Ironclad Reaches $3.2 Billion Valuation In Race To Build Software For Business Contracts – Forbes
Ironclad founders Cai GoGwilt and Jason Boehmig recently brought on Chief Operating Officer Leyla Seka and Chief Financial Officer Helen Wang to beef up its executive team.
Jason Boehmig spent two years as a lawyer in Silicon Valley, putting together documents for startups, before he had enough of the clunkiness of the job. Now, for the fifth time, he’s signed his name on a financing document for his own startup, Ironclad, which makes software to more efficiently manage contracts such as these.
Ironclad announced Tuesday that it had raised $150 million at a $3.2 billion valuation in a Series E round funded entirely by existing investors. Franklin Templeton, which first took a small stake in the startup’s previous round, led the investment, with participation from firms including Accel, Sequoia, Emergence Capital and Mary Meeker’s growth fund Bond Capital. The company last raised $100 million in funds one year ago, at a $1 billion valuation, according to PitchBook.
The San Francisco startup creates software to manage the business contract “lifecycle,” which can involve steps such as creating and executing a contract, as well as ensuring it meets compliance requirements. Founded in 2014, the company was named to Forbes’ Cloud 100 Rising Stars list in 2019, but bloomed later than competitors—by then, DocuSign, for example, had already gone public, while contract management startup Icertis had crossed the $1 billion valuation mark. A lawyer by training, Boehmig, who is CEO, credits Ironclad’s ascent to his background as well as the vision he laid out for the company at launch: Go beyond the legal department’s contracts to manage the paperwork of other teams such as marketing and HR across different industries. “Most investors, when I pitched our Series A, said that’s way too ambitious and it’s silly to do all that,” he says.
Boehmig started his career as a bond trader for Lehman Brothers, where he was exposed to the growing use of code to do quantitative analysis on financial data. When the 2008 financial crisis hit, he bolted to law school at the University of Notre Dame, which led to a move to the San Francisco Bay Area to join tech-oriented law firm Fenwick & West. Working on business contracts as an outside counsel for startups, Boehmig found the legal work to be unnecessarily tedious considering that data that could be utilized from each contract in much the same way as he had done on Wall Street. “I realized no one had the context to solve this,” he says.
In August 2014, he quit his job to make a go at building those tools. At a sparsely attended Stanford Law School lecture, he met Cai GoGwilt, who had, incidentally, quit his software engineering job at Palantir on the same day in August. “Everyone around us introduced themselves, and they were all academics,” Boehmig recalls. “I was, like, ‘Hey, I’m a lawyer who just quit my job to start coding this thing.’ And he was, like, ‘I’m a coder who just quit my job to start making tools for lawyers.’” The pair launched Ironclad in December of the same year, with Boehmig as CEO and GoGwilt as chief technology officer.
More than 1,000 customers now pay for the subscription-based software they built, with some starting to use it beyond their legal team. Beauty products maker L’Oréal uses it to create and maintain contracts with Instagram influencers who agree to promote its products. Revenue is up 150% year-over-year, Boehmig says; The Information previously reported that the company was on track to make $13 million in the fiscal year that ended in January 2021, which would indicate more than $30 million in sales in the latest year. Boehmig declined to comment on this, except to contend that the numbers in the previous report were out of date.
In any case, Ironclad is likely still on the tails of DocuSign, which is on track to generate $2 billion in the same time period; Icertis, which told GeekWire last March that its revenue was “far north” of $100 million; and other contract management providers. Boehmig dismisses the notion that DocuSign is a rival: “Everyone thinks we’re going after DocuSign, but they’re a partner of ours. We have a competitive [contract lifecycle management] product, but we’re very compatible with the DocuSign ecosystem.” But to beat others, Boehmig is betting that customers prefer Ironclad’s approach to selling its product piecemeal—picking the specific use cases they want for their business—rather than as a single, large-scale deployment, which he mentioned has led to a lawsuit against one competitor (he may be alluding to a complaint filed by health services provider Change Healthcare over a $5.2 million contract with Icertis last month). Having built out Ironclad’s use cases, Boehmig says he is also less worried about even later bloomers, which are primarily building point solutions: “[Customers] should know that there’s going to be a ton of consolidation in the lower end.”
Ironclad’s latest fundraise, signed with the legal advice of Boehmig’s former firm Fenwick & West, may be one such buyer; the company made its first acquisition last year, paying an undisclosed amount for PactSafe, which builds legally binding digital buttons. Boehmig says the focus will continue to be on product, such as adding more features for collaboration across companies or using artificial intelligence to further streamline the contract process. The company now counts more than 400 employees, and last September, it hired a chief operating officer, Leyla Seka, and its first chief financial officer, Helen Wang, as it prepares for an IPO.
“They just need to go out and continue winning business. It’s just about execution, quite honestly,” says Ryan Biggs, managing director of Franklin Templeton’s Franklin Venture Partners, who compares Ironclad’s position in contract management software to that of category flag-bearers like Gong in sales enablement and OneTrust in privacy compliance. “I think it’s a scaling exercise from here.”
