Harvey AI's recent $300 million funding round has proven that investors are keen to be a part of legaltech firms that deliver real results, potentially paving the way for Asian startups to grow in a similar fashion.
Harvey secured this massive Series D in February, valuing the company at $3 billion. Sequoia led the round, with Coatue, Kleiner Perkins, OpenAI Startup Fund, Google Ventures and others joining. This came just seven months after Harvey raised $100 million at half that valuation, and just fourteen months after its $80 million round valued it at $715 million. This quadrupled valuation in just over a year is reshaping investor expectations in the legaltech sector.
The trend isn't limited to Harvey alone. SpotDraft, a Bengaluru-headquartered legal tech company, has demonstrated a similar trajectory of accelerated growth. The company recently secured a $54 million Series B funding round, following closely on the heels of its $26 million Series A round in March 2023. This represents a more than doubling of investment in just under two years, underscoring the increasing investor confidence in Asian legaltech solutions.
According to recent data, an estimated 79 percent of all legal-related investment since 2024—nearly $2.2 billion—has gone to companies incorporating AI. This shift towards AI-powered solutions is driving the rapid valuation increases and attracting unprecedented levels of funding to the sector.
Harvey's playbook offers a template for success in Asia. First, it targeted the enterprise level directly, securing adoption from 235 major firms across 42 countries. This approach could work particularly well in Asia, where decisions often flow from the top down.
Second, Harvey positioned itself as a premium solution rather than competing on price. On track for $100 million in annual recurring revenue, it has proven firms will pay for value. This also challenges typical legal tech SaaS valuation metrics of 6-10x ARR, with Harvey sitting pretty at a 30x ARR valuation.
Third, Harvey built specifically for legal workflows rather than offering general AI capabilities, tapping into the estimated 44 percent of legal work that Goldman Sachs analysts believe could eventually be automated.
While Asian markets have traditionally lagged in legal tech adoption, with only 12 percent of law firms using AI tools compared to 37 percent in the US, this gap is rapidly closing.
Another Indian startup, Lucio, has gained traction by securing contracts with in-house teams and top Indian law firms, including Cyril Amarchand Mangaldas and Trilegal, signalling the institutional acceptance of AI tools in the traditionally conservative Indian legal market.
From an investment perspective, IRR expectations in growth-stage legal tech SaaS range from 20–30 percent, but payback periods can be longer. Harvey's funding shows us that large institutional investors are now looking at the legal tech sector. Experts say that Asian legal tech has been primarily a VC- and HNI-backed sector rather than attracting traditional private equity. Until recently, most investments in companies like Spotdraft, Docusign, and Blueflame.ai had been early-stage VC bets on AI-driven contract management and automation.
Lucio's CEO Vasu Aggarwal acknowledges both opportunities and challenges: "As more firms look for ways to save time and handle bigger workloads, there's a real opportunity to innovate. Scaling in India, however, comes with challenges. Many lawyers are used to traditional ways of working." Importantly, he notes: "At least at larger law firms, they are starting to look at these solutions as investments, not just costs."
However, challenges remain. As Shikha Rawal, senior counsel at US investment firm Alpha Wave Global, points out: "The primary hurdles for legal tech tools include slow adoption rates, scalability issues, and regulatory uncertainties.”
Despite these hurdles, the success of Harvey AI has not only raised the bar for what's possible in legal tech but has also paved the way for Asian companies to secure their place in this burgeoning market. As the industry evolves, it's becoming increasingly clear that the next billion-dollar legaltech company may very well emerge from Singapore, Hong Kong, or Bengaluru.
