Austin legal-technology startup Disco is planning to go public in a move that would punctuate a period of fast growth that was slowed only temporarily by the pandemic.
The company's S-1 filing, made June 25 under the legal name CS Disco Inc., showed it plans to list under the ticker abbreviation "LAW." The filing showed it plans to raise $100 million from the initial public offering, which is likely a placeholder figure that will be adjusted as the company nears its first day of trading. The company hasn't set prices for shares yet — or a date for its public debut.
Disco helps legal teams with an artificial intelligence-powered platform that offers automated e-discovery, legal document review, case management and other data collection. For example, the company says it holds more than 10 billion files and 2.5 petabytes of data.
Disco declined to comment, citing a quiet period before the IPO.
The company was founded by CEO Kiwi Camara in 2013 out of his law firm Camara & Sibley. Camera moved the startup to Austin in 2018 after sending a cold email to Austin venture capital firm LiveOak Venture Partners.
"Technology will transform the law just as it has transformed every other area of life," Camara wrote in a letter to employees that is included in the IPO filing. "This transformation creates a massive opportunity to build an iconic business: the category definer for the new category of legaltech."
Disco's quarterly revenue has mostly been on the rise, except when it flatlined at $15.7 million in the first and second quarters of 2020 as the pandemic caused shutdowns and widespread caution. The company laid off an undisclosed number of employees due to that uncertainty.
Since then, Disco's revenue has climbed to $17.9 million in the third quarter of last year and $21.1 million in the first quarter this year. Overall, it logged $68.4 million in revenue in 2020 and a net loss of $23 million, compared with 2019 revenue of $48.6 million and a net loss of $29.8 million. At the end of March, Disco had 336 full-time employees.
The company's growth has been accelerated by major injections of venture capital. Disco said in the filing it has raised $161 million in capital since its inception. Last fall it announced a $60 million equity round that valued the company at $785 million. Bessemer Venture Partners and its affiliates own 26.4% of the company. Meanwhile Austin's LiveOak Venture Partners has about 19% and Georgian Partners holds about 12%. Camara owns about 10%.
The company says a "substantial portion" of its revenue is driven by its top 10% of customers. It didn't name those customers, thought it noted that as of the end of March, it had 909 customers, including law firms, legal services providers and government organizations.
It expects demand to accelerate, and it estimates its market opportunity to be $42 billion globally.
"The impact of law on the business world is only growing, with businesses today operating in more jurisdictions than ever before and increasingly exposed to a growing number of constantly changing laws and regulations that can materially damage a company’s brand and operations," the company wrote in its initial IPO filing.
The company noted how competitive Austin has become for tech talent.
"Many of the companies with which we compete for experienced personnel have greater resources than we do and can frequently offer such personnel substantially greater compensation than we can offer," Disco wrote in its filing.
But the company also considers being in Austin an advantage.
"One of the deciding factors was when we would try to recruit executives to move to Texas from [Silicon] Valley or from New York, you tell them 'What do you think about relo to Houston?' and they hang up," Camara said in a recent conversation on Clubhouse. "You tell them, 'What do you think of relo to Austin?' and that's usually a super easy sell. And so it's the combination both of the local talent market, which is great with UT and all the tech companies that have been built here, but it's also just incredibly easy in this climate to convince people to relocate to Austin."
Disco has also developed a philanthropic program called Disco Cares, which more than half of its employees participate in. Camara said in the filing that he intends to donate, from his personal holdings, about 1% of the common stock to causes such as housing, education and food insecurity ahead of the IPO.
"The more we grow, the more good we will be able to do," he wrote to employees.
Disco's filing comes amid a flurry of IPOs for both legal-tech companies nationally and Austin-area companies. F45 Training, which recently moved its HQ to Austin, filed to go public earlier this month. FTC Solar and Bumble have also gone public this year, in addition to the formation of several special purpose acquisition companies that are created to take companies public.
Disco's 49,000-square-foot headquarters is at 3700 N. Capital of Texas Hwy. in West Austin. Its lease expires in October 2022. it also has an office in London.
The company is being advised on its IPO by Cooley, and J.P. Morgan Securities Inc. and BofA Securities Inc. are the book-running managers and underwriters of the offering.
"Since our inception, our principal goal has been to create experiences that feel 'magical' to lawyers, by delivering intuitive, intelligent offerings that are well-tailored to lawyers’ workflows and a joy for legal professionals to use," the company wrote in the filing.
