Harvey Nears New, Smaller Deal With GV After Its Acquisition Plans Collapse

One month ago, we broke the news that Harvey, a startup that sells AI-powered legal software, was looking to raise $600 million in funding at a valuation of at least $2 billion. The firm told investors that it planned to use some of the capital to acquire vLex, a 25-year-old legal research firm majority-owned by private equity firm Oakley Capital.

As things turned out, though, the acquisition fell apart and the funding round shrank. Harvey is now expected to raise about $100 million in a round led by GV, an investment arm of Google-owner Alphabet, according to two people involved in the investment. And it will be at a valuation of about $1.5 billion, including the new capital, according to one of the people. The details of what happened give an unusual inside look at how investors are pushing back on some proposed AI investments, even in what’s still a competitive market for AI deals. 

Some investors balked when Harvey proposed the vLex acquisition and the $2 billion valuation. One investor who spoke with Harvey executives was concerned that the acquisition of vLex wouldn’t ensure Harvey would catch up to one of its main competitors—and would have spent a lot of money, to boot. That rival, Casetext, now has easy access to enormous amounts of legal data thanks to its acquisition last June by Thomson Reuters. The new owner can help Casetext improve its research results.