- DoNotPay, a startup that uses artificial intelligence and chatbots to fight small claims like parking tickets, just raised $12 million in Series A funding with an $80 million valuation.
- The round was made up of existing investors, according to founder and CEO Joshua Browder. Coatue led the round with participation from Andreessen Horowitz, Founders Fund, and Day One Ventures.
- Browder said the 8-person team was struggling to keep up with surging demand as more users wanted to cancel gym memberships, get airline refunds, and ask for rent extensions amid the coronavirus-led downturn. He hopes to increase the team to upwards of 30 people with the new funding.
- The shutdowns have also helped propel the legal system "10 years forward," Browder said. This increases the types and amount of services DoNotPay can take on with its software.
- Click here for more BI Prime stories.
When gyms across the country started closing up shop to comply with statewide shelter-in-place orders, Americans started ditching their pricey fitness memberships en masse. But instead of waiting on hold with customer service for hours or suffering through a tedious exit survey, many of the former fitness aficionados cancelled with DoNotPay after a mere few clicks in an app.
The startup uses artificial intelligence technology combined with a utilitarian chatbot to fight small claims like gym membership cancellations or parking violations that suck up hours of Americans' time every year. And on Tuesday, the five-year-old startup announced that it raised $12 million in Series A funding with a valuation topping $80 million, bringing its total funding raised to just under $17 million.
"We were so busy with the chaos going on that we couldn't even think about fundraising," DoNotPay founder and CEO Joshua Browder told Business Insider.
But the demand for small legal resolutions was quickly outgrowing Browder's 8-person team. He realized that, in order to take advantage of a once-in-a-lifetime, pandemic-sized opportunity, he needed to bring on more money, fast.
He met with his existing investors remotely, and ultimately Coatue signed on to lead the round. Andreessen Horowitz, Founders Fund, and Day One Ventures also participated in the round, but the process of fundraising still presented challenges for Browder even without having to court entirely new backers.
"In one of the big pitches, the whole connection came down so that was stressful," Browder said. "It was my connection and Zoom just crashed."
Now that the funding is in hand, Browder can breathe a little easier and get his team some relief. He said he hopes to increase its size to upwards of 30 people because the higher level of demand isn't going away any time soon.
"Sometimes we can see into the future," Browder said. "In the past few days, an engineer called in that we were seeing more cancellations for a gym called 24 Hour Fitness. And then we saw, sure enough, that they were going bankrupt a few days later."
In fact, he said DoNotPay's scope will only increase because the legal system was forced to move its practices "10 years forward" in the span of three months as county courthouses and legal offices also shut down during shelter-in-place orders. Some of the more archaic rules of the legal system, such as appearing in person to contest a parking violation, were done away with and moved online. Now, DoNotPay's automated chatbot can get to work because, as Browder explained, you can't have a robot in the courtroom.
"Things that wouldn't be available before are now entirely possible for us," Browder said.
The startup could also be an unlikely beneficiary of a long-term economic downturn, Browder said. Outside of gym memberships and airline refunds, DoNotPay has also added tools for freelancers and renters in need of payment extensions, services that will only increase in need as shutdowns drag on across the country.
"In crazy times like these, people don't want to pay for anything," Browder said. "But then you have contractors that maybe did the work already and people don't want to pay them, which sometimes there are important reasons for that, but also some people see it as an excuse not to pay."
Eventually, Browder said he hopes to extend DoNotPay's services beyond payments entirely. One tool his team has been working on recently would help erase arrests and minor convictions from people's records. When the team first started working on it, he envisioned it helping people with charges related to marijuana in jurisdictions that had legalized or decriminalized possession. But now he sees an even bigger need given the arrests at ongoing Black Lives Matter protests around the country.
"If you are arrested and not charged, you can get it erased from your record because a DA isn't going to take the time to pursue it, and that is what is happening with protesters right now," Browder said.
Join the conversation about this story »
NOW WATCH: Pathologists debunk 13 coronavirus myths
https://ift.tt/37W6Izv