BC-based legal software company Clio joins the Canadian unicorn parade and raises US$110m at a US$1.6bn valuation

A British Columbia company that has established itself as a leading internet software provider for lawyers is the latest in a string of Canadian start-ups to hit a $1 billion unicorn-level valuation US dollars.

Thémis Solutions Inc., better known as Clio, raised US$110m in US-led equity from fund giant T. Rowe Price Associates Inc. and backed by the growth equity arm of OMERS. The funding values ​​Clio, based in Burnaby, British Columbia, whose law firm management software is used by around 200,000 lawyers, mostly in the United States, at US$1.6 billion. Tech companies that reach valuations of US$1 billion are often called unicorns.

Several Canadian technology companies have achieved this distinction through financings or buyouts since last fall, including Hopper Inc., Wealthsimple Technologies Inc., Galvanize Inc., Verafin Inc., Benevity Inc., Dapper Labs Inc. and Clear Finance Technology Corp.

Clio plans to use the money to make more acquisitions, hire 250 employees this year (up from 575 now), expand globally, develop its technology and prepare to go public as early as 2022, the report said. CEO and co-founder Jack Newton.

“Clio is in a vertical that we really like,” said Andrew Davis, director of private investments at T. Rowe Price, which typically backs private tech companies that he believes will go public in the medium term. “It was very clear that they had a good product market fit. They drive a lot of value for their clients and allow lawyers to focus on providing advice instead of running the business.

Like many technology providers to small and medium-sized businesses who have seen their fortunes soar during the COVID-19 pandemic, Clio has benefited from an accelerated adoption of digital tools.

Clio is positioned as an operating system for lawyers, especially small and medium-sized firms. Through its online platform, lawyers track time and appointments, manage cases, share documents with clients, invoice and manage payments, and attract new clients. Most Clio customers did not use any case management software and relied on pen and paper, or basic digital tools such as spreadsheets.

Like other subscription software providers, Clio offers a moderately priced alternative to expensive on-premise solutions for large enterprises that have historically been out of reach for small businesses. Once customers sign up, they tend to be loyal and regular users. “Once you have more than one person, you need to consolidate information in one place, and that’s where Clio shines,” said Megan Cornell, founder and CEO of the Ottawa-based company. Momentum Business Law Professional Corp., a 15-lawyer firm that has been using Clio for nearly a decade. Using Clio “absolutely allowed our business to grow,” she said.

With widespread shelter at home last year, Ms Cornell said ‘there was literally no disruption’ to her business. However, many other practices without online practice management tools initially struggled. As a result, Newton said, Clio experienced its fastest-ever annual growth in 2020, and its revenue is expected to exceed US$100 million on an annualized basis in 2021. [in] all industries, including law, that not being in the cloud is not acceptable,” Ms. Cornell said.

Mr. Newton and his childhood friend Rian Gauvreau, who grew up together in Edmonton, launched Clio in 2008, motivated by the latter’s experience as an IT director in a law firm. They found that smaller law firms faced more ethics and malpractice complaints than larger ones, in part because they lacked software to help them run their businesses effectively.

The duo’s platform was an immediate success when introduced at an American Bar Association conference in 2008, and the company went on to attract support from some of America’s top private equity firms, including Bessemer Venture Partners. , TCV, JMI Equity and Version One Ventures.

Matt Emery, general partner of JMI, said his company decided to invest in 2019 in a $250 million financing led by TCV which saw the two US funds largely buy out previous shareholders and inject an undisclosed sum into Clio. Mr Emery said it was clear that Clio “has the market-leading product with the most satisfied customers. They still have a lot of leeway in this market, which allows law firms to manage their practices as successfully as possible.”

Similar to online practice management software providers in other market segments, payment processing represents a large and rapidly growing source of revenue for Clio. The platform’s ability to invoice and manage payments reduces the time between services rendered and payment received in minutes from months. On average, Clio customers have received 16% more monthly revenue since the start of the pandemic than before, Mr Newton said. Payments and financial services could eventually represent the bulk of Clio’s revenue, he added.

“The era of digital transformation is just beginning in the legal arena,” said Newton. “COVID-19 has helped catalyze this digital transformation, but we see ourselves as still at the very beginning of what we hope to accomplish.”

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