- FLEX Capital enters a partnership with the successful serial founders and lawyers Kathrin Schürmann and Simone Rosenthal to build a new RegTech group in the field of Alternative Legal Services.
- The first platform investment is the company lawpilots. The training platform is the No. 1 for legal e-learnings in all business-related areas in German-speaking countries. These include data protection, compliance, ESG, IT security and other regulatory requirements.
- Regulatory requirements in Europe are becoming increasingly complex, making compliance more difficult. This poses constant challenges for many medium to large companies. Adequate business models are urgently needed that leverage the enormous automation potential in the legal industry and relieve the respective legal departments of the companies.
- Together, FLEX Capital and the founders of lawpilots want to invest in appropriate legal business models. FLEX Capital is providing a budget of 60 million euros.
FLEX Capital enters a partnership with the successful serial founders and lawyers Kathrin Schürmann and Simone Rosenthal to build a new RegTech group in the field of Alternative Legal Services. RegTech (“Regulatory Technology”) refers to the use of technology to overcome regulatory challenges and optimize compliance processes. The Next Generation Private Equity Fund from FLEX Capital is making the first platform investment in the company lawpilots, the number 1 in the German-speaking area for legal e-learning.
The Berlin-based company was founded in 2017 by the successful lawyers for technology and data law and offers e-learning courses in the areas of data protection, compliance, ESG, IT security and occupational safety for company employees.
The bootstrapped company has over 1,200 customers in Germany and Europe. They include Audi, AutoScout24, BASF, Deutsche Bahn, Freudenberg, Infineon, Konica Minolta, Siemens, Ströer and Volkswagen. lawpilots was able to win over 480 new customers in 2022. The company employs 65 people. In total, lawpilots offers more than 48 different e-learning courses in 35 languages and has already trained more than 3.5 million employees.
RegTech - an essential part of the everyday life of heavily regulated companies
Compliance with increasing regulatory requirements poses significant problems for many medium-sized to large companies. The General Data Protection Regulation (GDPR) from 2018 is one of the most drastic and well-known pieces of legislation in recent years. Since then, further legislation has been introduced in various areas of the company and a trend towards excessive regulation is particularly noticeable in the technology sector. Current examples include the Supply Chain Due Diligence Act, which came into force on January 1, 2023 and represents further ESG regulation, and the Cyber Resiliance Act from September 2022 as an additional extension of compliance requirements in the area of cybersecurity. A number of other laws will come into force in the near future. Only the Data Act, the Digital Services Act, the Digital Markets Act, the Data Governance Act and the Artificial Intelligence Act should be mentioned here.
Every company is obliged to comply with the relevant regulatory requirements. Otherwise there is a risk of high fines in addition to image damage. A breach of compliance can result in costly business disruptions.
Therefore, companies are faced with the particular challenge of training employees carefully and continuously and making the dangers resulting from a violation of these requirements transparent to them in the long term.
A study by Globalscape underscores that data security training programs are one of the key levers for avoiding compliance costs.
“With lawpilots, we are currently helping more than 1,200 active customers to regularly train their employees in the above areas through 48 online training modules in more than 35 language and country versions. In total, more than 3.5 million employees are currently learning how to deal with legal requirements in everyday business.” says Philipp von Bülow, Managing Director of lawpilots and continues: “As one of the first providers on the market, we are setting the standard for legal and regulatory requirements today E-learning and give people around the world more security in their everyday work.”
“With lawpilots, we not only see ourselves as leading experts in the field of legal e-learning, but also as a strong RegTech provider,” says Kathrin Schürmann: “Legal training courses are too important to be complicated. Our product was developed according to the latest learning psychology approaches and is designed to ensure learning and, above all, understanding of the complex regulatory content. With this combination of multiple award-winning expert knowledge and innovative learning methodology, we want to continue to stand out from the competition in the future.
“lawpilots is a pioneer in a rapidly growing market. The legal requirements for companies and thus the training needs of employees will increase exponentially in the coming years,” says Peter Waleczek, Managing Partner at FLEX Capital and explains, “With lawpilots, we have chosen a strong first platform investment in the RegTech area and will be massively invested in invest in the technology and the product. Together with the founders, we will take lawpilots and other RegTech companies to the next level of growth.”
Founding of a platform for alternative legal services in the field of RegTech
The investment in lawpilots is just the beginning of a visionary collaboration between Kathrin Schürmann, Simone Rosenthal and FLEX Capital. The capital is also planned to be used to set up a new platform for alternative legal services with a focus on RegTech. This makes sense against the following background:
Kathrin Schürmann and Simone Rosenthal are founding partners of the renowned law boutique Schürmann Rosenthal Dreyer Rechtsanwälte (SRD). The highly specialized team at SRD has been advising on all areas of technology and data law for years and has been nominated several times for the prestigious Juve Award for their special expertise in these areas, which they won in 2020.
Away from their established law firm boutique, the founders have repeatedly demonstrated their entrepreneurial flair and used market opportunities at the right moment to set up a number of other successful start-ups in the RegTech space. In addition to lawpilots, this also includes the management consultancy ISiCO, which specializes in data protection certification, compliance and data governance, and the privacy solution platform caralegal, which automates data protection management in companies with its innovative legal workflow and supports it in a legally secure manner.
The founders have thus built up a conglomerate that has the character of a “full-service provider” focused on “digital business”. The interaction of the components of the company conglomerate repeatedly results in very important impulses and feedback for alternative legal services.
FLEX Capital is a Next Generation Private Equity Investor founded by seasoned software entrepreneurs helping bootstrap mid-market companies to reach the next stage of growth. lawpilots is the first investment of the second fund launched in January, amounting to 300 million euros. For the first time, this includes a commercial structure that enables FLEX Capital to operationally support portfolio companies with a specially built team of 30 experts, which sets the investor apart from many other private equity funds.
“We experience the pain of the legal departments and law firms, who struggle every day with the lack of digitization in the legal area and the associated loss of efficiency as well as the shortage of skilled workers. We see enormous automation potential here and recognize the need to relieve companies with appropriate business models. This is where we start together with FLEX Capital. In the future, companies should be able to react effectively and quickly to legal requirements with our offer.” says Simone Rosenthal and continues: “Our new partner is known for implementing growth strategies very cleanly and with a sense of proportion. Our strategic coordination with FLEX Capital showed right from the start that we can plan and make decisions together with this partner on an equal footing. FLEX Capital not only convinced us on a professional level, but above all on a human level. We are happy to have found the right partner in FLEX Capital to implement this vision and grow together.”
“The topic of regulatory compliance and the potential of the RegTech market has fascinated us for a long time. With Kathrin Schürmann and Simone Rosenthal, we have now met two successful and visionary entrepreneurs who are absolute pioneers in their field. We are delighted that they have chosen us as their partner from all their options.” says Christoph Jost, Managing Partner of FLEX Capital and adds: “Together we would like to invest in relevant legal business models in the alternative legal services market and are making a budget of 60 million euros available for this”.