Toronto-based Kira Systems has received a $65 million CAD ($50 million USD) minority investment from New York City-based Insight Venture Partners.
“Our probability of success was a lot higher than the dilution that we were talking.”
– Noah Waisberg
Kira Systems’ platform uses machine learning to automate contract analysis for law firms. Promising to save lawyers up to 90 percent of the time spent doing contract review, Kira identifies contract clauses, and its products span due diligence, finance, and lease abstraction. One of its key features is Quick Study, which allows users to create custom machine learning models by uploading sample contracts, and highlighting what exactly it wants Kira to learn.
This is the first time the previously bootstrapped company has raised outside funding. Speaking with BetaKit, CEO, co-founder, and lawyer Noah Waisberg said that the company raised the money after evaluating the opportunity with Insight, which invests in growth stage companies with at least $10 million to $20 million in revenue. The VC firm counts Canadian tech darlings like Shopify and Hootsuite among its investments, and Waisberg indicated that Insight could provide much-needed guidance on scaling.
“It turns out that it’s pretty painful going from the 35 that we were at in January 2017 to 115 today. There were lot of hard times during that time period, and our hope is to continue to grow quickly and we’d like to do so more gracefully,” Waisberg said. “My co-founder and I weighed the dilution versus the value that Insight would bring, we kind of came to feel that our probability of success was a lot higher than the dilution that we were talking.”
Insight Venture Partners targets companies with at least $10 million to $20 million in revenue and counts Canadian tech darlings Shopify and Hootsuite among its investments.
It’s also a matter of the technology being in the right place at the right time; since Kira Systems started working on the tech in 2011, the company faced challenges in building up the machine learning capabilities of its product, as well as selling to lawyers that the product could actually improve efficiency. By 2014—after several years of operating without revenue—Waisberg said the company found some success. Now sitting at over 115 people, Kira is also operating within one of the machine learning capitals of the country home to a breadth of talent.
The company said that the funding will be used for further product development and expansion. While the product is found in law firms like Osler and Cassels Brock, the company is focused on expanding its customer segment, including corporates and professional services. Waisberg cites a high volume of contracts within this sector as a reason for the increased interest.
“If we think about [it]…Apple probably has a million contracts, or Nike probably has like 400,000 contracts,” he said. “It takes a person somewhere from 30 to 90 minutes to read through a contract and pull 25 data points out.”
Peter Sobiloff, managing director of Insight Venture Partners, will be joining the board. “Kira Systems’ performance as a bootstrapped business has been impressive, and we’re eager to partner with them to more aggressively pursue growth,” said Sobiloff. “We don’t see many pure-play AI businesses with their traction, and this success has come from the fact that Kira is fundamentally changing how contracts are reviewed. This represents an opportunity to make a meaningful impact across their core market segments.”
