A Deep Dive into LegalTech. Cataclysm Ventures — My Journey So Far
The past year (2022) has been very crazy, and a big part of that has been my focus on trying to grow Cataclysm Ventures.
In the spirit of open venture, a concept which I’ve become very fond of, and familiar with during my time freelancing for Ada Ventures, I thought it would only be fair to showcase where I’m at now, how much I’ve learnt about the LegalTech investment scene, and what the future holds.
To preface all of this and give a little context, I’m a 20-year-old, 2nd year, London-based law student, who has spent the past couple of years exploring the startup and venture capital ecosystem across a variety of roles and projects. Over that period I came to the realisation, and to an extent frustration at the lack of early-stage investment into LegalTech startups in comparison to other sectors. This coupled with some research behind the funding of pre-seed / seed funding of successful LegalTech startups, I started Cataclysm Ventures to enable angel investment into early-stage LegalTech startups.
The initial idea of Cataclysm was to be an angel syndicate, pooling capital from angel investors to help fund and accelerate growth in LegalTech startups. Since then, a lot has changed and I’ve learnt a ton about the ecosystem.
I’ll come onto the future of Cataclysm later in this post, however, it must be said, I went into this whole project with my eyes open, but being young and naturally slightly naive about the state of LegalTech investment. To me, and to many of the incredible people who have supported me along the way (and on this … it really means the world to me), it was more an experiment more than anything. No one fully knew if this would work, or where it would end up, let alone if there was a need for it in the market, if there was enough interest from angels or if there was a genuine understanding/interest of LegalTech amongst investors, angels or otherwise.
I however was determined to give it a shot. Over the past few months, I’ve realised parts of my hypothesis were flawed, albeit for a number of very valid factors.
Here are a few things I’ve learnt along the way:
- Firstly, I just thought investors would understand LegalTech but realised quickly that a lot more education needs to be done in order to promote and encourage investors into the space.
- I thought most VCs just weren’t interested in LegalTech. This is also not the case. Recently I’ve seen more and more early-stage VCs getting excited about the LegalTech landscape, and even if they hadn’t invested in the space yet they wanted to learn more.
- I thought the market (especially in the UK) was full of venture-backable LegalTech startups. Stats and research had shown a massive boom in the space. However, even though the market has many growing LegalTech startups, many weren’t and don’t currently seem to fit the traditional hyper scalable venture backable model that has enabled the growth of the SaaS giants globally. That being said there are still plenty of exciting venture-backable startups in the space, and plenty of exciting ones which aren’t typically venture-backable. This also highlights how nascent LegalTech really is in comparison to other verticals.
- The LegalTech space was more fragmented than I expected, and there were fewer connection points, events and organisations bringing the sector together in comparison to other verticals I’ve worked in.
- It would be easy to find, and convince angel investors. This was probably a highlight of my naivety, but something I’ve struggled with somewhat. Not all angels are public about their startup investing and many, especially those who invest in legal are slightly under the radar. This is something I’m going to really explore and focus on how best to tap into the existing angle community in the UK. This links to my next point.
- People didn’t seem to have as much of an attachment to investing in LegalTech as they did a passion for investing in areas such as health, or female, BAME or LGBTQ+ founders.
- Many angels who I did speak to weren’t currently actively investing. This was for a variety of reasons but the biggest being the current state of the market and the economy. When I started Cataclysm the venture investment landscape was at a peak, but since then a lot has gone downhill, with many investors holding off investing, and startups pushing the closure of rounds into 2023. It was my first time coming face to face with tricky market conditions in any sense.
- A lot of my previous experience has been around community management, but building a community from scratch is harder than I expected. I also probably didn’t put enough time as I should have into curating a community. So I’m going back to the drawing board to really think about how I can make this as effective as possible.
So what does the future hold:
- A potential pivot in the short-term, moving away from building an angel syndicate to instead building a community, focused on connecting startups with investors (angel, VC or other) and wider ecosystem players.
- A greater focus on education.
- A bigger focus on building in public.
- Considering partnerships and collaboration opportunities across the ecosystem.
If you’re interested in getting involved / joining the community then sign up below, and if you want to chat — shoot me a message on LinkedIn.
- If you’re a startup or founder — sign up here (https://airtable.com/shrbKO3g9fb5KsCXU)
- If you’re an investor, operator, lawyer or part of the wider LegalTech ecosystem — sign up here (https://airtable.com/shrA1OP4qANdeqqeV)
