Canadian Lawyer

18 M A R C H 2 0 1 6 w w w . C A N A D I A N L a w y e r m a g . c o m T E C H S U P P O RT O P I N I O N A great starting place to learn about legal innovation is the event we at LegalX in Toronto are running in April with McCarthy Tétrault LLP. Also, MaRS, home of LegalX, has an amazing program called Entrepreneurship 101 for new and emerg- ing entrepreneurs. It's a free program and there's a massive library of entrepreneurial materials on the MaRS web site. Money leads, innovation follows As legal tech expands, risk capital needs to follow. This won't happen much in 2016, as we have been in the industry for a couple of years, though the foun- dation is being laid for what we feel will be a breakout year in 2017, where risk capital will be more receptive to legal innovation and startup founders. It's really important to understand that, in 2016, we're living in a new funding landscape for startups. Gone is the day of relatively quick and early seed rounds of capital followed by a quick series A raise. Where we are today is a new paradigm with this central continuum: bootstrap — friends and family — pre-seed — seed — seed 2 — series A. This is important to know because more of the funding burden than ever will fall to the entrepreneur, who is functionally responsible for getting to, or awfully close to, generating revenue before raising risk capital. Long gone are the days when venture finance just bet on teams and ideas in which they believed. The landscape in Canada is signifi- cantly worse than the United States for this, as very few investors are open to early-stage investments in legal tech- nology and innovation startups. We've done a lot to change that since launch- ing LegalX in late June of 2015, and we have a very long way to go. Send in the clowns More mercenaries will emerge in the legal innovation space, just as they did close to a decade ago in the education technology space. For our purposes, a mercenary is someone who is drawn to be a startup founder in the vertical who really has no business being there. To continue the analogy, once people realized the money could actually be made in education technology, startup teams were formed with absolutely no people with an education background. No teacher, no administrator, not even a technologist who knew the space. When this happens, the results are mixed at best. This will be bad for the legal innovation industry in the short to medium term but actually great in the long term, as we predict a bloodletting similar to what happened more than once in education technology. nbelievably, we're now months rather than weeks into 2016. While it's late to make new predictions, we're new here, so please allow us to begin what will be a regular column with a landscape scan of where we are with legal innovation and technology and where we're heading. Think of this less as a prediction and more of a state of the union. Legal innovators saddle up More people from within the profession will try legal entrepreneurship. Some will, as all entrepreneurs do, begin side projects, the vast majority of which never see the light of day. Some will dive deeper and become a startup founder. Those who do so will find that being in the legal tech vertical is neither a hindrance nor a help in getting a product to market, as legal tech entrepreneurs face the same hurdles as others do. Yes, some are in fact unique to the legal vertical, but the same holds true when a doctor leaves medicine to build a digital health or medical device startup. U The here and now of legal innovation By Aron Solomon and Jason Moyse @aronsolomon @jasonmoyse

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