Lightspeed Inks Legal Tech Fundraising With AI Startup Noetica

Lightspeed Venture Partners scored its second big legal technology funding deal this week, backing software platform Noetica Inc. in a $22 million Series A fundraising round announced Thursday.

Lightspeed, a Silicon Valley-based venture capital shop, was also behind a $135 million Series D fundraising announced Oct. 8 that secured a $1 billion valuation for EvenUp Inc., a maker of artificial intelligence products for personal injury and plaintiffs’ law firms. Lightspeed has become a major investor in the legal tech space due to advances in AI tools and a generational change in the industry that’s made it easier to sell efficiency-improving software to lawyers.

“The AI wave has accelerated the trend,” said Lightspeed partner Justin Overdorff, who leads the firm’s fintech practice. “The Baby Boomer generation is moving off from the top of many big firms, and a lot of what goes on in these firms is oftentimes rote human processes that involve language.”

Noetica, a software startup that uses generative AI to help Big Law firms benchmark deal terms in corporate transactions, was co-founded in 2022 by former Wachtell, Lipton, Rosen & Katz associate Daniel Wertman, who is also its CEO. It’s the latest entrant in a stream of startups seeking to corner a potentially lucrative slice of the legal tech market, in which total fundraisings year-over-year have doubled to nearly $2 billion, according to funding database Crunchbase.

Counsel AI Corp., a legal tech and AI platform doing business as Harvey, has contributed to that growth by engaging in fundraising talks that could value the company at more than $2 billion. Harvey’s April 2023 Series A raised $21 million and the company secured another $715 million in financing before year’s end.

Noetica, unlike Harvey and some others in the legal tech and AI space, has sought to focus solely on transactions. “We’re not trying to be everything to everybody,” Wertman said.

Lightspeed, which last year led a seed funding round for Noetica, was joined in its most recent financing by Thomson Reuters Ventures, Bling Capital, Flybridge Capital, Company Ventures, and The LegalTech Fund.

Faster deal closings might not be welcomed by those eyeing hourly billables, but Big Law associates aren’t going anywhere, Overdorff and Wertman said. AI tools will be as beneficial to deal lawyers as the computer and email, which improved archaic processes for negotiating deal terms that helped corporate clients and made their legal advisers more profitable, they argued.

Noetica, which was advised by Wilson Sonsini Goodrich & Rosati on its fundraising, will use the capital infusion from its Series A to expand its customer base by hiring more staff to build out its AI and software engineering and sales staffs, as well as other functions, Wertman said.