As AI hype continues to rage, companies are starting to fluctuate between demonstrating value behind the hype, and continuing to fight the accusations of vaporware. One such company is Harvey, a legal AI platform.
Harvey was founded in January 2022 by Winston Weinberg, a former O'Melveny & Myers associate, and Gabriel Pereyra, a former research scientist at Google DeepMind. The company quickly gained attention in the legal tech space, securing its first funding round through the OpenAI Startup Fund in November 2022, which laid the groundwork for a significant partnership with OpenAI.
Harvey's growth has been rapid, with three major funding rounds in just over a year: $5 million from OpenAI in November 2022, $21 million from Sequoia Capital in April 2023, and $80 million led by Elad Gil and Kleiner Perkins in December 2023. This brought the company's valuation to $750 million just two years after its inception.
Initially launched as a provider of custom large language models (LLMs) for elite law firms and corporate legal teams, Harvey has since expanded its offerings to include workflow automation and legal research tools. The company has attracted clients such as Allen & Overy, Paul Weiss, and PwC, among others, while maintaining a relatively low public profile and limited transparency about its specific products and capabilities.
Despite Harvey’s investors and lofty valuation, it has its detractors. Most recently with a tweet on July 20, calling Harvey "complete smoke and mirrors." This statement, reportedly liked by influential founders and investors in Silicon Valley, was just the latest in a series of skepticisms around Harvey's capabilities and transparency.
The tweet comes a month after Isha Marathe, a legal tech reporter, published an article titled, “The Hype Behind Harvey: How the Stealthy Startup Is Raising Industry Eyebrows” on LegalTech News. Despite Harvey's sizable funding and high-profile clients, there's a surprising lack of firsthand experience with their product. As the article notes, "the phrase 'I have never seen what Harvey does' seems to be a commonality." This secrecy has led to both curiosity and skepticism, with one legal tech expert pointing out the unusual nature of Harvey's approach: "It is bizarre that after several years in business and several impressive funding rounds, I cannot find someone in the greater legal technology market who has tested the product or received a demo." This strategy of extreme stealth, while initially creating buzz, may be reaching its limits, as the article warns that remaining "in stealth too long and people will have questions and expectations that cannot be met."
However, just days after the tweet, Harvey announced a $100 million Series C round at a $1.5 billion valuation led by Google Ventures with participation from all of its existing investors, OpenAI, Kleiner Perkins, Sequoia Capital, Elad Gil, and SV Angel. While this was less than the $600 million at $2 billion the company had hoped to raise in order to acquire a large legal research firm, it still came with the announcement that the company had tripled from $10 million ARR in December 2023 to $30 million ARR.
Ed Suh, Managing Partner at Alpine VC, chimed in, “When a company raises a significant up round from insiders, and those same insiders put their reputations on the line publicly endorsing the company, it's much more likely that that's a sign of a substantive, high quality business than a sign of vaporware.”
Ultimately, only time will tell on Harvey's success. But as AI continues to pervade every sector, from healthcare to legal and beyond, each company is working to demonstrate the quality of its product and strategy, demonstrating traction and customer delight. Some will fail to live up to the hype while others become generational companies.
