klarity Raises $18M to Automate Document Analysis

Automating Document Review with Artificial Intelligence

The process of reviewing numerous, similar documents can be exceedingly monotonous. However, Klarity proposes a solution, leveraging artificial intelligence to transform documents into structured data, specifically targeting the needs of finance and accounting departments.

The Evolution of Document Automation

While document automation isn't entirely novel, Klarity distinguishes itself from earlier attempts. Previous generations of companies focused on partial automation, still requiring significant human oversight. Ondrej Antos, Klarity’s co-founder and CEO, emphasizes that the market for full document automation remains largely untapped.

According to Antos, communicated via email, the limited value proposition of partial automation hindered its widespread adoption. “Full automation offers the potential to eliminate human review for a substantial portion of documents – exceeding 85% in Klarity’s case – with enhanced precision.” This capability delivers considerable value, benefiting not only large corporations but also mid-sized businesses processing hundreds of documents monthly, thereby expanding the overall market potential.

Klarity’s Origins and Launch

Klarity was established in 2017 by Antos and Nischal Nadhamuni, colleagues from their time at MIT. Their collaboration stemmed from Antos’ firsthand experience with extensive data review during his career as a corporate lawyer. Nadhamuni, specializing in Natural Language Processing, believed this technology could surpass human capabilities in document comprehension. The initial product release occurred in August 2020.

Klarity effectively substitutes human effort in tasks involving large-scale document analysis, such as accounting order forms, purchase orders, and various agreements. Rather than requiring accountants to manually sift through countless nearly identical documents to identify deviations, Klarity performs this function, conserving accountant time and minimizing errors.

Rapid Growth and Funding

The company has experienced substantial growth over the past nine months, with annual recurring revenue increasing ninefold and year-over-year growth exceeding 24x. This momentum prompted Klarity to seek additional funding to bolster sales and marketing efforts, facilitate scaling, and continue investment in research and development.

Currently, Klarity serves over 40 enterprise and mid-market clients, including prominent companies like Coupa, Optimizely, and 8×8.

Today, Klarity announced the completion of an $18 million Series A funding round, led by Tola Capital. Sheila Gulati, founder and managing director of Tola Capital, will join Klarity’s board of directors as part of this investment. To date, Klarity has raised over $20 million in total funding.

Investor Participation and Future Plans

Additional investors in this round include Invus Opportunities and a consortium of individual investors, notably executives from existing customer organizations 8×8 and Coupa. Existing investors, such as Elad Gil, Daniel Gross, Nat Friedman, and Picus Capital, also participated.

Klarity is actively expanding its team, focusing on hiring personnel for sales, marketing, and engineering roles. The company’s headcount has grown from 14 to 34 employees within the past year. Furthermore, the company anticipates launching new document review automation applications for deal desk, renewals, and procurement teams later in 2022.

“Many enterprises are currently unaware that a technological solution exists for this pervasive challenge,” Antos stated. “We aim to educate the market about the availability of a technical solution to the longstanding issue of document review within accounting teams and to continue developing a leading-edge product.”