UpCounsel, an online marketplace for businesses to find and hire legal help, was winding down and had set a closure date of March 4.
After struggling to grow the business as planned and getting hit with lawsuits, the startup sent an email to users in early February notifying them of its plans to shutter.
One of those users was entrepreneur Sieva Kozinsky, who just happened to have recently co-founded a firm called Enduring Ventures.
Kozinsky had turned to UpCounsel years prior after receiving a $35,000 bill from a “brand name” Bay Area law firm for three months’ work.
“When they sent me the bill, I freaked out and decided to find a lawyer that was affordable,” he told Crunchbase News. “That’s when I found UpCounsel and an amazing lawyer who charged about one-third of the price of the other firm.”
Over the years, Kozinsky estimates UpCounsel saved him anywhere from $70,000 to $100,000 in legal fees.
So when he read that the “Uber for legal services” was potentially shutting down, Kozinksy was not only disappointed. He saw opportunity.
Buying great companies
Kozinky’s new firm, Enduring Ventures, was founded in December specifically to buy great companies that are struggling for one reason or another and build them back up.
Over the past few weeks, Kozinsky and co-founder Xavier Helgesen quietly acquired what was left of UpCounsel. This essentially included UpCounsel’s website, which has a community of more than 10,000 lawyers.
In a blog post published on March 31, Helgesen announced via email to users that Enduring Ventures had purchased UpCounsel and that he is now its new CEO. Kozinsky is serving as its interim CFO.
In that post, Helgesen wrote: “My past businesses relied on UpCounsel for legal work. We saved a ton of money using it! We were shocked when we heard UpCounsel was shutting down. So, because we’re such big fans, we bought UpCounsel to prevent the service from closing and to focus on expanding it.”
According to Bloomberg, UpCounsel was hit with a lawsuit in 2018 in which it was accused of “brazenly” violating the California bar rule that prohibits lawyers from sharing legal fees with nonlawyers. Despite settling in 2019, the company continued to struggle.
Namely, dissatisfied shareholder Raj Abhyanker sued UpCounsel last October for breach of fiduciary. After the prolonged lawsuit took a further toll on the company, UpCounsel’s founders and some staff got hired by LinkedIn as part of a license agreement, according to Kozinsky. This led to the decision to shut down operations.
UpCounsel had raised $26 million since its 2012 inception from investors such as Menlo Ventures, Compound, BluePoint Ventures and Homebrew. In fact, I covered its $12 million Series B in April 2018 here.
Enduring
Kozinsky and Helgesen are quick to point out that despite their firm’s name, they don’t consider themselves to be venture capitalists.
Instead, they describe Enduring Ventures as a small, private holding company focused on buying “exceptional” businesses that are generating revenue, and growing them. They are realistic in their efforts, and say they are “not looking to shoot the moon with massive returns.”
“We can and will focus on the fundamentals, which is making a great, sustainable service [for] our customers and attorneys,” Helgesen said.
UpCounsel marks their first acquisition. The firm is targeting three to four total buys over the next 12 months.
Kozinsky told me that Enduring Ventures has modeled itself after Warren Buffet’s Berkshire Hathaway model. Its investors are mostly former startup founders who had experienced impressive exits and were looking to invest in other companies.
“We buy beautiful businesses and hold them forever. We are a holding company in the model of Berkshire Hathaway, working to build a more sustainable economy where wealth and economic growth is broadly shared,” Kozinsky says in his LinkedIn profile. “We recruit, train and coach amazing and non-traditional CEOs. We champion employee ownership, profit sharing and community/mutual ownership in the businesses we buy.”
Helgesen previously founded two venture-backed social enterprises: Zola Electric and Better World Books. Kozinsky previously founded StudySoup and The MBA VC Fund, a pre-seed VC fund.
