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Posted Jan 20, 2017 08:30 am CST
Ari Kaplan speaks with Krishna Srinivasan, a founding general partner at LiveOak venture partners in Austin, Texas, an early-stage venture capital firm with investments in a variety of companies, including e-discovery review software provider, DISCO.
This Q&A has been condensed.
Ari Kaplan: Tell us about your background and the genesis of LiveOak Venture Partners.
Krishna Srinivasan: I am an engineer by training and wrote supply-chain software early in my career before going to business school. I joined Austin Ventures in 2000 and about 10 years later co-founded LiveOak Venture Partners. Our strategy is to invest in technology and companies predominantly in Texas. We have had the largest fund in Texas since 2008 and have 17 companies in our portfolio.
Ari Kaplan: How do you decide on the companies in which to invest?
Krishna Srinivasan: That’s certainly a little bit of an art form—not something they teach you in business school today—and is a learning process. I was thankful to have the opportunity to learn the trade at Austin Ventures. There are four major aspects to look for in companies that we invest in. First and foremost is the team. We are looking for a team that has unique knowledge of the space and has special insight. Second, we want to be in large attractive markets, where there is opportunity to build a meaningful business. Third, we look for headroom for innovation, where there are hard problems to solve. And, fourth, we want to see early signals that the company’s approach with respect to its products is indeed attractive to its customers.
Ari Kaplan: Why is legal technology currently attracting so much attention from venture capital firms?
Krishna Srinivasan: Legal is interesting because you’ve got huge data-centric problems, providing lots of information that needs to be processed, managed, and handled, and provides the opportunity for invention. You’ve also got a very expensive work force where even a small improvement in productivity for a lawyer is obviously incredibly meaningful. So, the use of technology adds real value in terms of productivity and hence can be a large market opportunity.
Ari Kaplan: What are the disadvantages of investing in legal?
Krishna Srinivasan: The disadvantage of investing in legal is that the sales process and methodology is pretty unique. Selling to lawyers and groups of lawyers is definitely different from a typical enterprise. From a public company context, exits are probably a bit limited since there are not that many companies in the space and so it may not be an ideal segment.
Ari Kaplan: As an early investor in e-discovery review software provider DISCO, what makes legal technology attractive to your team?
Krishna Srinivasan: One, DISCO brought the combination of killer legal expertise and domain insight combined with a really smart collection of tools and technologies that tackle a hot problem. Two, the litigation software industry is a giant market when you look at the amount of spend. Three, there is huge opportunity for innovation given that the technology used is pretty antiquated, but quite complex. Finally, the company had lots of traction and interest from customers.
Ari Kaplan: Where do you see venture investing in legal headed in 2017?
Krishna Srinivasan: First, I’ve seen ideas for lead generation since lawyers and law firms are the highest spenders on Google Adwords to find consumers. That’s definitely an opportunity waiting to be taken by somebody. Second, practice management software in a law firm that integrates with billing and creating an entire workflow is attractive. There are lots of interesting ideas out there in the legal industry; it really comes down to a lawyer or entrepreneur, who wants to disrupt a large problem, and has the insight and angle to tackle it. There are lots and lots of unsolved problems out there, but it’s going to be gated by that special collection of entrepreneurs who have the insight and perseverance to build something of substance.
Listen to the complete interview at Reinventing Professionals.
Ari Kaplan regularly interviews leaders in the legal industry and in the broader professional services community to share perspective, highlight transformative change and introduce new technology.
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