Eric Theis

Great to catch up with some of Spellbook’s seed crew. Never forget those who backed you before it was obvious. @BillyDraper @KatieS @amansamraa @ertheis

It’s time to expose a huge scam in AI startups: Contracted ARR The reason many AI startups are crushing revenue records is because they are using a dishonest metric The biggest funds in the world are supporting this and misleading journalists for PR coverage. The setup: Company signs 3-year enterprise deals. Year 1 is discounted (say $1M), Year 2 steps up ($2M), Year 3 is full price ($3M). They report $3M as “ARR” — even though they’re only collecting $1M right now. The worst part: The customer has an opt-out option at 12 months! It’s not actually a 3 year contract. In the chart below, by Q5 the company is trumpeting ~$100M “ARR” to press, while actual cash-generating, in-effect ARR is ~$35M. That’s ~3x inflation. On top of this, enterprise AI companies are bundling full-time “forward deployed engineers” into deals massively reducing margins, sometimes producing Year 1 negative margins. At some point customers are going to start triggering their opt-out clauses or aggressively negotiating down Year 3 pricing. And a wave of enterprise AI companies may collapse.

@scottastevenson It doesn’t come up anymore because Spellbook would no longer be QSBS eligible even if it did have a US-based topco

This does have material downsides for Canadian founders and employees: 1. No lifetime capital gains exemption—first $1.25m tax free. Can be very meaningful for team members in an exit. 2. No access to millions in subsidies from SR&ED, IRAP, etc. — can be a lifeline especially if doing deep tech. Being a Canadian corp has never been brought up as an issue when fundraising at Spellbook. 10 years ago I saw it come up, but not any longer. Perhaps the data is lagging?

Excited to share that @Dropbox has chosen Spellbook as its AI contract review platform. Their legal team will use Spellbook to review and negotiate contracts faster and with greater consistency, so they can keep the company moving at lightning speed, with confidence. And yes, we have a Dropbox integration.

I’m afraid this is the most perfect company swag I’ve ever seen

We’re proud to announce that we've raised $25M to help engineering teams navigate AI transformation with clarity. AI has reshaped how software gets built, but leaders still lack the tools to understand what's really happening. How to separate hype from reality. How to understand AI's true impact on quality, velocity, and team architecture. Span gives engineering teams the missing layer of context and understanding. The participation of over 100 CTOs, CPOs, founders, funds, and operators reflects just how deeply what we're doing resonates across the industry. 📽️ Watch the announcement below.

Spellbook has raised a $50m Series B led by @rabois at @khoslaventures. Since 2022 we've grown rapidly to 4,000 law firm and in-house legal customers including Nestlé, eBay and Kennedys. We aim to be the best way to draft and review agreements with AI—Cursor for contracts 🧵

We just dropped the next post in our Navigating Diligence series: Nail the 'Hair-on-Fire Problem' + 10x Better Solution This is the first (and, we think, most important) exercise in our diligence playbook. 📘 blog.blingcap.com/hair-on-fire-a… 🧵 What’s inside:

We’re excited to announce Sunflower Capital Funds I and II. Sunflower is a $250m fund that partners at the earliest stage with companies building foundations for modern enterprises, critical industries, and the physical world.

Thrilled to be a part of Bling Capital Fund IV and invest in the next generation of early-stage founders!

Meet Spellbook Associate: The first AI Agent for law Two years ago we launched the first GenAI copilot for lawyers. We had no idea it would now be used by 2,500+ legal teams! Today we're launching the first full-fledged agent that can break down legal projects into plans, execute work across multiple documents and apps, review its work and re-plan as needed. More below👇

Honored to be part of the 2024 Forbes Midas Seed List. Thanks to the @blingcapital team and the Bling Capital Product Council, our LPs, and also our CEOs for the opportunity! ♥️ forbes.com/lists/midas-se…

We're thrilled to announce that @SpellbookLegal has raised a $20m Series A financing, led by @inovia. In 2014 my musical instrument company got a legal bill that nearly zeroed our bank account. In 2019 we launched Rally to help lawyers draft more efficiently using document automation. In 2022 we launched Spellbook as the first generative AI copilot for lawyers. In 2023 we assisted 1700+ legal teams with nearly 1 million contracts! We're excited to deploy this capital towards building the most trusted AI assistant for transactional lawyers. We have some huge new breakthroughs coming this year—which we'll start to show at @LegalweekShow next week! Thank you to our incredible team, customers and investors for joining our mission to help lawyers escape transaction drudgery—ultimately delivering more value to the end clients of legal services, and helping lawyers focus on doing more of the strategic work they love. Special thanks to our legal counsel at LaBarge Weinstein (@LWConnect) and the opposing counsel team at Osler, Hoskin & Harcourt LLP (@Osler_Law) and Inovia Capital who helped us close this deal in record time.

Thrilled to be on the Bling Capital team @bling0 who just ranked #4 on the 2023 Forbes Midas Seed List! Special thank you to our Bling Capital founders who have given us the opportunity to partner with them on their journey through product market fit and scale!

Announcing the @BlingCapital blog, focused on company building and fundraising Our first post on fundraising: “How to size a market in 30 minutes” to learn the essentials to get your market sizing right blog.blingcap.com/2023/02/13/How…

We’ve closed Fund III! Super excited to be partnering with the next generation of founders to define, find, and scale product market fit!

This is hugely important for any business, not just marketplaces. These customers who stick around “forever” are the ones who find long-term enduring value in your product, and have theoretically infinite LTV If you truly have a layer cake, your churn rate goes down as you grow!

The most retentive users in your cohorts are typically your “ideal” customers. You should be optimizing for and targeting these customers, not signups generally.

This is 100% on point. At Bling Capital, we examine “terminal cohort retention” as a key indicator of product market fit. Can be applied to GMV, engagement, subscription revenue, etc - whichever metric is most relevant for your business.

I’m thrilled to welcome @kylelui to the team! So excited to work with (and learn from) him! techcrunch.com/2022/03/28/kyl…