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.
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
Based in Concord, California, 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.
