Sixth Street Growth, CapitalG, and Tidemark are the other new investors in the round. Existing investors TCV, JMI Equity, OMERS, and advisory clients of T. Rowe Price have also participated in the round. After the fundraise, the team plans to expand its global market presence and enhance its industry-leading operating system for the legal domain.
Clio’s Series F funding has significant secondary component
Jack Newton, Founder and CEO of Clio, mentioned in the announcement that the Canadian legaltech firm’s round was heavily oversubscribed. However, he has also indicated on X that the round had significant secondary component to it. He said that the company wanted to ensure that it generated enough liquidity for early investors and employees. Further, he added that despite the secondary exit element, none of the investors have fully exited the company’s cap table.
Newton also mentioned that the company is profitable with over US$100M on its balance sheet, making its need for primary capital limited. Therefore, it appears that Clio’s Series F funding was more driven by need to provide liquidity to stakeholders than requirements of cash. It’s worth noting that the company is 16 years old and has been in the private capital markets for a long time. Accordingly, it’s not clear if the round is the largest ‘primary’ capital infusion in a Canadian company till date. Cohere, Wealthsimple, Trulioo and 1Password are other Canadian companies with fundraises of such scale.
Newton expressed excitement for bringing on board NEA and the other new investors on board the company. He mentioned that Clio operating system was a clear leader among platforms in legaltech sector. He added:
“We are pioneering this future for our customers, driven by our mission to transform the legal experience for all. Our commitment to delivering unparalleled value propels every decision we make, and we are inspired by the massive opportunities ahead.”
Jack Newton, Clio’s CEO and Founder
Is there an IPO plan post Clio’s Series F funding round?
The Canadian startup and tech ecosystem has had a dearth of exits. Now, post Clio’s Series F funding, the company has added Tony Florence, Co-CEO at NEA, to its Board of Directors. Florence highlighted the Canadian legaltech unicorn’s alignment with NEA’s thesis, including exceptional team, market leadership, and business economics. He also shared that Clio’s retention and NPC metrics were best-in-class in the legal sector.
Interestingly, he mentioned that they looked forward to “applying NEA’s company-building expertise” with Clio. NEA is known for having a track record with more than 270 portfolio company IPOs, so Clio might be looking to hit the public market as soon as the environment is favourable. The company is doing well on profitability and growth topline growth metrics – Newton mentioned that Clio is “profitable with rule of 40+“. The company has also disclosed that it has grown from US$100M ARR in 2022 to US$200M ARR now. Neither the company not the investors have stated the IPO intention explicitly though.
Clio was founded in 2008 and is a Burnaby, BC-based Canadian legaltech firm. It provides a cloud-based practice management platform for lawyers to manage and expand their practices. In the midst of the 2008 crisis, Jack Newton and Rian Gauvreau co-founded Clio after seeing firsthand the struggles faced by small organizations and solo practitioners in operating their businesses. In May 2021, Gauvreau had announced his resignation as Chief People Officer of the company. This news broke about a week after the company claimed unicorn status with a US$110 million Series E round. OMERS Growth Equity and T. Rowe Price Associates Inc. had led the round that valued it at US$1.6 billion then.
Clio has been on a strong growth path
Clio powers the whole legal process for law firms and serves as their operating system. By centralizing client intake, case management, document management, legal payments, and other functions, it claims to streamline the administration of law firms. More than 100 law societies and bar associations globally have endorsed its product, and has more than 250 legal technology software integrations in its platform.
It’s worth noting that the company has been strengthening up its top management team since its Series E round. These include a new CFO, COO, CTO and CMO, as well as most recently, a new CPO. It has also made acquisitions in Canadian legaltech space and beyond, including at least six significant inorganic moves in the past 5-6 years. The Canadian legaltech space has seen funding and new product launch activity in recent times, including by LawVo, CiteRight, Doormat, and PainWorth.
In recent years, Clio has grown upscale and globally in the APAC area, and now touts itself to be the industry leader in mid-market cloud law practice management software. It says it provides services to over 1,000 mid-sized businesses just in the US. Since its introduction in 2022, Clio’s all-in-one payments division has expanded as well, handling billions of dollars’ worth of legal-specific transactions yearly. In addition to Burnaby, Clio has offices in Toronto and Calgary. At its office hubs across North America, EMEA, and APAC, the company employs over 1,100 people. The release mentioned that all divisions of Clio are actively hiring at present, including product, R&D, sales, marketing, and customer success.
