Our investment in Arteria — a data driven approach to enterprise contracting that doesn’t change the workflow
Contracting is a huge, unsolved problem for heavily regulated and complex financial services firms. We are proud to be backing such a strong team of individuals who are tackling this problem with a data driven approach that does not disrupt existing workflows.
This oversubscribed $11m syndicate we have led with Information Venture Partners, with participation from Golden Ventures and StandUp Ventures, will give the company the firepower it needs to scale its already tried-and-tested technology with further investments into product and sales.
All business starts with a contract or agreement, without one in place no revenue flows
A binding agreement between two participants is the bedrock of modern business. Every relationship — be that supplier, employee, client etc — is governed by the mutual agreement entered into by each side. ‘A’ will provide ‘X’ to ‘B’ for ‘Y’. It sounds straightforward enough but how many contracts have you ever seen or signed that are that simple??
As the complexity and number of business relationships grow, so does the difficulty in managing contracting. This is a major problem for enterprises. Regulations, jurisdictions, conditions, limited liability, triggers, dates, exclusions all conspire and result in the 100+ page ‘standard’ template that is the starting point for so many agreements.
Imagine for a moment the updated T&Cs you need to ‘accept’ whenever your phone updates its software. Now imagine if you had to go through each of those clauses and accept or negotiate each one on behalf of your company and keep a full audit trail of what you accepted or pushed back on and why. Enter the armies of pricey lawyers and consultants…
Whichever way you look at it — this is an unsolved multi-billion-dollar problem in enterprise
There have been innovations which have propelled the sector ahead. Not long ago ‘wet ink’ signatures were needed on most contracts to be valid. Companies like DocuSign, the $38bn venture success story which pioneered e-signatures, are now market standard.
However, signing an agreement is only one part of the equation. Months and months are lost as re-lined Word documents are sent back and forth between teams who are haggling over clauses hidden in 100+ page documents. Legal professionals, who demand premium salaries for their years of education and training, are relied on to interpret clauses and what is ‘reasonably acceptable’ on balance. Here lies another potential conflict — consultants and lawyers are often remunerated on hours worked and can be liable (ironically based on their contractual agreements) if something material gets missed. They are therefore more incentivised to take the time to go through everything with a fine-tooth comb and raise any and all risks to the ultimate decision maker who will sign the agreement. Molehills can quickly become mountains.
Process innovation has helped costs, but is not a long-term solution that speeds up time to signature or frees data
Of course, it makes no business sense for the cost of singing a contract to outstrip the revenue that new business will generate. This is where ‘templates’ come in. Lawyers create the standard terms along with a playbook on what can/can’t be changed in each. This allows lower cost document negotiators to take on lots of the back and forth with the legally trained supervisors only required for certain cases that are escalated. A plethora of technologies (RPA, OCR, NLP, AI…) are also beginning to be leveraged for some of these use cases to improve efficiency in these departments.
While these process improvements can lower costs, they do not necessarily allow firms to sign agreements faster (bringing forward revenue) or to free the immense volume of data trapped in these agreements. This was the part of the vision of the team at Arteria we were most excited by.
A data driven approach to enterprise contracting that doesn’t change existing workflows
When broken down into its component parts, a contract is a series of data points. Each of these data points has specific conditions attached to it and can be leveraged within other parts of an organisation.
The hard part is finding a way to translate the free text of a Word document (the legal world’s tool of choice) into data which does not alter the deeply embedded workflows on both sides of the table (emailing red-lines back and forth). This is the core of the Arteria product. Too often we hear pitches from entrepreneurs which include phases such as ‘if everyone did it this way then…’. While ideologically correct, the huge lift required to get people and institutions to change their way of doing business can never be underestimated.
As former legal professionals, the team at Arteria knew that this would be too big of an ask so designed a solution which would both allow free text negotiation, but have data capture at the core. By starting with the most complex use cases first, onboarding agreements for clients in financial markets, they have built an enterprise ready and scalable product which can handle the most demanding institutions. Their contracts with some of the world’s largest bulge bracket investment banks to handle highly complex agreements are testament to the strength of this product.
A visionary team with a detailed understanding of all the stakeholders needed to make this work
From our very first call, the enthusiasm, passion, drive and understanding of the problem set coming through from Shelby Austin, Arteria’s co-founder & CEO, made us want to learn more about the team.
As a former law firm partner, she knows first-hand the painful contracting process and knew change had to come. She founded a legal services business to address this, growing it to over 400 employees before selling to Deloitte. It was within Deloitte where she built Omnia AI, their data & analytics practice, to ~$100m of revenue in 2 years and incubated what would become Arteria. Abrar Huq, co-founder & CRO, has worked with Shelby for most of this journey. His cross-functional analytics expertise coupled with his knowledge of digital contracting has allowed this young business to win prestigious clients. The tech team is led by co-founder & CTO Jonathan Wong, a repeat startup CTO, who was the lead engineer at Deloitte’s AI Factory. He has taken the product from wireframe to production, and through some of the most rigorous procurement and security processes a business could face.
The combination of industry, technology, legal, start-up, consulting, executive and subject matter expertise is being added to, with recent hires in Sales, Marketing and Data Science from leading software and technology institutions, supporting the team as they scale.
Arteria’s focus is initially on the financial services sector, with a client base including global and domestic systemically important banks and spanning North America, the UK, Europe and Asia-Pacific. Arteria has seen rapid growth to date and was recently recognized by the Financial Times with the Intelligent Business Award for Contracting for saving clients as much as 60 percent of their associated costs. We are excited to be partnering with the business to help them achieve their ambitions.
