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Contract lifecycle management (CLM), the method of managing a contract from initiation through award, compliance and renewal, can be costly for companies. World Commerce and Contracting estimates the average cost of a simple contract at $6,900, rising to more than $49,000 for more complex agreements. The opportunity is often worth the investment, but without close contract governance, businesses stand to lose up to 40% of a contract’s value, a KPMG survey found.
The tantalizing prospect of automating the contracting process has drawn a number of entrepreneurs to the space, including UnitedLex co-founder Ajay Agrawal. Agrawal's newest venture is SirionLabs, which incorporates AI technologies like natural language processing to import and organize contracts, negotiations and contract review.
Highlighting the investor interest in the segment, SirionLabs announced that it closed an $85 million Series D financing round led by Partners Group with participation from existing investors Sequoia Capital and Tiger Global. It brings the company's total raised to $157 million, which Agrawal said is being put toward scaling operations as well as product research and development.
"[With] UnitedLex Corporation, my team and I were always trying to build software applications to automate aspects of the manual work that they were doing for clients. Some of those applications were very successful, so it inspired me to start thinking about how to achieve that 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, myself and Claude Marais, the ex-global head of outsourcing in General Motors, began to brainstorm and envision SirionLabs. We founded SirionLabs -- an enterprise SaaS platform -- along with our co-founders [and UnitedLex colleagues] Kanti Prabha and Aditya Gupta."
SirionLabs leverages algorithms trained on legal documents and "industry data" to deliver visibility into contract performance, invoices and relationships during the contract post-signature phase. (The company declined to provide more information about the training data and the algorithms haven't been benchmarked for accuracy by a third party, it's worth noting.)
Customers can use template libraries with "AI-led" clause selection, which helps generate boilerplate commercial contracts. Or they can load third-party drafts into the platform to have it look for missing clauses, insertions, deletions and modifications during multiple contract negotiation rounds.
SirionLabs also provides "draft risk scores" and suggestions for improving clause selection. Beyond this, the platform surfaces insights intended to give an edge during negotiations based on past contracting data.
"SirionLabs' competitive advantage is ensuring performance after the contract is awarded matches the terms laid out in the contract," Agrawal said. "Technical executives care about CLM software because the data in contracts is central to their key stakeholders across the organization. For the legal department, software is a crucial tool to identify and manage risk and compliance. [And] for procurement, it represents huge cost savings in vendor negotiations and management."
Legal is notoriously slow to adopt new tech, with a 2019 Bloomberg Law survey finding that only about one in four people working at law firms and law departments use tools powered by AI or machine learning. Obstacles include a lack of resources, budget constraints and tech illiteracy. But that's not stopping startups -- the contract management lifecycle market is expected to grow from $1.5 billion in 2019 to $2.9 billion by 2024, according to Markets and Markets.
Broadly speaking, legal tech as a category continues to resonate with investors, who poured $9.1 billion into the market through funding and mergers and acquisitions in 2021 alone. The pandemic has no doubt played a role in this, bringing a focus on business continuity and minimizing risk.
Heavy hitters in the sector include Icertis, which recently secured $150 million at a $3.2 billion valuation to build out its contracting tools. LinkSquares in April landed $100 million for its AI-powered contract analysis platform, while ContractPodAI, a close competitor, has raised tens of millions to digitize contract reviews.
Agrawal also sees Ironclad, Conga and DocuSign CLM as SirionLabs' chief rivals. But while he didn't disclose revenue or reveal whether SirionLabs is currently profitable, Agrawal claimed that the company is gaining traction, with more than 250 customers including Qantas, Credit Suisse and Vodafone.
"The addressable market for CLM is expanding rapidly as more organizations undertake digital transformation initiatives," Cyrus Driver, a managing director at Partners Group who plans to join SirionLabs' board, said in a statement. "We were attracted by SirionLabs' leadership in this category, superior product offering, and blue-chip client base, and look forward to working with management on increasing scale-up capacity. "We have strong conviction in SirionLabs’ growth potential, so we wanted to be involved as a key investor to continue the company’s momentum in this key industry.”
SirionLabs has around 600 employees and plans to hire around 200 in 2022, Agrawal said.