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by Melissa Rogozinski, Chief Executive Officer
A version of this article first appeared in the March 14, 2023 issue of Legaltech News.
The legal tech market is hot, exciting and can be quite lucrative for investors ($6.5 billion was invested in 2021 alone!). Investors are, by time, trial and experience, thought leaders who excel at growing companies.
However, many investors who are expanding in this niche space may be thrown off in assessing the genuine potential of a legal technology prospect if their team is not particularly familiar with this territory. To determine if a prospect is really worth the investment, the answer often lies in evaluating their marketing and sales functions—instead of just their profit stats. And, when legal tech has a market size range of $18M – $92B, you surely deserve to know where your investment will make the most impact.
Let’s take a look at three tips to unpack this as an investor.
What Does Their Growth Team Look Like?
Although many companies in the legal tech space are led by founders with incredible ideas and Ivy League backgrounds, quite a few of these leaders don’t actually have a track record of knowledge or experience within the legal industry or enterprise environment. It’s important to know if a prospect investment has a knowledgeable growth team in place.
- Does the growth team employ expert marketers and sales professionals?
- Does the growth team refrain from an ad hoc method in favor of a targeted approach rooted in strategy?
- Does the growth team align marketing efforts with sales goals, or are they siloed?
- Do they understand complex, B2B selling?
- Do they implement account management protocol that facilitates client success?
Research indicates when sales and marketing are aligned properly with a growth strategy, it can increase revenue by 36%. Take time to explore these aspects because it will determine if your investment in a company’s marketing will generate revenue or not.
How Effective is Their Tech Stack?
You can tell a lot about a prospect’s potential by looking at their tech stack. The tech stack includes a website, CRM, email campaigns tool and social media accounts.
- Is the website and marketing messaging obvious and easy to understand?
- Would the target buyer be able to clearly understand the technology or service and how it supports their business goals?
- What kind of CTAs are provided throughout the public-facing marketing collateral?
- What does social media posting and engagement reveal?
- How is the CRM set up to support lead conversion and deal flow?
All applications should sync with the CRM, so the data collected creates records of leads and contacts and hence facilitates hyper-efficient marketing automation and sales workflows. Examining all of the above is important as an investor because it will reveal the efficacy of proper lead qualification and improve deal-closing rates.
Is Their Content Meaningful?
Explore your prospect’s Web and social media content with the point-of-view of a buyer to see if they are hitting all the right marketing channels where a potential buyer would actually seek information. Think like a buyer to determine if the content is engaging and informative enough to maintain their interest in a manner that could lead to a conversion.
- Does the product or service solve real problems of real target buyers?
- Does your prospect develop client-centric marketing campaigns about these problems and solutions?
- Is there a clear purpose behind every piece of content on their Website and social media platforms?
- Are they consistent in churning out relevant content?
- Is there a clear CTA or end-goal for all content produced?
Evaluating the content produced by a legal tech prospect will indicate whether the founder really understands the legal industry, purpose, practice and business of law and their target buyers. This will let you know for sure if your prospective acquisition can reach their audience and provide a worthwhile return on your investment.
In Conclusion
It is important to conduct your own due diligence on the background of the founder and leadership team, their practical knowledge of the legal industry, marketing and sales resources employed and the message they are sending through their content and tech stack.
The above three core questions outlined above will help you further evaluate—strategically—the marketing and sales infrastructure and efforts of legal technology prospects you are eyeing to comprehensively assess their potential and/or identify the cracks in the system that will need addressing if you proceed to invest in them.
Knowing a prospect’s strengths and weaknesses will enable you to determine if they are clearly differentiating themselves from the competition, maintaining impactful communication with clients and their own prospects and are employing a solid revenue growth model that leads to impressive response rates and smooth closure of deals. After all, at the end of the day, their success impacts your ROI, too. So, your investment should be a well-informed one.
