Why we invested in Emma Legal
The AI-native platform which automates legal corporate due diligence
6 Degrees Capital has led the investment round in Emma Legal, together with Entourage Capital and well-known angel Alex Brabers.
Emma is an AI-native platform that automates legal corporate due diligence.
Legal due diligence
Legal due diligence is typically performed ahead of significant business transactions, such as mergers, acquisitions, or investments. Lawyers check a company’s existing contracts and documents to assess the potential risks and liabilities associated with becoming a (part) owner, both contractually and legally.
Typical areas that are examined include the corporate structure (incorporation documents, ownership and governance structure, subsidiaries), contracts and agreements (customers, suppliers, employment, technology), assets and real estate, intellectual property, regulatory compliance, litigation issues (ongoing or potential), and financial obligations.
Legal due diligence aims to avoid that buyers or investors inherit hidden legal issues or obligations. It ensures that problems can be rectified ahead of the transaction (or reflected in the price), and that all parties can proceed with transparency and confidence.
The perfect use case for AI automation
Legal due diligence is typically done by lawyers who go through vast amounts of documents with a checklist. It is tedious work, prone to human error, time-consuming and therefore expensive. A typical legal due diligence takes days, weeks, or sometimes even months.
Creating ‘red-flag reports’ of potential issues does not require the expertise of a senior lawyer. You simply need to look through documents with a pre-defined checklist of potential issues. But it also can’t be done on autopilot, as clauses you read in a document on day one might be relevant for clauses you read 80 documents further on day two.
Scanning thousands of pages looking for hundreds of potential issues that have emerged in millions of other cases historically, while never losing sight of all information available about a company, is the perfect use case for AI. AI is simply far better equipped to handle this task than lawyers.
Emma
Emma Legal has created an AI-native platform specifically for legal due diligence. Built on LLMs and their own models, Emma analyses every document, generates red-flag reports in minutes, compiles information request lists, and summarizes which documents are missing. You can interact with Emma in everyday language, and she will answer any question you might have on the docs.
It is a powerful tool that works alongside lawyers, allowing them to reduce costs, accelerate delivery, and enhance the quality of service delivered to clients.
Why now?
Until 2024, training AI models required vast datasets, leading to inconsistent results. However, advances in LLMs now enable significant breakthroughs, such as passing the bar exam without specific training data. Emma Legal leverages these LLMs on top of their own models to offer specialised legal due diligence tools, ensuring thorough analysis beyond what general LLMs like ChatGPT can provide. Unlike traditional LLMs, which prioritizes cost-efficiency over comprehensive analysis, Emma uses a multi-stage process to identify and highlight critical issues while minimizing irrelevant noise. With its enterprise-grade workflow, intuitive interface, and security, Emma streamlines the whole legal due diligence.
Team
Co-founders Rick Van Esch and Pieter Buteneers previously built and sold Chatlayer, which provides advanced AI chatbots. Through Natural Language Processing, Chatlayer bots were able to understand and communicate with customers in more than 100 languages across any channel. This was quite an accomplishment at the time, resulting in Chatlayer being acquired by Sinch, a technology communications group with $3bn in revenues.
Rick was CEO at Chatlayer and stayed on as managing director for new technologies at Sinch, where he built a team of 180 people. Pieter previously worked at Robovision, was CTO at Chatlayer, and the Head of AI/ML at Sinch. He has a deep technical background in this space and co-founded MLCon in his spare time. MLCon is a leading machine learning and artificial intelligence conference, and Pieter still curates content and speakers for the various MLCon events globally.