How We Built A Software That Automates Startups Legals
Hello! Who are you and what business did you start?
Hi, I’m Anthony Rose, founder, and CEO of SeedLegals.
SeedLegals is the new way to close your UK funding round. No lawyers, no accountants, everything done on your terms. Our always-on platform, supported by a team of experts lets you raise funding dramatically more efficiently and cost-effectively.
SeedLegals is the largest, fastest and most reliable way to close a funding round in the UK.
What's your backstory and how did you come up with the idea?
I used to head up BBC iPlayer. After leaving the BBC, I built a startup -sold it- built another startup -sold it. I then invested in a few startups and got tired of paying lawyers. In a stroke of luck, I met my business partner Laurent Laffy, serial angel investor, and ex-VC.
We got together and decided it was time to transform the way we do funding rounds.
Take us through the process of designing, prototyping, and manufacturing your first product.
For a startup, most founders think that the problem is building stuff. Founders are often technical and love to create things. However, experience has taught me that the key problem is getting people to want the things you’ve built, not actually building them.
The idea is to start by creating a minimum viable product to verify whether people actually want what you are building, without spending loads of your own time and money.
For SeedLegals, working on legal agreements, it’s a bit more difficult. You can’t have a minimum viable Shareholder’s Agreement or Articles of Association…
Our strategy mimicked that of a swan, appearing to glide elegantly across the water with some frantic paddling beneath the surface. What I mean is that, when we started SeedLegals, all the consumers could see was a slick website that let you set your deal terms and generated a contract. In reality, behind the scenes, our CLO and team were manually handcrafting things to make sure all of that happened and worked.
Most early-stage startups adopt the ‘fake it till you make it’ approach when they start out. Through significant human effort, you give your users a seamless customer experience. You work this way until you get tired of doing it yourself, and you’ve worked out exactly what the customer is looking for. Then, you use technology to automate everything.
Experience has taught me that the key problem is getting people to want the things you’ve built, not actually building them.
Describe the process of launching the business.
When you start a company, you have several problems to solve:
- Understand what customers are looking for.
- Build the solution to the customer’s pain point.
- Get investment to build a team.
- Create an awesome team to grow your business.
- Operationally manage to grow your team and scaling the business.
In our case, we knew customers would want automated funding rounds. My co-founder and I were essentially customers ourselves, having both been around for a while. We knew we could fund it, create a team, and build the product.
Interestingly, the big question was not whether customers would want the product, but whether investors and law firms would allow it to be used. Startup founders could have loved SeedLegals but investors may have insisted on using their ‘trusted’ law firm. That was our key problem.
When I work with startups, I want them to focus on finding the key proof point.
It could be that the solution is something technically complicated, if so, can you build it? If it’s easy to build, will people want it? If people want it, are you differentiated enough from your competitors? SeedLegals’ proof point wasn’t whether the customers would want it, but whether investors would allow deals to be completed on it.
I was delighted when I found out that most investors hate the time spent on legal. Often the cap table is a mess, founders know little about funding rounds and have unrealistic expectations.
Whenever a company raises funding, they invite all their investors to sign. That’s up to 30 new eyeballs on your product for every 1 new customer acquired.
By having a beautiful automated platform, SeedLegals offered investors a professional set of documents with the ability to e-sign everything online and have all their legal created in no time, all in one place. Founders also get unlimited awesome support at zero extra cost, meaning Investors now deal with founders educated about the process.
An investor investing in a CBD company where traditionally founders are not versed in the process of funding rounds wrote to me that, “whenever I asked my founders for document changes, it took them seconds to update, and they knew everything about the deal terms! So I asked them, ‘who is the muse whispering in your ear,’ and they said SeedLegals... I had to use you guys for my future rounds.”
In fact, angel investors love us! Earlier this year we were named Rising Star Legal Team for Early Stage Deals by the UKBAA.
Since launch, what has worked to attract and retain customers?
We currently acquire 1/3 of our new customers through word-of-mouth via customer advocates and partners. We also have virality built into the platform. Whenever a company raises funding, they invite all their investors to sign. That’s up to 30 new eyeballs on your product for every 1 new customer acquired.
It’s led to steady growth of investors who insist on only using SeedLegals for their investments.
Another 1/3 are acquired through content marketing. Our resources and content are designed to help founders go from an idea to getting investment.
Our most successful blog posts leverage insights we’ve uncovered from the data on SeedLegals. We’re able to dive in and explain things like how to value your company, using real-world anonymized data collected from thousands of similar companies.
That’s something no law firm can do!
Worth mentioning, the way we acquire customers has changed substantially over time! In the beginning, we needed to get the word out to founders fast. We sent thousands of cold emails, generating lists from Crunchbase and AngelList.
Around 1% of everyone we contacted through this channel converted to paid customers. We needed a better converting channel.
So the next thing we tried was events. One of the great things about targeting startups is that they hang out in the same places. So we started doing workshops and seminars at workspaces and accelerators. It worked great. Events are still our highest converting channel, with 11% of attendees becoming customers.
How are you doing today and what does the future look like?
In my experience over the years, I like to think of technology solving problems in two phases:
Phase 1: Identify a current pain point, a utility problem you can help somebody do better. No need to change the world. In our case, it was simply that the founders needed to get funding more efficiently, so we helped them do that.
Phase 2: The next step is how can you leverage the network effect. How can you use the customers you’ve got and your expertise to create things that give you a competitive advantage?
Up till now, we’ve been focused on Phase 1 - our website. It simply showcased SeedLegals as the fastest way to close around. There was no mention of Blockchain or smart contracts - it was simple and it solved a problem.
Now we’re focusing on the next step, which consists of two things.
Firstly, in the same way, that TransferWise does ‘borderless banking’, imagine borderless legals! Imagine if you were able to see deal terms across multiple countries on your single interface, all in English and terms you understand.
You’d be able to invest with Terms Sheet and Shareholder’s Agreements you’re familiar with, which are simultaneously rendered in a different language. It can transform the way we invest across Europe. European companies can raise across the continent, and London investors can tap into unlimited foreign enterprises.
Secondly, with a growing percentage of UK startups completing funding rounds on SeedLegals, the next step is capturing both sides of the market: startups and investors. We’re currently working on a version of SeedLegals designed for investors where they can lead with a Term Sheet and negotiate the deal terms in a single interface. We see a future where humans negotiate the deals’ terms and machines generate the legals in seconds, instead of paying a lawyer to spend 3 days doing it manually.
Closing deals this way also creates data showing the market standard for both investors and startups, so they can close on deal terms everyone is happy with, dramatically faster than ever before.
My experience has led me to see that doing one thing well is much better than doing multiple things.
Through starting the business, have you learned anything particularly helpful or advantageous?
I’ve learned a few things ...Firstly, a founder’s initial perception is generally that building the product is the hard part. In reality, having people want what you’ve created is the issue. Often I see pitch decks and businesses looking for money, but they have no website traffic or users. It’s disappointing when someone has put in so much effort building what looks like an elegant site and a fantastic product, but they’ve got no actual demand for it
Secondly, often startups try to persuade investors by being everything, a B-C business, a B-B business, having APIs, using blockchain and doing a million things at once. In fact, my experience has led me to see that doing one thing well is much better than doing multiple things.
Whenever I see a pitch deck that shows a company being B-C, B-B, and other things, I view it as a negative, not a positive. A pitch deck should have clarity on what their consumer or business proposition is, but not both.
Another thing I’ve seen when people initially create their website is essentially telling people all the things they do and how clever they are. To be honest, nobody cares. Consumers are only interested in what’s in it for them as users. My advice is instead, don’t focus on the techniques and technology of whatever you are building. Focus on how it benefits the user.
For SeedLegals, the first version of our site was all about how we use document automation technology for legal. No one cared. Once I realized that what people wanted to know was we could help them close a funding round faster and cheaper, that became the focus. In fact, there is no mention of the word ‘legal’ or ‘automation’ on the home page. It’s all about looking at the problems consumers have and how you solve them.
What platform/tools do you use for your business?
We use quite a few, so here are everyone's favourites:
- We love intercom. It’s how we give our customers unlimited free legal support.
- Hubspot from our sales and marketing CRM. It has some extremely powerful features, but definitely hunt around to see if you can get the 90% startup discount since it does come with a lofty price tag!
- Slack - obviously.
- Airtable - for project management and loads more.
- Notion.so - for company-wide knowledge sharing, OKRs, employee onboarding and more.
- Webflow - our CMS. It’s one of the most underrated tools on the web.
- Upwork for outsourcing bulk admin tasks.
- AngelList for hiring.
- … and Zapier to connect them all!
What have been the most influential books, podcasts, or other resources?
The book that I regularly recommend and the one that I keep thinking about is The Mum Test. The name comes from the fact that generally when you have an idea, you don't know if it’s good or not, so you ask people. One of those people might be your mother. “Hey mum, I've got this amazing AI-powered bicycle lock with GPS tracking, is it a good idea?”. Of course, your mother would say, “my son is so clever, of course, it’s a good idea.”
However, this brings up two problems. Firstly, you’ve asked the wrong audience. Your mum doesn’t ride a bicycle and isn’t interested in a GPS enabled AI lock, and secondly, you’ve asked the question in the wrong form, “imagine if this would be brilliant!” when in fact you should be asking “have you ever looked for such a thing?” If people say, “mmm not really,” that’s a good indicator of two potential things. One could be that you've created something so revolutionary that no one’s looked for it, however, the second and more likely scenario is that there’s no real market need. You may build it and no one will come.
So The Mum Test is named on the basis that you’ve asked your mother to validate your product. Instead, if you ask your possible audience, and they say “yes I’ve looked for such a product. I found three of them, two don’t work, and one is very expensive.” At that point, you know that you have a technical or price point advantage, which if you can hit, you have a market.
Advice for other entrepreneurs who want to get started or are just starting out?
It’s a marathon, not a sprint. Our data shows you’re going to be putting a median $32,000 of your own money into the product before you can raise investment, so make sure you are able to fund it yourself. Some people put in a lot more, but the idea is that nobody invests on a powerpoint.
You need to have built something, a prototype or minimum viable product, something to demo to investors to show that there is something tangible to work with. Ironically the best way to be a founder is to have sold a previous company and have enough money to fund the new one!
Be aware that it may be several years until you see the value created and you should perhaps expect to be with the company for 5 years before you potentially have an exit.
You may get lucky and get an exit sooner, or you may not have an exit but grow the business to be cash flow positive and not need one. However, broadly your goal might be over three funding rounds to raise 3-5x the amount of the last round, at 3-5x the valuation. In this way, after 3 rounds, your business either doesn’t need more investment or you’re ready to be acquired which offers a nice return for everybody!
Are you looking to hire for certain positions right now?
We are a great startup with a wonderful office in Holborn overlooking (rather ironically) Lincoln Inn fields amongst all the law firms. We’re growing our team in all directions and need a range of talents from law grads and salespeople to Java and Angular developers to join us!
We would love to talk to the smartest people that understand startups, funding and perhaps have a legal degree, but are looking for something other than a law firm in their future.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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