Spellbook, which makes AI products for law firms, has closed a US$50 million (C$70 million) Series B round led by Khosla Ventures, one of the top venture capital firms in Silicon Valley.
Based in St. John’s and Toronto, Spellbook announced the funding Thursday, saying the deal values the company post-money at US$350 million, or C$490 million.
Khosla Ventures and Palo Alto-based Threshold Ventures are investing in the company for the first time. The other investors are returning backers iNovia Capital, Bling Capital, Moxxie Ventures, Path Ventures and Jean-Michel Lemieux.
"Spellbook is using technology to make law faster, better, and more transparent," said Keith Rabois, Managing Director of Khosla Ventures, who will join Spellbook's board of directors. "It’s the Shopify and Square democratization story for lawyers.”
In an interview from the company’s headquarters in St. John’s, Co-Founder and CEO Scott Stevenson said the company has recently been more than tripling revenues at an annual rate, and the funding sets the company up for further growth. Spellbook is now used by nearly 4,000 law firms and in-house legal teams across 80 countries, which the company says is more than any comparable AI contract-review product. Its customers include such blue-chip companies as Nestlé and eBay, as well as the British-American law firm Kennedys Law.
About 115 people now work at Spellbook, and Stevenson believes that number will double in the next year or two. He also said he is devoting a lot of time to enhancing the top level of management, both by upskilling existing staff and hiring top talent.
“It’s a huge moment of validation,” he said of the latest funding round. “When we started as Rally seven years ago, almost no investor would talk to us … and now one of the most successful investors in the entire world has looked at our metrics and seen what we’re doing.”
The company last raised capital at the very end of 2023, when it closed a US$20 million round led by iNovia Capital of Montreal. Its first fundraising exercise was a $750,000 round in 2019.
Spellbook said it will use the new capital to expand beyond contract review into the full scope of transactional work and scale its go-to-market teams to capture more of the $1 trillion transactional legal services market. It also aims to enhance AI capabilities with deeper contract intelligence grounded in real-time market data.
The company attributes its rapid growth in large part to the speed with which customers can roll out Spellbook. It says its competitors require multi-month enterprise rollouts whereas Spellbook works instantly within existing workflows and right in Microsoft Word.
Stevenson said Spellbook is now moving beyond its basic contract-review product with new features. It is beta-testing Market Comparison and Preference Learning features, and intends to release them to all clients in the coming months.
The company also said it is continuing to invest in Spellbook Associate, which it calls the first AI agent that can handle multi-document transactional drafting.
Throughout the interview, Stevenson emphasized that large language model AI is having the same impact on the legal profession that spreadsheets had on accounting a few decades ago. The main beneficiaries so far have been the large firms, he said, and Spellbook helps to spread the benefits to smaller firms.
"We're at the spreadsheet moment for lawyers," said Stevenson in the statement. “With $30 trillion running through contracts annually in the U.S. alone, even small efficiency gains create massive value. This funding accelerates our mission to make contracts move at the speed of commerce."
