Spellbook, the St. John’s legal software-maker, has raised a US$20 million or about C$27 million Series A funding round after being approached by returning investor iNovia Capital with an offer late last year.

The deal, which was signed just before Christmas, is Spellbook’s second eight-figure capital raise in less than twelve months. The previous, US$10.9 million or C$13.8 million round also included iNovia, which is based in Montreal. It also marks the first major venture capital deal to be anounced in 2024.

“They followed along with our progress and they’re extremely impressed with how quickly we’ve been growing,” said Stevenson of Inovia. “We very quickly decided to move ahead because it would be a way to quickly inject some more capital, so we can grow the company faster, and capture the market faster, and build out our product faster.

“And even more importantly, we could close the round quickly and get back to work.”

The round also included: Thompson Reuters Ventures, the VC arm of one of the world’s largest legal technology companies; Bling Capital and specialist investors The Legaltech Fund, both from Miami; Moxxie Ventures, led by former Twitter executive Katie Stanton; Path Ventures of California; N49P and Good News Ventures of Ontario; and Halifax’s Concrete Ventures.

The announcement comes after Spellbook’s revenue grew tenfold from 2022 to 2023, with its client roster now including a little over 1,700 legal teams across 50 countries — up from about 600 teams in May of last year

In an interview Wednesday, Spellbook CEO Scott Stevenson said much of the money will go towards engineering and product development, along with hiring across most departments.

The company’s system can auto-generate contract clauses in response to user-inputted topic prompts. It also draws on sources like Wikipedia for general knowledge and allows users to ask GPT-4 questions about a given document, such as what a contract says should happen in a case of late payment.

With the new funding, Stevenson plans to expand Spellbook’s functionality to help lawyers with tasks other than just contract drafting, as well as improve its personalization to better reflect the writing style of its user.

Those changes are possible because, although Spellbook uses the GPT-4 API, the technology’s basic flexibility means the model can, for example, be augmented to find information on the internet in real time, rather than relying solely on pre-existing training data.

“I think there a little bit of a misunderstanding that you can only train these models,” said Stevenson, referring to the process of feeding data into the algorithm to improve its predictions.

“These things are pretty human-like, in the way that you wouldn’t train a human to memorize all the laws in the world, but you can teach AI or humans how to search the internet or public databases to find what they’re looking for.”

So far, the United States is Spellbook’s largest market, though Stevenson plans to continue building out the company’s staff in Atlantic Canada. So far, the team includes about 30 people, and he expects that to increase to about 80 by the end of the year.

“The AI thing that’s happening is not just hype,” said Stevenson. “The way people are using it and the frequency with which lawyers are using it is just incredible to witness. This is real.”