Legaltech unicorn Clio now also a centaur after hitting $100 million USD in ARR milestone

Amid glut of unicorns, Bessemer calls centaur status “true mark of an exceptional SaaS startup.”

Weeks after Bessemer Venture Partners told the market that centaurs are better than unicorns, Burnaby-based legaltech startup Clio wants you to know it’s that mythical creature, too.

Newton claimed that in today’s tech economy, achieving centaur status “signals much more” than lofty valuations.

After becoming a unicorn last year, Clio has now surpassed $100 million USD in annual recurring revenue (ARR), achieving centaur status—a title used to describe private software-as-a-service companies with over $100 million in ARR. According to San Francisco-based VC firm Bessemer’s State of the Cloud 2022 report, “being a centaur is the new milestone to celebrate.”

While Clio co-founder and CEO Jack Newton described centaur designation as “just one lens” for measuring a company’s performance, he claimed that within the context of today’s tech economy and market downturn, “it signals much more.”

“Building an enduring, 100-year company takes financial discipline, an unwavering focus on the success of our customers, and the durability to withstand swift changes in the market,” said Newton. “We’re incredibly proud of this accomplishment, which is one more important milestone in Clio’s growth story.”

Hitting $100 million in ARR can also be a sign that a company has reached the size and is on the path towards going public. In recent months, Clio has also added a slew of new executives, including a CFO, COO, chief people officer, CTO, and CMO, a necessary shopping list for a potential public market debut.

The current state of the market likely precludes an IPO for Clio or any other Canadian tech company in the near future. BetaKit reported in 2021 that Vancouver-based Hootsuite, which itself sits north of $200 million in ARR, was considering an initial public offering (IPO) before putting those plans on hold following a frigid response to new Canadian tech issues.

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Newton told BetaKit earlier this year that Clio isn’t planning to go public anytime soon, adding that the IPO window is closed for now, and “probably gone” for the rest of 2022.

Founded in 2008, Clio provides cloud-based practice management, customer relationship management, and client intake software to the legal sector.

The startup first achieved unicorn status in April 2021 when it raised a $110 million USD Series E round at a $1.6 billion valuation, joining a growing herd of Canadian tech companies to reach this milestone during an all-time high for VC investment in the country.

But company valuations have since fallen amid the broader public tech stock rout, which has spread to privately-held firms—fuelled by rising inflation, interest rates, and geopolitical tensions.

RELATED: With Canadian tech IPOs on pause, private markets face a higher bar

In its latest State of the Cloud report, Bessemer—which led Clio’s $20 million Series C round in 2014—described centaur status as “the true mark of an exceptional SaaS startup,” referring to centaurs as “part of an elite subset of the growing unicorn herd.”

“The unicorn-or-bust mentality has unfortunately driven many startups and investors to focus on valuation as their primary goal, instead of building a great business,” states the report. “Given these conditions, and the market correction, at Bessemer we know the VC and founder community are in need of a new milestone to strive for—one rooted in evidence, cloud fundamentals, and dare we say a milestone based on…revenue?”

Bessemer argues that centaur companies have product-market fit, a scalable go-to-market strategy, and a growing customer base. Amid the current glut of tech unicorns, centaurs are a comparatively “rare breed”—according to Bessemer, while 520 unicorns were minted in 2021, only 60 private cloud businesses hit centaur status.

Feature image of Jack Newton, courtesy Clio.

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories and breaking news. He is also the winner of SABEW Canada’s 2023 Jeff Sanford Best Young Journalist award. His coverage is more complete than his moustache.

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