Legal-technology startup CS Disco Inc. has secured another eight-figure funding, less than two years after its last one.
The Austin-based company announced Oct. 15 a $60 million equity funding round that values the company at $785 million. The investment was led by Georgian Partners, which also led the $83 million funding round Disco announced in January 2019.
Other returning investors were Bessemer Venture Partners, LiveOak Venture Partners and The Stephens Group. Breyer Capital, which recently established roots in Austin, also invested.
Disco has now raised a total of $195 million, according to the announcement. CEO Kiwi Camara founded the business in 2012 in Houston and relocated the headquarters to Austin in 2018.
The company makes software that helps “legal professionals do their work,” Camara said in a statement. It is known for its e-discovery product, which helps with the digital collection of records by putting raw information into a searchable database. Camara previously compared what Disco’s cloud-based software can do for the discovery process to the jump from dial-up internet to broadband.
“We see it as the next high-growth category in enterprise software,” Disco Chief Operating Officer Sean Nathaniel said. “We’re so well-positioned to build a kind of legal technology platform, similar to what Salesforce built for sales.”
The new funding is a substantial injection of capital sure to aid the startup during the pandemic. Other e-discovery startups have raised big rounds this year, including California-based Everlaw, which announced a $62 million round near the start of March. Disco's latest round also highlights the seesaw nature of startups — the company cut jobs earlier this year, citing the financial risk posed by the health crisis.
Disco has about 500 customers, including corporations such as Viasat Inc. and Southwest Airlines Co. Other customers include global law firms like Clyde & Co. LLP and Kennedys Law LLP.
Disco declined to share revenue figures but Nathaniel said Disco is “the leader in cloud e-discovery solutions space,” a subset of the wider $20 billion e-discovery market, according to the announcement.
In addition to bolstering its flagship e-discovery product, Disco plans to use the new funds to invest in other offerings related to the legal process. Camara said in January 2019 that Disco eventually expects to be able to walk its clients through an entire case, from compiling witness files to building chronologies and everything in between.
Nathaniel noted that as of Oct. 14, there are still areas of the litigation life cycle the startups plans to “build, acquire or partner to deliver to our customers.”
“Our preference is as a software development company, and one with a maniacal focus on a lawyer-focused design experience,” Nathaniel said.
While Disco wants to “keep the door open for an acquisition or a partnership,” the startup is not actively pursuing those avenues, he said. Nathaniel also indicated Disco isn’t eyeing an exit.
“We have no imminent plans to go public,” he said. “Currently, we have so much momentum behind us that an IPO is not something we’re considering in the near future.”
Disco cut an undisclosed number of jobs in March because of the economic uncertainty caused by the Covid-19 pandemic. A source told Austin Inno there were about 75 layoffs. Disco said in a statement at the time the decision was made to “proactively address and reduce potential risk” associated with a potential downturn.
“We had invested heavily in 2019, based on the growth we expected in 2020,” Nathaniel said. “We did do a restructure in March based on the assumption there would be a slowdown.”
Nathaniel said it was the right move. Disco regained its footing by the end of the second quarter and is now planning to hire for roles in sales and marketing.
“I think in hindsight, we would still take a similar approach,” Nathaniel said. “We are where we need to be, and we have the structure to achieve our goals.”
The startup now has about 300 employees, about 25% of whom work remote permanently, according to Nathaniel.
Venture capital funding in the Austin metro is down slightly from 2019's record haul. Through the third quarter of 2020, companies based in the Austin area had raised nearly $1.48 billion, compared with more than $1.5 billion through that point the year prior, according to data from PitchBook and the National Venture Capital Association. Health care and software companies, in particular, have been able to continue landing fresh capital during the pandemic.
Biopharmaceutical company Triumvira Immunologics Inc. raised $55 million in August. Shattuck Labs was valued at about $647 million after its Oct. 8 initial public offering on the Nasdaq. Everlywell Inc. is reportedly in talks to raise capital at a valuation of more than $1 billion.
Meanwhile, video streaming startup Restream Inc. raised a $50 million round in August, while in the same month cybersecurity company SpyCloud Inc. raised a $30 million round. Data-focused startup Data.world Inc. raised an oversubscribed $26 million round in September and OJO Labs, which has developed artificial intelligence software for homebuying, raised a $63 million round in July.
Austin's only other funding round in the third quarter in excess of $25 million was a $35 million round raised by Icon Technology Inc., which is bringing 3D-printing tech to construction.
