2174 - Unlocking Simplicity in Startup Legalities with SeedLegals' Anthony Rose

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1:05With us right now, it's Anthony Rose. Anthony, you are the founder and CEO of Seed Legals. You are on the web at seedlegals.com. Anthony, it's great to have you. Thank you so much, Josh. Yes, before we get going, what do you do in your free time? What are you into lately? What are your hobbies, music, entertainment? What have you been geeking out on? All right. So this is the time I get to disclose to the world and my colleagues get to discover for real why I'm not online in the morning because I'm a late night person. So I like nothing better than to go to bed at about 2 or 3 a.m. And between 10 p.m.

1:44and 3 a.m., I listen to mostly German opera while I get through my day's emails. That also means I get up late. But of course, you know, there is some time, you know, that you have to get out and about. And for that, I really love running, whether I'm in London or New York. I run typically in New York. You know, I live down near Wall Street way, so I'll run to meetings midtown or, you know, Flatiron way. It's like 12 minutes to Flatiron, and it's really nice that you could just, like, run everywhere. But more recently, I've got this new thing. I'm not sure if I'm going to stay with it or it's just for a short period, but I live on the 52nd floor of my building and I've begun taking the stairs.

2:26So I try with a goal once every day or two to take the stairs back up, which of course is, it's a bit of self-discipline because it's quite hard work, but I've got it down to a sub eight minutes. You can start, start on the seventh floor. So it's 45 floors, but, uh, but you know, your heart rate gets to about 160. And, you know, it's perfect for those times when, you know, between Zoom calls, you've got a half hour gap between calls, you're feeling like you need a bit of a pickup. Like, I'll take the elevator down to the seventh floor and then like walk up the stairs again. So that's what I'm quite looking forward to now.

3:09So, yeah. Yeah, it sounds fun. You know, I'm looking at your LinkedIn profile here, and you and your team, so one of my favorite, if I still listen to, like, I don't listen to too many streaming radio stations per se, but I absolutely love the music on BBC Six. So because of that, I use the iPlayer. Your team created that. Yeah, that goes back a while. I was happily living in Australia back in 2007, and I was hired by the BBC to go to London. I said, where are the stock options? But I was persuaded and headed up iPlayer, took it to launch and beyond. And, you know, really proud of the team and what we did to deliver that.

3:59Well, that's incredible. Well, so tell me about the work that you do with seed legals. Right. So over the years since the BBC, I built Startup, Sold It, built Startup, Sold It, invested in a few, got tired of paying lawyers, met my co-founder and built Seedlegals. So Seedlegals is a platform that if you're a startup founder, instead of going to a lawyer and paying vast amounts and being very slow and sending Word documents backwards and forwards, there's a platform for all the legals for your funding round. So you'd hop on Seedlegals, create your cap table, send out safes, do the funding round and repeat.

4:36And you can do all those documents, all the legal documents you need to grow your business as a startup. And it's really transformative. Some like 50 ,000 UK companies on Seedlegals, some like a third of all early stage investment in the UK is done through our platform. And I've now somewhat moved to New York to launch our Seedlegals platform in the U.S. market. Yeah. Well, explain the concept, because I'm looking at the pricing tab, and this is pretty cool, because these are prices that you don't normally find when you're hiring attorneys. Right. So, you know, the reality is that in the US and in the UK, most funding rounds use industry standard documents that have been created by panels of lawyers, you know, over decades.

5:26And they're remarkably self-similar. In the US, it's called the NVCA, North American Venture Capital Association. There's equivalent in the UK. And lawyers take these and they fill in the blanks and they send them backwards and forwards between lawyers at, you know,$600 plus per hour. But actually, computers can do all this much more efficiently. So we've come up with a new process where founders log in. They set the deal terms. We've got data. We've got hint text. We've got articles. And we've got our team and a partner law firm as needed to help you understand what you're committing to in a funding round, which founders often don't know.

6:05And then the platform builds the documents to reflect that. And importantly, the documents are guaranteed to reflect the inputs. And then anytime you want to negotiate, you simply agree different terms and the documents are rebuilt in like a tenth of a second, as opposed to, you know, sending word documents backwards and forwards to the lawyers. So you get to a better result faster, but in a much more efficient way. And, you know, we use AI internally, but it's not like saying we're making documents with AI. That's a whole difference. And, you know, more interesting and less secure system. We're building the documents that humans would build, that your lawyer would build, just in a much more efficient way.

6:50Yeah. Well, it's really interesting because in terms of leveraging AI, can you explain what the advantages and maybe disadvantages may be currently? Right. So it's really interesting. So let's say somebody comes to you and you want to do a commercial deal with them. And so you want to agree they're going to build some software for you and you need to have a legal agreement. So once upon a time, you would go to a lawyer and you'd spend ages explaining to the lawyer, well, they're going to create the software. Teasing out the deal terms is going to be a really slow process. You're going to pay a lot for that.

7:31What's happening now with AI? Are people just going on chat GPT and saying, I want a contract with whatever? And it's going to ask some questions and it's going to come up with a document. But that document may well have howling errors in it. and the lay person, unless you're an expert, you're just not going to spot it. So what I think the new pattern is people are going to use ChatGPT to come up with the first pass of legal documents and then take them to a lawyer to review. But instead of paying the lawyer for 10 hours of legal time, they're going to pay them for one hour of legal time because they got 90 % of the way themselves first, but still want that legal review for now.

8:10And then what the Seedlegals platform does is for certain classes of things around fundraising, stock options and so on, it's going to make a reliable document that really doesn't need that legal review step because it's within a certain scope and has been well tested over many thousands of iterations. Yeah, yeah. So if I'm correct in understanding, so you're using – just to make sure I understand. So there's ChatGPT, there's SeedLegals, and then there are human attorneys. So just make sure I didn't miss this. SeedLegals fits where? it fits sort of in the middle so if you go on chat gpt you can ask it anything it will create any kind of contract but because it's made anything you don't know if it's reliably good for what you want so what we've done is we've said for things around fundraising you know we don't do wills and probates and it's not commercial lease if you're fundraising those documents are remarkably standard so we've come up with an automated automated way of creating the documents that your lawyer would have made just as reliably, but much more swiftly and much less expensively.

9:22Yeah, I'll say. Yeah, I mean, it was just yesterday that I needed our bylaws and couldn't find them. And so bylaws are not incredibly complicated. I mean, it's a pretty simple, for most simple, but certainly for hours. But yeah, literally 10 minutes and I had them recreated. And so, I mean, that's what's possible. How is this impacting? And again, you're part of this movement. What's going on in the business law world right now? Well, I think what's interesting is lawyers existed for decades, charging very high prices. And people were scared to look at other alternatives. But I think AI is changing all of that, where people just routinely, you know, you see in chat groups, I need a contract for something.

10:14I mean, people for funding rounds say, get on seed legals. But for other things, they go, go for a chat GPT. So lawyers have been very protective of the billable hour. And the whole legal model is built on the billable hour. So you've now got this really strange system where lawyers internally probably want to use, you know, AI and chat GPT and equivalent systems to build things with less time. But if they take less time, they're going to build less. So lawyers are less likely to want to create billing systems that reduce their revenue for the law firm, which means the door is going to be open for others to create systems that take business away from law firms.

10:58And that's the tragedy. And, you know, that happens, you know, over my career years ago, I used to be with Kazar, the music file sharing company, and then with the BBC creating online versions of TV. So this is the third foray, I guess, in disruption, you know, music, video, legal. And in each case, I'm amazed that the incumbents, the existing players, don't embrace technology to change the model themselves. It takes an outsider to go and change it so that eventually everyone comes kicking and screaming and drags along because the world has changed. And technology is always going to change things.

11:39And you really want to embrace it because if you reject it, you just lose out ultimately. Yeah, it's like yelling at a giant tidal wave bearing down on you. And I'm sorry, but, you know, that toothpaste is out of the tube, as we say here in the U.S. So tell me about Seed Legal as a company. Who is Seed Legal? So we're 160 people headquartered in London, now with office in New York as well. We're a mixture of tech team. Obviously, we're a tech platform. We've got legal team lawyers. We've got customer support, sales team. And you can think of us as like a modern version of a law firm, a tech-driven platform, but providing the documents you'd often go to a law firm for.

12:31Yeah. Yeah. And, you know, from your perspective, too, I'm sure you have an interesting vantage point. What do you see? I mean, there's a lot of weird stuff going on in the United States economy right now, to say the least. So what is going on? Like, what is the investment world like right now? Well, the investment world boomed in 2021 during COVID, and then it's been down since then. And there have been reports for the last few years of it's about to pick up again. So the challenge for a startup founder is, you know, do you wait for things to pick up or do you just get on with business now? But waiting is a very poor move because, firstly, you have no idea how long you're going to wait.

13:15There may be another war tomorrow. You know, a strategy of waiting is the opposite of what you should be doing. And even if you did wait for things to pick up, guess what? Everyone else will be competing for your fundraising. And when you do raise funding, if you do, you'll be competing for all the developers that everyone else is now trying to snatch up. So you want to be counter cyclical. But your strategy is what many startup founders are finding is they can't raise large amounts now. So they're doing smaller top up rounds or they're doing bridge rounds until the next round. And they're looking to get more cash efficient so that they're not on this treadmill of having to raise large amounts.

13:56Investors are also looking for companies that are profitable, cash flow break even, rather than bleeding lots of money. So the strategy has changed from I'm going to raise fortunes and grow like crazy and spend fortunes and come back to I'm going to raise smaller amounts, get to a profitable business so that I can extend my runway and it'll be longer to my raise again. And then I'm going to do bridge financing. I'm going to use safes or, as we call them in the UK, seed fast to raise a head of a round or I might top up a round rather than do a new funding round. Yeah, yeah. Well, and, you know, to your point, too, I mean, I've heard it said that, you know, a majority of new businesses are started when there's turbulence, when there's economic downturns, when there's, you know, very safe, conservative folks hang back.

14:50it leads to opportunity for those who do have courage. And I'm wondering maybe if you could share, Anthony, maybe some examples of some folks that have successfully used your platform and how that enabled them to get to market so much faster. That's a great point. Just before I do that, I think one reason why more companies are created in downturns is because a lot of people laid off. And instead of them just sitting on unemployment, they go off and go, great, I'll make my own startup because I've got some spare time now. So it may not be for the right reasons, but, you know, but that's exactly the life of an entrepreneur to take advantage of all opportunities.

15:34And when I, you know, at Seed Legals, I've talked to thousands of founders and not everyone is an entrepreneur. I think the entrepreneur mindset says everything is an opportunity. You know, something's gone wrong in the world. Great, there's an opportunity. I can fix that. You know, the government's changed that. Oh, wait, there's an opportunity to automate that. So I like that. So now, you know, as examples of companies on seed legals, there are, you know, many thousands. The winner of seed legal startup of the year last year in our awards is a company called Seafields. So what they're doing is they're harvesting seaweed, a particular type of seaweed in the ocean, which absorbs carbon dioxide.

16:19And they can either then sink that to the ocean floor for carbon capture or harvest the oils and so on out of the seaweed to make a profitable proposition. So imagine vast swathes of ocean filled with a particular type of seaweed, which is removing carbon dioxide from the atmosphere in an actually useful, you know, bio-efficient way of carbon removal. So that's one example. But it goes through to one of my favorite founders is a London bakery, a female founder. And she's using our platform to create safe agreements. So for those who don't know what a safe is, it's a simple agreement that says, I give you money and you'll give me shares later.

17:03And I'm convinced everyone who walks into a bakery, she says, would you like a baguette? Would you like a sourdough? And would you like a safe investment agreement? And she's raised from hundreds of people in a way she could never have done without a platform like Seedlegals. Yeah, no kidding. Well, this is amazing. I mean, this is allowing more people to really just imagine their dream. And because you're right, I think there's a lot of the legal aspects of this that are very intimidating. And, you know, thanks to AI and platforms like C-Legals, more people can just bring their business to reality.

17:45I mean, if you have a great idea, what a shame it is that you're held back just simply because the legal system is cumbersome and far too exclusive for you. So this really is, you know, kind of a play for democratization of ideas and businesses. I'm delighted you've said that because, of course, it's the cost of legals, but it's also the mentoring and education and empowerment, which I think has been an unexpected side effect. So, you know, we've got a lot of content, a lot of articles, a lot of data to show people how to fundraise, what to do, what to not to do. If an investor sends you these terms, you can agree, but these terms, you definitely mustn't agree.

18:27And by the way, you know, when you meet an investor, this is the type of agreement to use. And, you know, at prices starting from a few hundred dollars, it's now accessible for everyone. And one of the things is that means that it opens fundraising and investment to large groups of people who otherwise wouldn't do it. And also diverse founders, female founders, you know, and other diverse groups where VCs may not have wanted to invest. They can now reach out to angel investors and gives them a much more wide set of investment opportunity. Yeah. Well, Anthony Rose, your website, SeedLegals.com.

19:09And do you mind maybe sharing like how someone gets started or what they might want to click on and do at this point? Yeah. So if you're thinking of fundraising, you'd like to get investment ready. You just want to know how it works. You want to talk to someone. You can go to the website. We've got lots of resources and articles, but you can just hit the web chat button and one of my team will talk to you, get on a call, learn more, give advice on what to do, what not to do. And then when you're ready to do any legals for fundraising or your cap table, you can hop on the platform. There's an account manager to help.

19:46So we run our business like a modern organization that's going to help and be awesome to help you get to the next step. The company or the website is seedlegals.com. Anthony Rose, you're the founder and CEO. Anthony, it's been a great conversation. Thank you so much for joining us. Thank you so much.

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