Contract Lifecycle Management (CLM), a method of managing a contract from initiation to award, compliance, and renewal, can be costly for companies. World commerce and contracts estimates the average cost of a simple contract is $6,900, while the cost of more complex agreements rises to over $49,000. Opportunity is often worth the investment, but without careful contract management, businesses can lose up to 40% of contract value, notes KPMG. poll found.
The enticing prospect of automating the contracting process has attracted a number of entrepreneurs to the space, including UnitedLex co-founder Ajay Agrawal. Agrawal’s latest venture SirionLabswhich integrates artificial intelligence technologies such as natural language processing to import and organize contracts, negotiate and verify contracts.
Highlighting investor interest in this segment, SirionLabs announced the closing of an $85 million Series D funding round led by Partners Group with participation from existing investors Sequoia Capital and Tiger Global. This brings the company’s total fundraising to $157 million, which Agrawal says is being directed towards scaling operations as well as product research and development.
“[With] UnitedLex Corporation, my team, and I have always tried to create software applications to automate aspects of the manual work they did for clients. Some of these applications have been very successful, so it inspired me to start thinking about how to achieve this level of automation with contracts on a larger scale as a product rather than a service,” Agrawal told TechCrunch in an email interview. “In 2012, Claude Marais, former head of outsourcing at General Motors, and I started brainstorming and introduced SirionLabs. We founded SirionLabs, an enterprise SaaS platform, together with our co-founders. [and UnitedLex colleagues] Kanti Prabha and Aditya Gupta.
SirionLabs uses algorithms trained on legal documents and “industry data” to provide transparency on contract performance, invoices and post-contract relationships. (The company declined to provide further details about the training data, and it’s worth noting that the algorithms were not tested for accuracy by a third party.)
Clients can use template libraries with an AI-led option to help create standard commercial contracts. Or they can upload third-party drafts to the platform so that it looks for missing clauses, insertions, deletions, and changes during multiple rounds of contract negotiations.
SirionLabs also provides “project risk assessments” and suggestions for improving item selection. In addition, the platform provides information designed to give an advantage during negotiations based on data from past contracts.
“The competitive advantage of SirionLabs is that the performance after the award of the contract is in line with the conditions outlined in the contract,” said Agrawal. “Technical leaders care about CLM software because the data in the contracts is key to their key stakeholders in the organization. For the legal department, software is a critical tool for identifying and managing risk and compliance. [And] for procurement, this means huge cost savings in supplier negotiations and management.”
Legal authorities are notoriously slow to adopt new technologies, with the 2019 Bloomberg Act. poll found that only one in four people working in law firms and legal departments use tools based on artificial intelligence or machine learning. Obstacles include lack of resources, budget constraints and technical illiteracy. But that’s not stopping startups — the contract lifecycle management market is expected to grow from $1.5 billion in 2019 to $2.9 billion by 2024. according to Markets and Markets.
Overall, legal tech as a category continues to resonate with investors who poured $9.1 billion to market through financing, M&A in 2021 alone. The pandemic has undoubtedly played a role in this by focusing on business continuity and risk mitigation.
The biggest players in this sector include Isertis, which recently received $150 million at a $3.2 billion valuation to build its contract instruments. Link Squares in April landed $100 million for its AI-based contract analysis platform, while ContractPodAI, a close competitor, raised tens of millions to digitize contract reviews.
Agrawal also sees Ironclad, Conga and DocuSign CLM as major competitors to SirionLabs. But while he did not disclose revenue or whether SirionLabs is currently profitable, Agrawal said the company is gaining momentum with more than 250 customers including Qantas, Credit Suisse and Vodafone.
“The whole market for CLM is expanding rapidly as more organizations take digital transformation initiatives,” Cyrus Driver, managing director of Partners Group, who plans to join SirionLabs’ board of directors, said in a statement. “We were drawn to SirionLabs’ leadership in this category, superior product offering and blue chip customer base and look forward to working with management to increase capacity. “We strongly believe in SirionLabs’ growth potential, which is why we wanted to be involved as a key investor in order to keep the company’s momentum in this key industry.”
SirionLabs has about 600 employees and plans to hire about 200 in 2022, Agrawal said.
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