E-discovery company Reveal just got a $200 million investment and bought a data firm. Its CEO lays out its roadmap for beating out a major rival.

• Reveal, an AI-powered e-discovery platform, announced Tuesday that it's merging with Brainspace, a visual analytics platform used for digital investigations.
• The company also snapped up $200 million from K1 Investment Management, a private equity firm.
• The acquisition and investment are part of Reveal's growth strategy as it seeks to boost its AI technology and take on the e-discovery giant, Relativity.
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Reveal, an e-discovery platform fueled by artificial intelligence, has acquired Brainspace, a visual analytics platform used for digital investigations, giving the company an edge against competitors.

The deal brings over 100 new customers to Reveal's platform, Wendell Jisa, Reveal's CEO, told Insider. Both services are used by law firms, corporations, litigation service providers, and consulting firms performing investigative or legal work. However, 90% of Brainspace's customers use a competing review tool, which Jisa said he hopes to convert to his company's platform with the acquisition.

In addition to the merger, Reveal has also snapped up a $200 million investment from the private equity firm K1 Investment Management, which it plans to use towards hiring and more acquisitions. 

Launched in Chicago in 2011, Reveal uses AI to mine vast quantities of data to identify relationships between companies and people, classify documents, and ultimately streamline workflow for lawyers. In November, it partnered with DLA Piper, one of the biggest global law firms, to further develop AI innovations in the legal space using the firm's data.

Reveal's purchase of Brainspace is just the next step of its broader M&A strategy — it also acquired NexLP, an AI tool that analyzes data, in August — to help achieve the company's goal of automating the practice of law, especially given the rapidly burgeoning volumes of data across the globe. The move is part of a larger dealmaking trend in the legal tech market, as companies look to grow.

Read more: Tech has been transforming the legal industry at lightning speed. Here are the 5 big trends to watch in 2021.

By expanding its platform and boosting its technology, Reveal also plans to take on Relativity, one of the market's leading e-discovery platforms. 

"Our strategy is to make it almost illogical not to use Reveal," said Jisa.

Reveal's M&A strategy begins with partnerships

According to Jisa, Reveal's M&A approach is to first identify and partner with a company or product that it thinks will enhance its solution offerings. The partner firm then joins Reveal's platform and agrees to a royalty agreement.

Once they ascertain if it's a good fit, and it doesn't make sense to try to develop its own tech internally, Jisa said that's when he'll "pivot" and seek to acquire the business.

Acquiring Brainspace was the natural next step since their initial partnership formed in 2017, while NexLP was a partner for 18 months before its acquisition in August. Both companies have bolstered Reveal's AI capabilities. Reveal is an attractive buyer as it offers these companies a processing and review platform with global reach via its Amazon Web Services cloud infrastructure, with 24 data centers in six continents. 

"NexLP and Brainspace are the champagne, but you need a nice crystal glass to drink out of. That's Reveal's review platform," said Jisa.

Read more: 5 companies snapping up legal tech startups, like DocuSign and Wolters Kluwer, lay out their M&A strategies as the space heats up

Reveal seeks to 'take down' Relativity through its boosted AI technology

Partnerships and M&A are integral parts of Reveal's overall strategy to take on the competition and position itself as the leading AI-fueled e-discovery platform.

Jisa said that other e-discovery providers will "fall back" when it comes to technological edge with the Brainspace acquisition, which will boost Reveal's AI capabilities. 

"It'll be a two-horse race between Reveal and Relativity," said Jisa.

Relativity, which is widely regarded as one of the foremost e-discovery companies — or, as Jisa put it, the "200-pound gorilla" they're trying to "take down" — recently made an acquisition of their own. In January, it bought VerQu, a data management software, to bolster its collaboration offerings.

Reveal said that its competitive advantage stems not only from its robust AI technology, but also the flexibility it gives to customers. Unlike other players in the e-discovery space, Reveal offers the same software both on-premise and via the cloud, according to Jisa.

For example, Brainspace will still have its standalone product available through third-party platforms that it's integrated with, like Relativity. This is a fragmented solution, however, as Relativity users, for example, would have to pay separately for Brainspace's services, whereas it's fully integrated into Reveal's end-to-end platform.

According to Jay Leib, Reveal's executive vice president of innovation and strategy, a single, comprehensive platform is significantly more affordable for clients than paying for disparate point solutions, as it reduces overhead in terms of data storage and computing power, and also increases work efficiency.

The e-discovery platform will use its fresh $200 million investment to further propel growth

Also fueling Reveal's growth strategy is $200 million from K1 Investment Management.

"We believe artificial intelligence is the future of e-discovery and are confident that the technology that Reveal and Brainspace possess put them at the forefront of that trend," said Tarun Jain, vice president at K1, in an email.

Reveal will be using the fresh cash to internally develop its technology, make additional acquisitions, and grow its team.

The key focus for Reveal will be to continue developing and integrating its platform, with the ultimate aim of providing a "frictionless" user experience. "We need to invest heavily in creating that platform that makes it illogical to use anything else," Jisa said. "This is where we'll be investing the most heavily in."

Over the next 12 months, it plans to add at least 50 employees to its tech development, customer success, and sales and marketing teams, said Jisa. Reveal currently has a 150-person team.

The company also will seek to improve its certification and training, which Leib described as one of its Achilles' heels. The boost in this area will signal a mastery of tech, and also enable the company's engineers to better employ new innovations.

Through these efforts, Reveal wants to grow its annual recurring revenue by 40% this year, Jisa told Insider.

"The strategy going forward is never to get comfortable," he said. "We need to make sure that we go even harder, faster, stronger, and find what the next best thing is."

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