By Eliz’beth Layeni
The legal industry has been known to be one of the few professions steeped in tradition. However, ever-evolving technologies and more particularly the pandemic has caused most law firms to adopt technologies in a bid to maintain their competitiveness. Legal technology, also known as Legal Tech, refers to the use of technology and software to provide legal services and support the legal industry. Legal tech in Africa is aimed toward two general directions: access to justice for low-income legal services consumers who cannot afford legal services as priced; and legal operations tech for firms to offer their services faster and more efficiently with the advantage of a reduced cost. While there is quite an impressive number of investors in the tech startup ecosystem in Africa, the legal tech ecosystem involves a high risk due to low demand from high-value consumers which subsequently results in low investor attractiveness. Currently, there is no reporting on legaltech-specific funding. Legal tech entrepreneurs have sought funding through existing funding channels and mechanisms in the startup ecosystem generally. We will examine some of the funding channels and/or investors in Africa that have invested in a legal tech startup:
The Hague Institute for Innovation in Law (HiiL) has been credited with providing acceleration for justice innovations in Africa. It is the only startup program and innovation ecosystem builder in the world entirely dedicated to access to justice. It has supported over 120 justice startups globally. Startups such as DIYLaw in Nigeria, KYR Africa in Kenya, and LegalFundi in South Africa have benefitted from HiiL’s accelerator program. Entrepreneurs that have a justice innovation and are ready to scale and grow can apply for the HiiL Justice Accelerator program that offers seed funding, training and coaching.
Imvelo Ventures is a Venture Capital and growth equity firm in South Africa managed by Capitec Bank. The Company focuses on innovation-driven ventures and entrepreneurs. The company has invested in the South African legaltech startup – Cliqtech. In 2021, it was reported that the Company invested in Legal Lens and BriefCo – both legal tech startups owned by Catherine Paulse and Yusha Davidson.
Cataclysm Ventures is the world’s first and only syndicate focused on investing in legal technology startups in EMEA and APAC regions. They invest primarily in the pre-seed and seed stages and across all areas of legal tech. The syndicate operates an opt-in model where investors can opt into any deal they wish. Once agreeing on how much investors want to put into the deal, an SPV (special purpose vehicle) will be created. The syndicate has an advisory board of industry experts that provides support in vetting deals. Investors who are interested in investing as part of the syndicate can do by so filling out a form on the syndicate website. Legal tech startups can also send their pitch decks to the syndicate for an investment opportunity.
It will be great to note that outside the African continent, the legaltech ecosystem has had a good track record of investment and fundraising from investors – angels and VCs alike. For us to have a similar track record, there are quite a number of things we must get right, and until we do so, we may not be able to get the investor attractiveness we need.