Eudia, a startup making artificial intelligence software for legal teams, is emerging from stealth mode this week with a $105 million deal led by General Catalyst.
The company plans to announce the funding on Thursday, with a non-traditional twist: Eudia will receive $30 million right away, and will get the other $75 million on the condition that it finds other companies to buy, pending General Catalyst’s approval of the acquisition targets.
It’s part of a larger strategy at General Catalyst to bring AI to regular businesses. “We’re trying to incubate companies that will grow, will go public, where the founders are in the driver’s seat,” said Marc Bhargava, managing director at General Catalyst.
The deal’s mandate for mergers takes a page out of the private equity playbook, but there are key distinctions, Bhargava said. It’s “a very different journey than buying a target and trying to sell it in three to five years like in private equity, and having a private equity firm as essentially your boss.”
The Eudia funding is part of General Catalyst’s $1.5 billion Creation fund, announced last October. It focuses on startups building AI tools for industries that are not typically first adopters of new technology — such as legal, accounting and call center businesses — and then helping them acquire companies in order to grow. The driving idea is that once regular businesses incorporate AI tools, their productivity will accelerate.
“Our starting point is which industry can see massive automation, and if they can see this massive automation, how do we capture it the most?” Bhargava said.
General Catalyst has incubated and invested in a few companies using this approach already, including call center firm Crescendo and homeowners’ association business Long Lake Management.
Part of what drew General Catalyst to Eudia was its focus on selling its tools to in-house legal teams, versus law firms, because they often don’t already use many legal technology products. The startup is building a platform with AI agents that can help with common tasks like ensuring a marketing campaign is in compliance, drafting risk assessments or parsing contracts.
“We’ve built a platform that consists of an army of AI agents combined with a data and knowledge platform,” said Eudia Chief Executive Officer Omar Haroun. The result is “structured and usable” information that will make lawyers more efficient, he said.
Eudia is being used by legal departments at businesses like Cargill, DHL Group and Duracell, the company said. The CEO declined to share its total number of customers.
Eudia plans to use the much of the first $30 million to expand its product and engineering teams. Other investors in the round include Floodgate, Sierra Ventures, Hakluyt Capital and Defy.
Paayal Zaveri, Bloomberg News
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