Legal-technology startup CS Disco Inc. announced Dec. 17 an additional $40 million in debt financing, boosting the size of a funding round initially announced in October to roughly $100 million.
The $40 million in debt raised from Comerica, a Dallas-based bank, supplements the previously announced $60 million equity round led by Georgian Partners. Because no new equity was created, Disco remains valued at $785 million. The company has now raised a total of $235 million.
Taken in concert, Disco's $100 million round would rank among the largest funding rounds of the year for an Austin startup. Earlier this month, home health startup Everlywell Inc. raised $175 million. In June, biopharmaceutical company Shattuck Labs raised $118 million, before going public in October. Recreational vehicle-sharing company RVShare, based in both Austin and Akron, Ohio, announced a $100 million funding in October. And Homeward Inc., a company that helps homebuyers put up cash offers, announced a $105 million round in May, which was mostly debt financing.
CEO Kiwi Camara founded Disco in Houston in 2012 and moved the headquarters to Austin in 2018. The company is known for its e-discovery software, which helps lawyers collect digital records by putting raw information into a searchable database. The company expects to use its new funds to make the entire litigation cycle easier. Its other products include Disco Case Builder and Disco Managed Review.
Disco was always targeting a $100 million raise in the fourth quarter of 2020., Camara said in an email. The funds are expected to enable Disco to double its headcount over the next year, "with the majority of new hires to be located in Austin," he said.
"These will include new hires in our sales, marketing, professional services and customer success teams; product, design, and engineering; and HR, finance and legal," Camara said.
The company had about 300 employees, 25% of whom worked permanently remotely, when it announced its $60 million equity round in October.
Disco has been grabbing accolades recently, landing on the 2020 Deloitte Technology Fast 500 and the Forbes Cloud 100. But early in the pandemic, like many startups, it faced an uncertain economic situation. Disco cut an undisclosed number of jobs in March. 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.
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.
This week alone has seen a $50 million funding round from education-tech company Aceable Inc., a $45 million round from digital radar technology startup Uhnder Inc. and and $40 million round from credit-building startup Self Financial Inc.
This story has been updated to reflect the correct year Cs Disco Inc. relocated to Austin.
