By Tim Rollins
If you hop over to our news page, you can see the latest exciting news about our funding. Or if you prefer you could read about it on the Wall Street Journal or maybe the official press release. It's up to you. But for those of you visiting on the blog, I have an opportunity to provide a little more context in a little less formal manner. Let's get to it.
The press release explains:
Exterro, Inc., a portfolio company of Leeds Equity Partners (“Leeds Equity”), announced today that it has completed a strategic recapitalization and secured additional committed equity capital as part of a continuation vehicle transaction valuing Exterro at more than $1 billion (USD). With the support of a group of leading global institutional investors co-led by Coller Capital and Glendower Capital, this transaction will enable Exterro to devote more resources to the growth of its Legal GRC portfolio of products through M&A and product development. Exterro will continue to develop new initiatives for law firms and service providers, drive accelerated growth of its digital forensics product set and reinvest in its first-class global Training Academy, as it delivers new products to new geographies. As part of the recapitalization, Leeds Equity has made a significant new equity commitment from its latest flagship fund, Leeds Equity Partners VII, L.P., alongside the continuation vehicle and management.
Since receiving our original nine-figure round of funding in 2018, Exterro has seen amazing growth. Our revenue has grown more than 4x including both organic growth and inorganic through acquisitions of Jordan Lawrence and AccessData. Headcount has increased by well over 100%. We've grown to over 3000 clients, including over 100 Fortune 500 companies, in more than 150 different countries. We've added privacy compliance and digital forensics to our product portfolio
And despite--no, because of--the larger economy, this is the perfect time for for additional funding. Because how do you win in a competitive economy? By going against the trend, and now, when companies are retrenching, organizations like Exterro--profitable, self-sufficient, strong companies--should invest in growth now, precisely when the opportunity is here. When others are looking to sell, that's the time to buy. In a conversation with Joe Patrice at Above the Law, Bobby Balachandran explained it succinctly: "The soft market 'is like everything being right-priced… I wouldn’t say we are in super bad times, but there’s a reality check in the market.' And with a lot of exciting and high growth products out there still not making money, that puts Exterro in an enviable position as a profitable company with loads of cash in a market with key strategic resources.
Exterro is a leading provider of Legal Governance, Risk, and Compliance (GRC) software, which provides deep data insights, workflow efficiencies, and process orchestration across e-discovery, digital forensics, data privacy, and cybersecurity use cases. The company operates in a large, fast-growing market with significant macro drivers, including increasing litigation volumes, the proliferation of corporate data, an increasingly complex regulatory environment, the convergence of data risks and the ubiquity of digital evidence in crime and terrorist activities.
I think everyone sees that this is true. The litigious nature of business in the US isn't going anywhere. Every day you read about a new privacy regulation, or changes to an existing one, or a data breach. In the last year alone, we've gone from having 550,000 open cybersecurity jobs in the US to over 770,000. The trends aren't just staying the same--they're accelerating. The demand for our solutions is only increasing. And with a comprehensive all-in-one solution package, Exterro offers more and more organizations the ability to do all their legaltech shopping in a single place.
“Since our last funding with Leeds Equity, global demand for Exterro’s Legal GRC platform has grown exponentially, fueling our product innovation as we’ve continued building best-in-class e-discovery, data privacy, forensics, risk, and compliance technologies,” said Bobby Balachandran, founder and CEO of Exterro. “As the lines between legal, finance, IT, and security departments blur, Exterro is in a unique position, offering the only platform that can effectively unify and address the data and the legal requirements of those disparate business silos. Leeds Equity has been an incredible partner in Exterro’s growth, and we are thrilled to continue our partnership with them as Exterro enters this new phase of growth.”
There may be other solutions to individual challenges that organizations have adopted, but the fact is that platform software is the natural evolution in almost every existing software field. The classic example comes from one any Gen X (or earlier) professional can relate to. I started out writing on WordPerfect and doing spreadsheets on Lotus 1-2-3. They didn't have platforms--like Microsoft Office--and now they're relegated to the technology dustbin. Sure, legal teams can do legal hold in one tool, doc review in another, privacy management in a third, etc... but sooner or later, the benefits of having all the solutions in one place outweighs the specialized capabilities of a multiple single solutions.
Since Leeds Equity’s initial investment in 2018, Exterro has more than quadrupled its revenue, and now serves more than 3,000 customers across the world. Exterro’s concerted growth strategy has focused on organic product innovation, geographic expansion, and strategic M&A, including the acquisition and integration of Jordan Lawrence and AccessData. It has also included significant R&D investments in e-discovery, privacy, digital forensics, and incident management as well as investments in the Exterro team. These business-critical activities are integrated into Exterro’s leading Legal GRC platform, which was designed specifically to manage the convergence between legal operations, litigation support, compliance, breach response, and internal investigations. In addition to Exterro’s corporate markets, the company has also increasingly served law enforcement forensics departments, providing enhanced efficiencies to those agencies that are experiencing budgetary and staffing constraints, most recently with the United Kingdom’s West Midlands Police Department.
Looks like I got ahead of myself earlier in this article, but in short, the last round of funding went well--so well that Leeds was up for helping put together a second round of funding. But there's still more room to grow. Exterro's serving large law enforcement agencies and other public sector organizations in the federal government and overseas. The issues surrounding data management, understanding data, and digging deep into the stories data tells aren't confined to the private sector, as a quick listen to the Exterro FTK podcast, FTK Over the Air, can demonstrate.
“Bobby Balachandran and the entire Exterro team have built an industry-leading business uniquely positioned to help enterprises manage and analyze data and drive actionable business intelligence. These are critical requirements to operating in the face of challenges across e-discovery, data privacy, cybersecurity, and forensic investigations,” said Jacques Galante, Partner at Leeds Equity Partners. “We look forward to building on this great partnership as Exterro continues to capture the immense growth opportunity across its global markets.”
Mr. Balachandran originally founded Exterro in 2008 with the conviction that the legal industry would benefit from, and that there was enormous demand for, process improvements that could be derived from lessons learned in other industries. Today, Exterro offers the only Legal GRC platform for corporations – which include global businesses including Boeing, United Healthcare, American Express, Aflac, and Oracle – to mitigate risks, control costs, and have complete end-to-end visibility into their legal processes. Exterro has won numerous industry awards and accolades, including the Global InfoSec Awards, Best Forensics Product (2022), KM World Reader’s Choice Awards, Best E-Discovery (2021), LegalTech Breakthrough, LegalTech CEO of Year (2021), and more. The company also contributes to numerous civic causes that are spearheaded by its Exterro Gives Back initiative, which supports several organizations, including Women Entrepreneurs of India, Operation Child in the US, the Safe Escape refuge in the UK, and the founding of the LifeRay Foundation, to mention a few.
Having worked at Exterro previously and now as a "boomerang" who returned, I can say that the accolades Exterro and Bobby have been receiving are justified. Few tech companies are as focused around creating and delivering value as Exterro is--and by espousing a business process improvement mindset, Exterro is also more efficient.
“The Legal GRC industry continues to be highly attractive given favorable macro tailwinds, and we are proud to continue our strong partnership with Exterro to build on its premier market position. We are excited to continue to support the business through organic investment and strategic M&A,” said Kevin Malone, Principal at Leeds Equity Partners.