Text IQ chief executive Apoorv Agarwal says his software’s job is to spot a needle in a haystack – but a costly one. Make a mistake in discovery during litigation, and a company can face sanctions of tens or hundreds of millions of dollars, he says. “It’s a high-stakes needle.”
Like other startups, Text IQ’s raised funding to solve that problem. Unlike others, Text IQ is profitable. And for its first outside funding, it’s taking only about $3 million from top investor Floodgate and a group of veteran legal counsels in a seed round its founders say could be the only money it ever needs.
The tech industry’s interest in legal discovery isn’t new. A quick web search will yield a host of “eDiscovery” options that promise to speed up and cheapen the process, in which a company pays a gaggle of attorneys to look through documents to flag what’s privileged or irrelevant. Text IQ says it’s different as the only one to really do so through AI.
“There are a lot of companies and a lot of hype around AI,” Agarwal says. “We are trying to attack this problem from a different perspective.”
In a super-hot market for AI that’s leading some to quip that academics can now raise funding on just a concept, Text IQ started making money instead. The startup is profitable, with January revenue of 10x its burn rate, says cofounder Omar Haroun, and sales expected to be in the millions for the quarter. Customers saved $3 million in legal expenses so far this year, the company says—not including the much higher costs of bad outcomes averted by its use.