Online legal technology company LegalZoom.com Inc. had its market debut this summer, sporting a $7.3 billion valuation in its initial public offering.
The Glendale company, founded in 2001, had a long road to successfully going public. LegalZoom first attempted executing an IPO in 2012, which was delayed for years and ultimately cancelled.
Come 2021, the company’s IPO price registered at $28 per share. LegalZoom sold about 19.1 million shares at the price the night before its IPO, raising about $700 million. On June 30, the stock’s opening day, LegalZoom started trading shares at $36.75 and closed at $37.85.
“Our goal is to level the playing field for small businesses by making the law accessible with simple and affordable services,” LegalZoom Chief Executive Dan Wernikoff said in a statement. “At business formation, small businesses are looking for a lot more than just legal help. We’re excited to help remove roadblocks that get in their way, legal or otherwise,”
LegalZoom offers a wide variety of business-oriented services such as attorney advice, wills and trusts, but has primarily campaigned on business formation services. For example, the price to form an LLC starts at $79 plus filing fees. The company has said its mission is to democratize law.
The company’s IPO was executed after a year of pandemic induced gains, as an increasing number of small businesses started up using online services to organize themselves.
Last year, LegalZoom’s revenue grew 15.2 percent to $471 million from the $408 million that was posted in 2019. According to its initial SEC filing from May 2021, 10 percent of all new limited liability companies and 5 percent of all new corporations in the United States were formed using LegalZoom.
In its prospectus, LegalZoom described its opportunity as a $48.7 billion market, but acknowledged that pandemic-fueled growth might not be indicative of future growth in a highly competitive legal market.
Expanding service portfolio
Since the IPO, the company’s stock has fallen, closing at $17.56 on Dec. 1, about half the price at close on opening day.
LegalZoom has invested heavily into several different types of partnerships to heighten its exposure in the market and strengthen the services provided to small business owners.
For example, the company partnered with USC’s Master of Science in Social Entrepreneurship degree program, establishing a $30,000 scholarship and internship, mentorship and employment opportunities for qualifying students.
“We want to make sure that we’re supporting the students beyond them getting their degrees,” Catherine Davie, LegalZoom’s head of social impact, told the Business Journal. “We want them to be LegalZoom customers as well, so we can support them, provide resources, expertise and champion their causes.”
As for partnerships to bolster LegalZoom’s services, the company has constructed a network of providers from technology company Brex, accounting software maker Intuit Inc. and digital payment company Square.
The partnerships look to fill gaps that LegalZoom said many newly formed small businesses face.
Now, through the company’s partners, small business owners can obtain access, discounts and the ability to sign up through a simplified process to the three companies. In exchange for the discounts, the partner platforms will provide a simplified sign-up for LegalZoom’s legal, compliance and tax services to customers.
“The partners in our ecosystem were hand-picked,” Kathy Tsitovich, chief partnerships officer at LegalZoom, said in a statement. “They focus on the customer first, have complementary business models and value partnerships as a critical business growth lever.”