Trends in Legaltech Investing

Remote work and exit activity have driven investor conviction

Adam Lebovitz
Risky Business
5 min readNov 30, 2021


Image: Shutterstock

At the onset of the Coronavirus pandemic, many believed that investors would become hesitant to fund new investments. In the knowledge worker economy, uncertainty focused on how individuals and organizations might adjust to remote work. However, once that shift occurred, it became clear that organizations demanded improved tools and technologies.

As a result, venture capital investment overall grew in 2020 and the first half of 2021: However, according to Pitchbook’s data, $156B was invested in startups and $74B was raised by VC funds in 2020, and $150B has already been invested in startups through the first half of 2021. And contrary to popular narratives regarding corporate venture capital (CVC) activity in uncertain economic environments, CVCs nearly matched their 2018 high water mark by investing $68B in 2020.

As in other sectors, legal technology (“legaltech”) also experienced an influx of capital in 2020. Legaltech funding grew to an all-time high of $1.3B in 2020, up 24% from 2019. This trend continued in the first half of 2021, as investors appear to have grown comfortable allocating capital remotely. First half 2021 funding of $1.8B has already outpaced the entire prior year, with drivers of this funding in the legaltech market including:

  • The rise of remote work and required adoption of new technology solutions as a result of Covid-19
  • Recent exit activity in legaltech, most notably the IPOs of InTapp and LegalZoom, which helped drive conviction in the category
  • Increased willingness by law firms to adopt cloud solutions, versus requiring on-premises (“on-prem”) storage for legal documents

Including data from PitchBook and NVCA’s quarterly Venture Monitor report, this analysis shares highlights from the U.S. VC industry as a whole, as well as observations specific to the legaltech startup market, based on Touchdown’s work within the sector.

Legaltech & VC Funding Highlights

2020 was a record year for VC activity in the U.S., with $156B invested. However, the total deal count decreased from 2019, indicating that VCs concentrated funding in larger deals for fewer companies.

The legaltech sector, however, experienced growth across the board with $1.3B invested in 196 companies, an all-time high in both deal value and volume. Specifically, online legal service providers and document lifecycle management solutions received a significant portion of the funding.

Here is the legaltech deal count compared to the overall U.S. market:

Covid shifted operational approaches to legal services: historically, security and privacy concerns slowed adoption of cloud-based solutions, with many law firms lagging the transition seen in other industries. However, work from home increased appetite for cloud-based solutions. In tandem, innovative document and contract management solutions attracted significant venture investment, as did litigation-focused solutions, e-discovery tools, and others.

CVC Highlights

In CVC, corporate funds deployed 48% by dollar value and participated in 26% of deals in the U.S. in 2020. As shown in the chart below, the $68B invested by corporations was nearly $10B more than 2019, which suggests CVCs stayed in the market despite economic uncertainty, as my colleague Scott Lenet forecasted in this post from 2019.

CVCs are an important source of capital for legaltech and professional services-focused startups. In particular, CVCs can be especially beneficial to technology providers selling into large professional services organizations, or those bridging the gap between legal and business professionals. For startups developing such products, the expertise and guidance of large corporations, particularly in understanding how a tool is best integrated and sold into organizations, can be critical to success. The following CVCs have recently been particularly active in legaltech and adjacent categories:

  • Lexis Nexis Group, a provider of computer-assisted research
  • M12, the corporate venture capital arm of Microsoft
  • Salesforce Ventures, Salesforce’s cloud-focused CVC arm
  • MDR Lab, an accelerator program in the UK run by Mishcon de Reya

Notable Legaltech Deals and Exits

Legal Innovation In the News

Please contact us directly at for any ideas or investment opportunities related to this sector. Thank you for reading!

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Adam Lebovitz is a Senior Associate at Touchdown Ventures, a Registered Investment Adviser that provides “Venture Capital as a Service” to help corporations launch and manage their investment programs.

This article includes information from third party sources believed to be reliable; however, we make no representations as to its accuracy or completeness. References to strategies are for illustrative purposes only and should not be relied upon as a recommendation to engage in any particular strategy or to invest in any particular security. Opinions expressed herein are based on current market conditions and may change without notice and we reserve the right to change any part of these materials without notice and assume no obligation to provide an update. Recipients are advised not to infer or assume that any securities, strategies, companies, sectors or markets described will be profitable or that losses will not occur. Any description or information regarding investment process or strategies is provided for illustrative purposes only, may not be fully indicative of any present or future investments and may be changed at the discretion of the manager. Past performance is no guarantee of future results.



Adam Lebovitz
Risky Business

current @touchdownvc // @tuckschool @princeton @phillipsexeter grad // former @slow intern @broadgreen @dechertllp