by Ken Wieland
22 July 2019
LONDON — US-based Lexion, which uses AI to scour the small print of contracts, attracted $4.2 million in seed funding from Madrona Venture Group and law firm Wilson Sonsini Goodrich & Rosati. On the back of securing the seed money, Lexion officially launched its AI‑powered solution for contract management.
A spin-off from the Allen Institute for Artificial Intelligence, a creation of the late Microsoft co‑founder Paul Allen, Lexion aims to help legal teams track key obligations in their contracts automatically. Investment by a law firm suggests the start-up is ticking the right legal boxes.
The AI system, which Lexion claims is easy-to-use and reliable, is aimed at high-growth emerging companies and established players that typically have dozens to thousands of customer, vendor and employee agreements to manage, but often lack the resources to cope with it all.
The general idea, then, is to avoid slow and expensive document reviews. Or, as Lexion puts it, to make sure companies don’t miss that ‘gotcha’ clause or spend hours of expensive outside counsel time in reviewing piles of contracts.
Citing research from the International Association for Contract & Commercial Management, Lexion points out that organisations, on average, are losing 9% of revenue every year due to poor contract management. This could be erroneous overpayments, failure to apply discounts, and missed expirations.
The platform purportedly ingests all company contracts and automatically extracts dozens of key terms. These are then batched into a central repository where agreements can be filtered, sorted and searched across. The company’s proprietary natural language processing engine, said Lexion, can be ‘rapidly trained’ to extract previously unseen clauses or new document types.
Icertis goes unicorn
A few days before Lexion announced seed funding, investor confidence in AI-powered contract lifecycle management (CLM) was amply demonstrated by US-based Icertis, which closed a $115 million Series E funding round. With the extra funding Icertis claimed it was the first CLM company in the world to enjoy unicorn status, boasting a valuation in excess of $1 billion. Its flagship product is the AI-powered Icertis Contract Management (ICM) platform.
According to Icertis, ICM, which is sold on a Software-as-a-Service basis, can unlock commercial value embedded in a company’s contracts by transforming these static documents into ‘strategic digital assets’. Enterprises, says Icertis, are then able to protect against risk, improve compliance, accelerate business velocity, and optimise commercial relationships over the entire life of the contract.
Venture capital attention to AI is growing across all areas, of course, not just CLM. According to the latest Venture Pulse report from KPMG Enterprise, there were 43 VC deals within the ‘cybersecurity & AI/ML’ space worldwide during the first half of 2019, which totalled $803 million. This is not too far off the blistering pace set in 2018, when there were 99 VC deals in this sector over the entire year worth a total of $1.7 billion.