Troy Pospisil loved working for private equity firm H.I.G. Capital where, as an investment professional, he looked at hundreds of deals. But one thing Pospisil hated was the high volume of routine legal contracts, including non-disclosure agreements, that he and other executives had to review and negotiate. Pospisil estimates that he spent about 15% to 20% of his day on this “most painful aspect of workflow.” His solution was to quit PE and start a company to automate these time-sucking tasks.
“I always wanted to be an entrepreneur. I had to give it a go,” said Pospisil, who made good on his plans and founded a firm called InCloudCounsel.
In 2014, Pospisil launched the company, which is today known as Ontra, with one product: Contract Automation, which streamlines routine legal agreements used in private capital markets and investments. Today, Ontra also offers products for contract negotiation, to simplify fundraising, and to modernize entity management as part of a suite that seeks to make the back office more efficient.
On Tuesday, Ontra announced it has raised $70 million in financing from Silicon Valley Bank, a unit of First Citizens Bank. In total, Ontra has collected $325 million in financing and equity from investors including Blackstone, Battery Ventures and Mike Paulus, a former Andreessen Horowitz partner who cofounded Assurance IQ. Because the financing was a credit instrument, there is no valuation available for Ontra, Pospisil said.
Ontra ran a dual track process, considering both debt and equity providers, Pospisil told Fortune. Lenders that were interested in partnering with Ontra were offering attractive interest rates, prompting Ontra to pick SVB because it was a “far better deal,” he said.
“We are bringing in a great partner with SVB and we [didn’t] suffer any equity dilution for employees and existing investors,” he said.
Ontra currently has roughly 850 customers including the largest investment banks and private equity firms like Blackstone, Warburg Pincus, and Motive Partners, as well as asset manager AllianceBernstein.
Legal AI is growing fast
Ontra is one of several legal tech startups, including Ironclad and Juro, that use AI to automate routine legal processes for private markets and investment firms. Ontra has offices in San Francisco, New York and London. It currently employs about 385 people and has processed over 1.5 million documents.
The startup plans to use much of the financing for R&D and to launch new products. In September, it plans to launch another three products to streamline due diligence questionnaires, to simplify processes for customer verification, and to further speed contract negotiation timelines.
Ontra is looking to scale rapidly with plans to launch two new products a year for the foreseeable future, Pospisil said. “We want to be the indispensable, ubiquitous infrastructure provider for the private markets,” he said.
But when it comes to a possible IPO, Pospisil appeared hesitant. The IPO market has been very slow since a record 397 companies listed their shares in 2021. But a recent surge of strong deals, capped by a blowout performance from crypto firm Circle on June 5, means the public equities market may be open to high-growth tech companies. “We may IPO if it’s the right thing for the business. We don’t view an IPO as a goal in itself,” Pospisil said.