Deloitte Spin-Out Arteria AI Buys Financial Services Arm of H4

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Deloitte Spin-Out Arteria AI Buys Financial Services Arm of H4

Arteria AI, a CLM company that spun out of Deloitte, has bought the financial services arm of the UK’s H4, another CLM platform. Co-Founder and Chairman, Joe Seifert, will move to Arteria AI as a senior adviser. H4 will continue as a separate company, but have a more corporate focus.

Seifert is based in London and co-created the company. He previously worked at JP Morgan and was Chief Investment Officer for Essar Capital. In an interview last year, Seifert had explained that banks and financial institutions were very much the target client base for H4 at the time.

Now, however, there have been some strategic changes.

In a statement, Seifert said: ‘Arteria AI and H4 cover most of the top-tier of the financial services market and it made perfect sense to join forces. Having spent time with Shelby Austin and the team, I’m very excited that the combination will support Arteria AI’s position as a leader in digital documentation transformation across the global banking sector.’

Artificial Lawyer asked Abrar Huq, Co-Founder & Chief Revenue Officer, Arteria AI, some more about the move.

Why do this now? Why is Joe Seifert leaving at this point?

‘Financial services documentation is a huge market with massive clients and a great opportunity – it also makes sense that only one or a very small number of leaders will emerge as the dominant platform for documentation in this market and right now there is real client momentum. It makes strategic sense to combine two of the players with great expertise and rather than competing with one another in the same marketplace and replicating work, the market is better served by combining forces to go faster and cement the leadership position.

In addition, this allows both Arteria and H4 to better focus on the areas where they have emerged as leaders. We see Arteria AI as the leader in financial services and H4 standalone as a fast-growing business in corporate markets outside of global banking.  H4’s product and customer base was spread across global banking clients and the corporate market, outside of financial services. These are two distinct markets with different types of clients and product needs. It made perfect sense to join forces at Arteria in the complex financial services market.

While Joe continues to work on the financial services business he knows well and brings his experience to the Arteria AI team as a senior adviser, he will retain a minority stake in H4 going forwards.

If H4’s financial services business moves to Arteria AI, what is left of H4?

As H4 developed, it signed up clients in the global banking market as well as the broader corporate market. These are two distinct markets with different types of clients and product needs. Going forward, H4 is fully focused on its offering for the corporate market, outside of financial services.

How does this expand what Arteria AI can do now?

H4 and Arteria both had substantial focus on digital documentation for global financial services and especially the world’s leading banks – between the two companies, we cover most of the top tier financial institutions. As such, there is a great deal of knowledge on both sides ranging from product insights to customers to client lists. Arteria’s acquisition of the financial services business of H4 bolsters Arteria’s leadership position in this market and specifically adds further expertise in lending and custody.

Does this mean more of a UK focus now, as Joe Seifert is in the UK?

Having had deployments on four continents, Arteria AI already has a large global reach with a sizeable UK and EMEA footprint. Arteria had also opened an office in London off the back of our Series A funding in March 2021.

With Joe and H4’s financial services business in the Arteria fold, we will be able to even better serve customers with a UK and EMEA presence and continue growing our London office.’

And as to what Arteria AI does, this is how this site reported it previously:

  • Draft – Your data and inputs are used to create first drafts automatically from potentially hundreds of templates and thousands of variations.
  • Negotiate – Being data-first means you can negotiate with confidence. Your playbooks and previously negotiated terms are built into Arteria to allow for maximum efficiency and effectiveness.
  • Workflow – Whether it is one approval or one hundred, Arteria Flow gives you insight into where your documents are, in real time. Arteria Flow allows approvers to work through approvals quickly and clearly. 
  • Analyse – Spot bottlenecks and resolve them immediately with Arteria Analyze. Understand which clauses are negotiated or escalated frequently so you can speed up the contracting process.
  • Extract – Legacy contracts and third party papers still contain valuable information. Using AI you can extract this data to highlight valuable insights.’

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Is this a big deal?

It’s a fairly unusual move for one startup to buy just part of another startup in this way. It also perhaps underlines the challenges of selling into the financial services sector, especially big banks.

Essentially what has happened here is not that H4 has sold part of its product offering, rather it has sold the part of the business that focuses on a particular market segment, i.e. banks.

Will Arteria AI be better placed to succeed in this area? Quite possibly. The team at Arteria came from Deloitte, where there are deep and long-standing relationships with the financial services sector.

The company is also on something of a roll after gaining $11m in an oversubscribed Series A venture funding round just five months after going independent. 

The round was led by Illuminate Financial, and Information Venture Partners, which specialises in enterprise SaaS solutions. Meanwhile Illuminate has strong relationships within the financial services sector and Arteria is their first investment after securing backing from JP Morgan and Barclays for their new fund. 

The company also recently hired former Director of AI Research at Thomson Reuters and Scribd, Amir Hajian, as their VP, Data Science. 

They have also hired former Salesforce sales leader, Brent Taylor, as Head of Sales, and they have hired another Deloitte alum, John Wallace, as their Head of Professional Services.

But, back to H4. The CLM market is packed with players now, and there is plenty of focus already on the extraction of key data points from contracts. But, they remain a solid team, e.g. they hired Partha Mudgil, previously at BRYTER and before that one of the leadership team at Linklaters’ Nakhoda group.

Many CLM companies are centred on the US, so being UK-based could be a help to H4 as it looks to work with corporates and fast growth companies over here. The company also is fairly nimble and perhaps that will be an advantage.