Wordsmith AI, the Edinburgh-based legaltech start-up, has raised $70 million (£52m) in one of the biggest tech funding deals in Scotland in recent years.

The Series B funding is from London-based investment firm Highland Europe and Index Ventures, among others.

It comes alongside an expansion of Wordsmith’s product and new enterprise customer wins, including Sage and Starling.

The company has enjoyed a year of rapid growth which has seen its AI platform used by more than 500 companies, including BT, Financial Times, Safelite, Trip.com, and Canva.

Wordsmith began last year with eight staff and now has 130. It will use the new funding to lift payroll to 300 by the end of this year, double down on the US market, and support growing demand from corporate legal departments.

It is being seen as the next Skyscanner or Current Health, the monitoring company that raised $43m (£31m) in 2021 before its sale to US listed company Best Buy later that year. At the time it was Europe’s second-largest digital health exit.

Wordsmith raised $25 million last year, giving it a value of $100m, and the latest funding puts it on track to become Scotland’s next unicorn, a company valued at $1 billion. Its momentum reflects the pace at which legal teams are rethinking how work gets done.

“Legal does not need another filing cabinet, and it does not need another copilot that simply helps one lawyer work faster,” said Ross McNairn, CEO who co-founded Wordsmith with Volodymyr Giginiak, chief technology officer, and Robbie Falkenthal, chief operating officer.

“Wordsmith is the front door that does the work,” he said. “Requests come in, AI agents process the routine, lawyers approve what needs judgment, and every step is recorded as it happens. We are building the system Legal runs on: one place where work comes in, gets owned, gets completed and measured.”

Mr McNairn is a former lawyer turned technology executive who formerly worked at Skyscanner and helped scale Perk from $1m to $200m in annual recurring revenue. Mr Giginak has previously worked at Facebook, Instagram and Microsoft, while Mr Falktenthal was formerly with KPMG and Perk.

Jean Tardy-Joubert, partner at Highland Europe, said: “What is most exciting about Wordsmith is that this is a tool built for companies, rightfully involving all employees in legal affairs, in coordination with the in-house legal team.

“By taking a vertical approach, Ross and the Wordsmith team have established themselves at the forefront of the sector, with demonstrable market traction, impressive growth and more than 500 satisfied customers.”

Highland Europe has backed more than 80 companies, including n8n, Nabla, Camunda, Wolt, GetYourGuide, WeTransfer, Nexthink, ContentSquare, Bending Spoons, Huel, Deepki and 9fin.

Aveni raises funds

Scottish fintech company Aveni has secured £12m to accelerate the launch of a new platform designed to help banks, wealth managers and financial advisers monitor the risks posed by AI agents interacting directly with customers.

The funding round was led by PXN Ventures and backed by existing investors including Puma Growth Partners, Lloyds Banking Group, Nationwide and Scottish Enterprise.

The investment will support further development of Edinburgh-based Aveni’s Unified Assurance Platform and the launch of two new products, Agent Assure and Agent Approve, which have been developed to assess the conduct risk of AI agents operating within regulated financial services environments.

Joseph Twigg, CEO of Aveni, said: “The continued confidence shown by our existing investors is a powerful endorsement of the direction we’re taking.

“We have spent seven years building the models, the experience and the regulatory relationships that make us uniquely qualified to solve the hardest problem in AI adoption right now: how do you assure the conduct of an AI agent interacting with a real consumer?”

Alastair Moore at PXN Ventures, said: “Aveni is fast becoming financial advisers’ go-to tool for helping them leverage AI in a safe and appropriate way. The team now has seven years of live deployments and proprietary models built within the UK financial services sector.

“Its infrastructure is answering one of the biggest questions in AI adoption: how to manage real client interactions and build trust, so advisers can focus on what they do best.”

NatWest pioneers IP loans

NatWest, trading north of the border as the Royal Bank of Scotland, is allowing companies to borrow up to £10 million against the value of their Intellectual Property (IP).

The IP lending scheme went live at a launch event with representatives from Scotland’s technology and creative sectors at the Edinburgh Futures Institute.

The offer, the first of its kind in Scotland, will deliver loans ranging from £250,000 to £10 million and ensure that businesses that do not have significant access to physical assets can borrow against the value of their IP.  

This type of lending is particularly attractive to university spinouts and those in the technology and creative sector who have big, transformative ideas but do not have the assets – like machinery and buildings – to borrow against.

NatWest Group launched IP lending for businesses in England and Wales in 2024. All applicants’ IP is independently reviewed by the group’s specialist valuation partner, Inngot, and the bank can lend against up to 50% of the orderly disposal value found.

The bank has already funded £34m in loans through this scheme. This has included support for Iliad Solutions, a payments testing and certification platform provider, based in Leeds.

Robert Begbie, CEO commercial & institutional, Royal Bank of Scotland, said: “This new lending offer has game-changing potential for firms in Scotland’s high growth and innovation sectors – like gaming, life sciences and tech.

“As we look to the future, more and more firms in innovation industries will lack the tangible physical assets that are used as collateral in traditional lending. Our new product gives those firms with exciting ideas and high potential a new route to access the capital they need to grow.”

Chris van der Kuyl, chairman of 4J Studios, said: “With the right access to capital, Scotland has the potential to be the next global hub for video games and interactive entertainment. We have the talent and the ambition.

“By making IP-backed lending available to video games companies across Scotland, Royal Bank of Scotland is helping to secure an exciting future for this pioneering creative industry.”