In December 2020, AXDRAFT made history as the first Ukrainian legal technology startup to achieve an exit.

Co-founder Yuriy Zaremba described the acquisition as a breakthrough for his company — and the Ukrainian startup ecosystem.

“AXDRAFT’s development dynamics are the same as those of the most successful startups in Silicon Valley,” he told AIN.

In just over three years, the Kyiv-based startup achieved a high 7-figure exit at a 14.5x revenue multiple.

Scaling AXDRAFT from idea to 7 figure offer

Brothers Yuriy and Oleg Zaremba founded AXDRAFT in October 2017.

Before launching AXDRAFT, Oleg worked at Booking.com as a senior front-end developer, and Yuriy was an M&A lawyer in Ukraine, Yuriy shared on a podcast.

“When I was a lawyer, I experienced how routine legal work can be when you draft the same types of documents over and over again,” he said in a press release. “It’s a process that invites mistakes and keeps attorneys from focusing on higher-value contributions. That led me to start AXDRAFT with Oleg.”

AXDRAFT helps lawyers and non-legal teams automate contact and legal document creation. Using the software, contracts like nondisclosure agreements and service agreements can be created in an average of less than five minutes.

This helps eliminate mistakes and allows legal teams to delegate the drafting of simple legal documents to other departments within the business.

“It brings a huge time benefit and cost savings to organizations,” Yuriy said.

What sets AXDRAFT apart is its proprietary algorithm that drafts contracts in multiple languages, including Chinese and Japanese. It also supports live document preview and data integrations.

In December 2018, little over a year after the Zaremba brothers founded AXDRAFT, they were accepted into Y Combinator, receiving $150,000 in pre-seed funding for 7% of its shares, the Kyiv Post reported.

That next spring, in 2019, AXDRAFT raised $1.2 million in funding from leading Silicon Valley venture capital investors.

One of the biggest factors contributing to the company’s growth was increasing its prices, Yuriy said. In 2019, TechCrunch reported AXDRAFT charged $25 to review contracts. At the end of 2020, the Kyiv Post reported that the company charged a monthly fee of $750.

The co-founders’ biggest challenge was breaking into the U.S. market, Yuriy said, but by leveraging their network connections, they landed Slack as their first U.S. logo. That set them on a growth trajectory.

Walmart, Nestle and around 30 other companies became AXDRAFT users, Yuriy shared on LinkedIn. The team consisted of 10 full-time employees at sale.

Ukraine-based software company lands Houston buyer

Just three years into AXDRAFT, the co-founder brothers weren’t looking to sell, but their perspectives changed when they were approached by Houston-based Onit. Onit is a software company that develops solutions for legal, compliance, sales, procurement, IT, HR and finance teams.

Other potential buyers expressed interest, which led to a competitive sale process, Yuriy shared. It’s also worth noting that software companies saw unusually high multiples in 2020 because of the pandemic.

The biggest challenge during the sale process was negotiating shareholder payout structure.

“The buyer was private equity backed and wanted to have as few shareholders as possible,” Yuriy said. “We had around 20 investors and two-thirds of the purchase price was paid in equity.”

Yuriy, despite his experience in M&A law, was also surprised by the depth of due diligence considering the small size of AXDRAFT.

In December 2020, the deal closed at a high 7-figure sum.

“[AXDRAFT] is a disruptive company, which is exactly Onit’s legacy,” Eric Elfman, co-founder and now former CEO of Onit, said on the Onit Podcast shortly after the acquisition. “They fit our DNA, but they also fit in our broader strategy of bringing together products for our existing, almost 500 corporate legal departments to expand into.”

The acquisition was Onit’s third in 19 months. It had acquired McCarthyFinch, an AI-based contract management product, just 30 days prior.

After the sale, Yuriy and Oleg managed the business for Onit for almost three years, then launched a new company together, AiSDR. The AI-powered sales development representative books meetings with targeted prospects from a database of over 700 million contacts through conversations via texts and emails.

Looking back on the process, Yuriy offers advice to founders: “Selling a business is like fundraising. You are either in ‘selling’ mode or not. You can’t do it well in parallel with other tasks.”