Ukrainian startup Legal Nodes has been chosen to work with one of the world’s top seed accelerators, Techstars.
Legal Nodes will receive $120,000 and mentoring from Techstars’ experts in London, in exchange for around 6% of the company.
Legal Nodes has developed a platform for businesses to subscribe to legal services provided by freelance lawyers. Margarita Sivakova, 26, Nestor Dubnevych, 28, and Max Maliuk, 27, created the company to help other startups save time and money on these services. As of today, Legal Nodes works with nearly 80 clients, including tech businesses like Boosty, Cryptoprocessing and Gameinside.
Sivakova told the Kyiv Post that companies using Legal Nodes for over three months spend nearly 30% less on legal support than those who hire in-house lawyers.
Since it was founded in 2019, the startup has attracted $475,000, Sivakova said on Sept. 7.
The company sells a monthly package of the most common legal services like drafting, analyzing or amending documents, for $350. Businesses can work with lawyers remotely and track the progress via the Legal Nodes’ platform. Clients who only need a specific service like company registration or tax advice could buy it for about $400.
As of today, nearly 12 lawyers have subscribed to the company’s platform and over 120 legal partners around the globe. To choose the best lawyer for its client, Legal Nodes managers take into account the size of its business, the industry where it works, its market and budget constraints. All lawyers selected by Legal Nodes have appropriate licenses and experience with technology companies and startups.
After the company graduates from the Techstars program, the founders want to expand into the U.K., their most desired market. According to British analysis website LawtechUK, the country is a big market for legal-tech startups, which can sell over 11 billion pounds worth of products and services for small and medium-sized businesses per year.
The graph shows the most interesting industries for Ukrainian startups that have applied for a financing program organized by the Ukrainian Startup Fund. The market of legal services is not widely popular in Ukraine, but interest is growing.
On the other hand, the U.K. is a competitive market, because many tech companies that offer legal services are based in London, according to Managing Partner at the Ukrainian investment firm BRISE Capital Oleksandr Yatsenko. Sivakova acknowledged the difficulty of entering a foreign market.
“We need to take into account what legal services are most in-demand there, what are lawyers’ requirements for licenses and what is the pricing for legal services,” she said. Thanks to the Techstars’ program, Legal Nodes hopes to learn how to attract more clients and lawyers in the U.K.
Accelerators like Techstars provide mentorship and money in return for equity. In the last 14 years, Techstars invested in more than 2,500 startups with a total capitalization of $52 billion — nine of them became ‘unicorns,’ the startups valued at over $1 billion.
Techstars is interested in Ukrainian startups, according to Katherina Degtyar, Kyiv’s director at Startup Grind, the world’s largest startup community. Ukrainians participate in Techstars’ programs around the world: local startups Ecoisme, Let’s Enhance and Flawless App went to London, Preply — to Berlin, Kwambio, Respeecher and Go-2-U — to the U.S. It shows their international potential and success, Degtyar said.
It is very difficult to get into the program — Techstars accepts only 1% of its applicants, according to Legal Nodes, which only managed to get in on its third attempt.
“At first, we didn’t know exactly what kind of help we needed, where we were going and what we wanted to achieve,” Sivakova said. The company could get into Techstars when it changed its business model from an online marketplace that connects businesses with lawyers to a platform that sells legal services.
It turned out that finding a lawyer is not as big a problem as opaque pricing and ineffective, time-consuming communication with companies that provide legal services, according to Legal Nodes.
Given that all startups have legal issues, but many opt to outsource this work, Legal Nodes’ service is in great demand, according to Yatsenko. Ukraine’s and foreign investors also back the idea. In August, Legal Nodes attracted $300,000 from Estonian-Ukrainian company Lift99 and earlier, it attracted $50,000 from Ukraine’s state-owned startup fund. In 2019, the popular Ukrainian conference for tech businesses IT Arena called Legal Nodes the best local startup and awarded it $10,000 in prize money.
Investors said that Legal Nodes could make the subscription on legal services as popular as the subscription on streaming services like Netflix.
“The market of digital legal services has only started to emerge, and Legal Nodes has a potential to become one of its pioneers,” Yatsenko told the Kyiv Post.
