General Catalyst gave a legal tech startup $75 million to go company shopping. It just made its first purchase.
This is Eudia's first acquisition. Its artificial intelligence platform helps corporate legal teams handle routine matters. It ultimately wants to build a network of "AI-augmented" legal professionals who perform work for clients, particularly large enterprises, at a lower cost than Big Law rates.
"We believe AI is the future of labor," said Omar Haroun, a former lawyer and Eudia's founder and chief executive. "Not in a dystopian way, but more augmented humans who are ready to completely change the work that's being done."
Founded just under two years ago, Eudia already tops $10 million in annual recurring revenue across dozens of clients and, Haroun said, is on track to hit $20 million by the end of the year.
Eudia launched with a bang. The startup emerged from stealth in February with $105 million in Series A funding from General Catalyst, one of the most powerful venture capital firms in Silicon Valley.
The investment had just one major condition: Eudia would get $30 million up front and the other $75 million as it found other companies to buy.
A different kind of investment
The arrangement flips the script on the old corporate development playbook.
Typically, young startups raise small amounts of venture capital to keep the lights on while they crank on building and selling a product, and then they raise bigger rounds of funding as their revenue scales. They might direct some of that investment toward buying other companies — to access new markets, secure talent, or take out a competitor.
Eudia benefits from a different strategy taking hold in startup land.
General Catalyst is one of an increasing number of venture firms role-playing as private equity. The firm and others have been buying mature businesses or consolidating multiple competitors into a single company. The merged company can operate more efficiently by combining costs or applying technology to automate tasks and make more informed decisions.
In Eudia's case, General Catalyst trusted a battle-tested founder with its cash.
Before Eudia, Haroun started a company focused on surfacing sensitive information within large datasets, which proved particularly relevant in legal contexts. In 2021, he sold it to Relativity, a leader in the e-discovery market.
Haroun founded Eudia on the belief that legal teams deserve better than what most white-shoe law firms offer. Traditionally, companies would save their thorniest matters for their outside counsel to solve, Haroun said, but as the demands on legal teams have increased, they've sent more work (and money) out the door.
Eudia aims to help clients perform more work in-house. Its platform ingests everything from existing contracts, policies, and playbooks to past precedents and billing data to build a centralized "legal brain" for each customer. From that foundation, custom agents — software that can carry out tasks autonomously — speed up tasks like manually redlining contracts and running compliance checks.
With its recent acquisition of Johnson Hana, Eudia can offer hands-on support for more complex matters. Clients can now rely on Eudia's growing team of legal professionals to handle issues they once outsourced to law firms or guide them through the platform step-by-step.
Haroun said more details about integrating Johnson Hana, including brand strategy, would be announced in September at the Augmented Intelligence Summit, Eudia's invite-only gathering of legal leaders.
Eudia screened nearly a hundred potential partners before, Haroun said, choosing Johnson Hana for its sterling reputation and blue-chip client roster. Johnson Hana already handles legal work for Airbnb, X, OpenAI, Stripe, and Citibank, said Dan Fox, the company's cofounder and chief executive.
"I remember when I first met the guys, 'I was super clear: I'm not super animated about the idea of simply replacing lawyers,'" Fox said. Neither were Eudia's founders, he explained.
"This is a business model that looks to make lawyers better," Fox said.
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