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Spellbook conjures up $20m USD for its second raise in a year

What is the news, and how did the happen?

Spellbook announced a $20m USD round led by Inovia Capital with the participation of past investors including Thomson Reuters Ventures, The LegalTec Fund, Bling Capital, Moxxie Ventures, N49P (my fund), and others.

What does Spellbook do?

They use LLMs / Generative AI to enable lawyers to review and draft contracts.

Didn't they announce a round in 2023? Why did they raise it again?

Yes, and they raised due to the rapid growth of the company. in the last year they 10x revenue while increasing their user base by 300%

Why did this round come together?

Spellbook is a startup that is exhibiting what it takes to build a successful LLM-based company for several reasons:

1. They understand their customer. Before launching the Spellbook they already were serving lawyers. So they fully understood the lawyer's workflows, challenges, and what they valued.

2. Spellbook is quick to adapt and experiment based on user feedback and new technology capabilities. The product has improved significantly over the past 18 months.

This has resulted in massive customer growth and customer usage. Spellbook has over 1,700 law firms worldwide, 86,000+ contracts are opened on the platform monthly and Spellbook saves 30% of their time by using Spellbook.

What does this funding let them do?

Continue to scale rapidly.

Spellbook is racing towards providing solutions to 30,000 law firms worldwide and they need the capital to scale distribution and the product.

Takeaway for the community?

It is still early days in the LLM application world but companies that understand their customer workflow well and build products quickly can get the financing they need to build a flywheel and pull away from the pack.

While many outsiders think the rounds that are being announced today are being financed like 2021 many of the raises are based on rapid growth in customers and revenues backed by customer usage.

Many traditional slow industries are going to adopt LLMs faster than past technology. 

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