Summary List Placement
Try to imagine the contracts negotiation process, and one might conjure up a scene where a sheaf of papers, tucked discreetly into a manila folder, is shuttled from one law office to the mahogany table of another. With a stroke of a fountain pen, the deal is sealed.
Those old-school methods have long been replaced with the adoption of PDFs, redlined versions of which zip from email inbox to inbox. Now, contracting is undergoing another digital shift that will streamline the process as companies are becoming more comfortable with tech and are seeking greater efficiencies — and investors are taking note.
Contractbook, a Denmark-based contract lifecycle management platform, just raised $9.4 million in its Series A investment round, led by venture capital titan Bessemer Venture Partners. In November 2019, Gradient Ventures, Google’s AI-focused venture fund, led Contractbook’s $3.9 million seed round.
Founded in Copenhagen in 2017, Contractbook uses data to automate documents, offering an end-to-end contracts platform for small- and medium-sized businesses (SMBs). Niels Brøchner, the company’s CEO and cofounder, said that Contractbook was born out of the notion that existing contract solutions, like DocuSign, failed to use a document’s data — from names of parties to the folder the document is stored in — to automate the process and drive workflow.
“Data is alive, meaning you can build a whole automation flow around it and make everybody aware of what’s happening at the data all the time,” explained Brøchner.
Brøchner walked Business Insider through the pitch deck it used to demonstrate its unique value proposition to investors, and shared his visions of how he sees Contractbook growing with the help of the funding.
Outline the problem
Brøchner kicks off his presentation by mapping out the problem that Contractbook was created to solve. “The primary headache we’re solving is a very non-client-centric way of working, which is slow, expensive, and inefficient,” he said.
Existing point solutions like Dropbox for storage can rack up in fees over time, especially with the thousands of PDFs that are uploaded and downloaded between parties, Brøchner explained.
The main clients that Contractbook is targeting are small and medium businesses (SMBs), which tend to have smaller sales cycles and are more likely to be willing to buy end-to-end software solutions than larger, more traditional companies. It’s also not just limited to in-house legal departments within those SMBs — Brøchner explained that the platform is designed to be “holistic,” enabling companies to manage administration, sales, and compliance, all in one.
Introduce Contractbook’s solution
With the problem laid out, Brøchner then introduces Contractbook, and how the company can address these pain points.
Contractbook offers an end-to-end platform that seeks to replace existing solutions across five core components, representing distinct stages of the contract lifecycle. “We want to empower SMBs to own the full process, rather than individual point solutions,” said Brøchner.
While DocuSign is one of the biggest names in the digital contracts space, Brøchner pointed out that it’s still a point solution. The e-signature company has only recently started to tap into lifecycle management — which it’s doing through strategic acquisitions and investments.
In addition to storing documents in the cloud instead of Dropbox, for example, businesses can automate tasks and contracts through the use of data, which Brøchner will elaborate on a little further into his pitch.
Overall, Contractbook’s platform, at 1/20th of the price of competitors, saves clients both money and time. According to Brøchner, clients save 45 minutes on average per contract, and 84% of all documents are signed, sealed, and delivered in less than a day.
“When you’re an investment bank that does 10,000 contracts a year, that adds up,” he said.
State the company’s vision
The company’s core mission is “data-driven document automation” for the “remote generation,” which mostly means Gen Z and millennials, though that definition has expanded with the pandemic.
“We want to give the same peace of mind that Salesforce gives to sales reps,” explained Brøchner. “You’re handed the Contractbook platform, and you immediately feel like you’re a legal professional.”
Mary D’Onofrio, vice president at Bessemer Venture Partners, told Business Insider that the Series A funding this year comes at a time that’s particularly acute. “100,000 SMBs have closed during the pandemic, and they need automation tools now more than ever,” she said. “Contractbook in particular really empowers small businesses to grow.”
Dig into how your tech works — and how it sets Contractbook apart
“Contractbook is 100% binary, which means it’s a solution that is data-driven,” said Brøchner. “You can use all the data you’re creating and use it to automate task management and regenerate new documents.”
Brøchner then gave an example to better illustrate how the metadata stored in a JSON file can be used to automate the contract process.
“A contract always starts with a template, which is basically the data you want to use going forward,” he said. Let’s say we have a junior lawyer who’s setting up the template for a document. When the document is tweaked, the data used to create the template will automatically update other copies of the document within a company’s Contractbook platform.
New iterations of a document — for example, when an existing contract is modified during a renegotiation — will also be created and shared automatically in the correct folder, as predefined by the template’s metadata.
“It’s the workflow of the future,” said Brøchner.
Make your business case
It’s then time to dig into the numbers to illustrate the company’s growth in revenue and customer base.
Darian Shirazi, partner at Gradient Ventures, which led Contractbook’s seed round and participated in its Series A, said that he’s been “incredibly impressed” by the speed at which the company has grown within the past year: revenue has grown nearly fourfold year-over-year, with 100,000 active users across more than 2,000 businesses.
“If Bessemer hadn’t come in, we looked at doing it ourselves — we were that excited about the company,” said Shirazi. “Now we have a great partner with Bessemer, and are positioned to grow even faster than in the past.”
Both Shirazi and Bessemer’s D’Onofrio were drawn to Contractbook’s “viral” model of growth, where you’re not only getting your customers but your customers’ customers, too. This “bottom-up SaaS” — software-as-a-service — model is created, for example, when a client naturally exposes the platform to another company it’s negotiating a contract with. That company might find that they like the software and becomes a client itself, eventually forming a network of users.
“They use some of their customers themselves as customer acquisition channels, which makes them an important part of the business model,” D’Onofrio explained.
In fact, organic usage of Contractbook’s platform is growing 22% quarter over quarter, according to the company. And around 18% of all revenue generated last quarter was generated from peer recipients, per Brøchner.
Shirazi added that this marketing model, “where the customers come to you,” would do well in the US market, which Contractbook is seeking to enter in 2021, given the low cost of customer acquisition.
Demonstrate the market potential and drive home your value proposition
Brøchner laid out how they calculated the total addressable market, which clocks in at a whopping $124 billion. The ease of implementation and speed at which Contractbook’s services can be realized give it the competitive edge in this market, he said.
Share your visions for growth
Brøchner caps off his presentation by sharing his visions for growth, and how Contractbook will use the funding to actualize those visions.
The next big step is to use the Series A funding to “attack the US market pretty hard in 2021,” said Brøchner. While Contractbook will make its bona fide launch in the summer, the company plans to make initial hires and outreach.
In the long term, the company wants to drill down into each of the five core components across the contract lifecycle. “We have a good range, and now need to figure out how to beat the competitors in each by having the best product out there,” Brøchner said.
“There’s no doubt in our minds this is going to be the best data-driven document automation process in the world,” he added. “The growth and traction from investors show that we’re making the right moves.”