$250M Clio Haul Offers Yet More Vertical Validation
September 6, 2019 | Contributed by: Neal Polachek
The LSA Insider blog often addresses the importance of SaaS companies keeping a tight focus on a specific vertical. We’ve covered companies like Slicelife, for example, which helps local independent pizza shops compete with “Big Pizza” (aka Dominos and Pizza Hut).
This week we’re focused on another vertical — legal — as Vancouver-based Clio just announced an impressive US$250 million private equity round. That’s about CAD330 million.
This is a pretty massive round. In fact, it’s 10X its last raise, according to the ever-reliable Pitchbook.
According to Crunchbase, Clio has more than 150,000 firms in 100-plus countries on its platform today. Impressive indeed. What we don’t know is what that 150,000 figure really means. Does it represent 150,000 unique firms? Are they all paying? In any case, simple math suggests the company has a pretty handsome revenue run rate.
If you assume that all 150,000 “customers” are paying the minimum monthly amount of $40, the company’s top-line would hover around $72 million. A substantial figure. We have to assume some of the 150,000 customers are on a free trial so its top-line might be closer to the $50 million number. This is still ranks them among the best in the local SMB SaaS space if you exclude big players like Microsoft and products like 365.
Clio positions itself as an operating system for law firms via its Clio Suite “all in one” application. We’ve discussed the all-in-one concept extensively here, in particular how the notion may work better in vertical categories than as a all-things-to-all-SMBs solution.
It appears a key path to Clio’s success is its approach to integration. The company says it integrates with 150 other software applications. Last year the company acquired Los Angeles based Lexicata, which claimed to be a Salesforce-like solutions fashioned for the legal industry. We doubt Clio paid very much for Lexicata since it had raised very little money at the time, we believe its focus on solving some of the prospecting and client development was very attractive to Clio.
When you take a look at Clio’s product and pricing, it is pretty clear it’s focused not only on the legal vertical, but on very small, small and medium-sized practices. With no price point above $99 per user per month and offering free trial subscriptions, Clio is looking to quickly gain market share among solo and small practices.
Like many in the SMB SaaS space, Clio offers a suite of onboarding and user engagement solutions. These include videos, podcasts, guides, blogs, and the now increasingly common annual user event.
This year’s event in San Diego looks to attract some 2,000 legal professionals. What’s so interesting is the list of sponsors of the event ranges from highly specialized legal services to broader martech type companies — think Broadly, RubyReceptionists, Smith.ai, Zipwhip. The inclusion of these types of sponsors at the event speaks to the importance that the legal profession is beginning to put on client experience.
Clio publishes a Legal Trends Report. I downloaded last year’s report and found an interesting focus on client experience woven through the report.
One clear finding was the considerable disconnect between how lawyers want to work with clients and how clients expect to work with their lawyers. This speaks to the importance of lawyers understanding the expectations of the modern consumer. Those expectations — centered around immediacy, transparency, and authenticity — clearly contribute to the disconnect lawyers and their clients are experiencing.
We’d expect Clio’s Legal Trends Report 2019 will focus even more attention on the issues of client experience and how lawyers must continually adjust and reorient their practices to meet the needs of today’s modern consumer.