Anthony Rose, the man who created the BBC iPlayer, is hoping his legal automation platform can become like a “drug dealer” for investors looking to sign new deals.
His company SeedLegals, which was used to create over 27,000 contracts in 2018, is already a startup favourite.
The platform can be used to create the legal documents needed to secure investment, helping early stage businesses cut down on — or eliminate — legal fees.
Already, around 8% of all early stage UK funding rounds are completed using SeedLegals.
Now, Rose, who left the BBC in 2010, is eyeing a product for investors. He believes his company, which raised $4m (£3.2m) in May, could become a central hub for investment funds.
“Today, it's dramatically faster, easier, better, cheaper for a founder or a company to use SeedLegals,” Rose said in an interview. “But the goal is in fact to have both sides of the market.
“I want to essentially be the drug dealer of a product for funds — to make it addictive, to make it so easy to use SeedLegals for your next round.”
‘Game of roulette’
Rose acknowledged the goals of founders and funds are often very different.
“Venture capital firms play it like a game of roulette — some startups will make a lot of money and many will make an average or no return,” he said.
“They may in fact be happy with the 18-month ‘go big or go bust,’ because it's a way of winnowing out the weak — it's the brutal spartan approach, and you're going to die if you don't make it.”
Startups don't necessarily want a 1% chance of being successful, so SeedLegals pioneered a top-up mechanism that allows them to raise money in between funding rounds.
Though the amount of the top-up is negotiated at the time of the first raise, it still gives startups breathing space in the event they burn through cash quicker than expected.
While this doesn't necessarily chime with the approach of venture capital funds, it makes a lot of sense for the more risk-averse angel investors, who tend to make fewer investments.
“We knew that startups would love SeedLegals,” Rose said. “But what we've found, perhaps unexpectedly, is that it has gone as viral with investors.”
In addition to an investor product and a planned international expansion, Rose hopes to introduce other “funding adjacent” products, like the recently launched tools for share options and share transfers.
While Rose does not think SeedLegals can replace everything law firms do in the funding space, he also thinks the reverse will end up being true.
“The game plan is not to compete directly with the incumbents — but just to do a new set of things that the incumbents are actually unable to do,” he said.
“We can create two sides of a marketplace — a complete platform that automates everything from the contracts to the cap-table, with branded products. And law firms just can't do these things.”