Three creative ideas to fund legal innovation
A week or so ago here I mused about a legal-specific venture fund. That post and folks’ reaction to it reminded me that I’d thought about this some before (including musing about it in this talk I gave at EvolveLaw a few years ago). In short, traditional venture funding is far from the only model to fund companies or spur innovation in legal.
Here are three additional ideas to fund legal innovation:
- Crowdfunding. In the post-Kickstarter era, the notion of crowdfunding has a certain perception. It’s some combination of the Pebble meets the indestructible sweatshirt, plus the unrealistic “crowdfund it and people will just give you money” notion, and shysters. Another person, somewhat dismissively, called an idea I shared with him about crowdfunding legal innovation “the Awesome Foundation for legal.” The fact is that Awesome Foundation is genuinely awesome and I think legal could learn a lot from it. But what I find so compelling about crowdfunding is that it’s truly the crowd that funds. I’ve said this a few different times and in a few different ways on this blog (see, e.g. here, here, and here) but I feel pretty strongly that legal professionals have a responsibility to give to the legal system as much as they do to take or benefit from it. To me, many in legal contributing some or even a little to figure out how we can scale technology, services, and process to build solutions that expand access to the legal system and grow the overall pie is a no-brainer.
- Micro or Indie-VC. I draw this one from a couple of my internet crushes. Ever since Evgeny Morozov wrote his takedown of Tim O’Reilly, whom at the time I’d barely heard of, I’ve considered O’Reilly a bit of a hero. A few years later I heard a great interview of Bryce Roberts who, together with O’Reilly, founded O’Reilly AlphaTech Ventures or OATV. OATV was very early to the micro-VC or “institutional seed” category that invests small amounts in companies before they have gained significant traction. In 2015 OATV started work on a new investment category they called Indie.vc “which is designed to support founders with a focus on customers, revenue and profitability.” You can read their investment terms and philosophy at the previous link but they are a firm much more focused on customers and profitability than they are on some of the other typical VC metrics. This aligns what I heard from Christian Lang about his great recent New York Legal Tech Meetup about funding in legal tech that a traditional “sell-side” venture model, akin to say Y-combinator, may not be the best one for legal.
- Xprize for legal: My final suggestion is for the creation of some kind of moonshot prize for legal innovation or technology. The XPRIZE mission is to bring about “radical breakthroughs for the benefit of humanity” through incentivized competition. The best known XPRIZE is the Ansari X Prize related to spacecraft development awarded in 2004. The prize was $10 million but the competition spurred over $100 million in investment in pursuit of the prize. I remain convinced that the buzz from an audacious goal and the promise of a large purse will attract greater attention to opportunities in legal.
I may not have said this in my last post about the legal venture fund but, overall, what’s driving this is my conclusion that what legal innovation needs more than anything is capital. With more money we’ll have more failures, sure, but we’ll also have a few more successes. We’ll also attract more and better talent to legal.
Traditional VC may not be the right or best path forward for legal tech. I’m not sure. I’m sure, however, that we need more money. Let’s start thinking about how to get it but there’s no need to limit ourselves to what’s always been done.
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