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Legal technology firm Luminance has raised $40 million in fresh funding from investors to grow its U.S. footprint, capitalizing on the wave of investor interest surrounding artificial intelligence.

The company told CNBC that it raised the fresh capital in a Series B funding round led by U.S. venture fund March Capital. National Grid Partners, the venture capital arm of the National Grid, and law firm Slaughter and May, also invested in the round.

“We had lots of interest from lots of VCs,” Eleanor Lightbody, CEO of Luminance, told CNBC in an interview on Tuesday.

The fact that AI is now a “hot topic” certainly helped, Lightbody said, but she added that Luminance had the metrics — such as its annual sales performance — to match the interest it’s gotten from investors.

Lightbody said that businesses are investing in AI tools like Luminance’s to keep a competitive edge, as well as to reduce costs.

“Everyone wants to stay competitive,” she told CNBC. “We want to build opportunities they didn’t know existed.”

Luminance said its annual recurring revenue jumped roughly fivefold in the past two years, but declined to share figures with CNBC. The company counts the likes of Koch Industries, Hitachi, Yokogawa, Liberty Mutual, LG Chem, and BBC Studios as its clients.

Legal business

Founded in September 2015, Luminance develops machine learning models that help lawyers automate contract reviews and shorten the time it takes to get them signed. The company was founded by a combination of lawyers, mathematicians, and experts in mergers and acquisitions at the University of Cambridge.

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Luminance is one firm of the many generating buzz from investors thanks to the hype swirling around artificial intelligence. Companies like OpenAI, Anthropic, Cohere, and Mistral have raised billions of dollars from venture capitalists — along with interest from large tech firms like Microsoft and Amazon.

Microsoft has invested north of $10 billion into OpenAI, and the firm recently completed a secondary share sale led by Thrive Capital, valuing it at $80 billion.

Luminance declined to comment on its valuation, but Lightbody said that it fetched a “significant premium” over the $100 million assessment that the company secured in 2018, when it last raised external funds.

Investors have been placing bets on sector-specific AI companies lately, sometimes in favor of businesses pursuing a form of “general” AI that would be capable of performing any task imaginable.

In a sector like law, where a high level of attention needs to be paid to a company’s specific legal controls and decision-making, Lightbody said that general-purpose AI solutions like ChatGPT aren’t the answer.

“We’re going to start seeing a lot more specialized AI companies come out,” Lightbody said. “That’s exactly what we’re doing.”

She noted that domain-specific large language models are “absolutely key” in the legal field.

“It’s important because, unlike generative AI, where it doesn’t really matter whether the answer is wrong because the whole point of AI is to come up with an answer, when it comes to legal that just can’t happen.”

Generative AI tools like ChatGPT have become known for producing “hallucinations” — answers that contain false information about certain historical events, in an effort to guess the answer to a user’s question.

Luminance plans to invest aggressively toward expanding its U.S. footprint, in an effort that Lightbody said will include hiring new executives locally, as well as exploring new offices.

Autopilot

Last year, the company launched an artificial intelligence tool capable of negotiating a contract completely autonomously without any human involvement. Luminance says the instrument, dubbed Autopilot, handles day-to-day contracts negotiations, and especially the tedious manual work of reviewing nondisclosure agreements (NDAs).

Luminance developed the AI based on its own proprietary large language model (LLM). LLMs are a type of AI algorithm that can achieve general-purpose language processing and generation.

The business is backed by Invoke Capital, the venture capital arm owned by controversial British entrepreneur Mike Lynch.

Lynch has been accused of artificially inflating the value of his software company Autonomy to Hewlett Packard Enterprise, which is suing him for billions of dollars’ worth of alleged losses.

He has been charged by the U.S. Justice Department with 14 counts of wire fraud, one count of securities fraud, and one count of conspiracy to commit wire fraud. Lynch denies the charges and says that Autonomy underperformed under HPE due to mismanagement from its new owner.

Lightbody said that the U.S. proceedings against Lynch aren’t creating uncertainty for Luminance, and that the businessman has no day-to-day involvement in the running of the company.

Correction: This article has been updated to reflect the spelling of Eleanor Lightbody’s name.

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Baidu, once China’s generative AI leader, is battling to regain its position

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Baidu, once China’s generative AI leader, is battling to regain its position

Pictured here is the Ernie bot mobile interface, with the Baidu search engine home page in the background.

Future Publishing | Future Publishing | Getty Images

Chinese tech giant Baidu has released two new free-to-use artificial intelligence models as it vies to regain its leading position in the country’s fiercely competitive AI space. 

The Baidu models launched Sunday included the company’s first reasoning-focused model, and come ahead of plans to move toward an open-source strategy. 

However, experts told CNBC that while the release of the models is a positive development for Baidu, they also highlight how it is playing catch up as its Ernie bot — one of China’s earliest versions of a ChatGPT-like chatbot — struggles to gain widespread adoption. 

“The new models make Baidu more competitive since the company has been lagging behind in a reasoning model release,” Lian Jye Su, chief analyst at Omdia, told CNBC.

A reasoning model is a large language model that breaks down tasks into smaller pieces and considers multiple approaches before generating a response. It is designed to process complex problems in a similar way to humans.

Chinese startup DeepSeek upended the global AI race and transformed China’s ecosystem in January when it released its R1 reasoning model, which rivaled American competitors despite costing a fraction of the price.

Baidu has said its new ERNIE X1 reasoning model “delivers performance on par with DeepSeek R1 at only half the price,” and has “stronger understanding, planning, reflection, and evolution capabilities.” CNBC has not been able to independently verify this claim.

According to Wei Sun, principal analyst of artificial intelligence at Counterpoint Research, Baidu’s future competitiveness could hinge on whether its new models deliver on the promised performance and cost advantages. 

“Baidu is clearly in catch-up mode, largely due to its slow innovation pace and underestimating rapid shifts in market dynamics,” Sun said. 

What happened? 

Baidu rolled out its first generative AI platform to the public in 2023, giving China one of its first answers to OpenAI’s popular AI chatbot ChatGPT. 

However, despite initial momentum, Baidu’s Ernie product has since been eclipsed by competitors including startups as well as large-tech companies such as Alibaba and ByteDance.

Experts list a number of reasons for Baidu’s struggles and slow rate of innovation.

“Baidu fell behind when they tried to build proprietary models and compete for funding for AI,” Ray Wang, principal analyst and founder of Constellation Research, told CNBC. He added that the company has also suffered from recent government crackdowns and was distracted by “regulatory nonsense.” 

CFOTO | Future Publishing | Getty Images

Proprietary models keep their source code and underlying architecture confidential, in contrast to models from the likes of DeepSeek, whose source code is made freely available on the open web for possible modification and redistribution.

“Using a closed-source approach means that [Baidu] was training its model from scratch whereas the open-source models were able to leverage certain parts that were communal to developers,” said Kai Wang, a senior equity analyst for Morningstar. 

Baidu, however, said last month that it would make its next-generation AI model Ernie open-source from June 30, according to Reuters.

“Baidu has always been very supportive of its proprietary business model and was vocal against open source, but disruptors like DeepSeek have proven that open source models can be as competitive,” said Omdia’s Su. 

He added that Baidu is “merely following the footstep” of its biggest competitors in China, namely Alibaba, DeepSeek, and Tencent, which have all now released open-source models. 

Baidu’s advantages

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Baidu shares jump 10% following release of new open-source AI models

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Baidu shares jump 10% following release of new open-source AI models

ZHEJIANG, CHINA – MARCH 16 2023: A view of the logo of ERNIE Bot, an AI chatbot service developed by Chinese search engine Baidu, March 16, 2023.

Long Wei | Future Publishing | Getty Images

Shares of Chinese tech giant Baidu were trading up 10.7% in Asia on Tuesday, as investors appeared to react positively to the release of two new AI models over the weekend.  

Baidu released two new artificial intelligence models on Sunday, including the latest version of its foundational “Ernie” model and a new reasoning model that it said rivaled DeepSeek’s R1 model. CNBC is not able to verify these claims.

A reasoning model is a large language model designed to process complex problems in a similar way to humans, breaking prompts down into smaller pieces and considering multiple approaches before generating responses. 

According to Kai Wang, a senior equity analyst for Morningstar, the stock jump is likely a “delayed reaction” to the new models as Baidu vies to regain a leading position in China’s AI space. 

“The stock also hasn’t gotten as much love as the other hyperscalers but still it’s a platform that stands to benefit from greater AI demand since enterprises will need someone to help them with hosting, scaling, and computing power,” he said.

A hyperscaler refers to a major cloud computing company that provides massive data centers for computing storage and demands.

Baidu said on Sunday that its ERNIE X1 reasoning model “delivers performance on par with DeepSeek R1 at only half the price,” and has “stronger understanding, planning, reflection, and evolution capabilities.”

Chinese AI start-up DeepSeek upended the AI industry in January when it released its R1 open-source reasoning model, which rivaled models of American competitors, despite claims it was produced at a fraction of the cost and with far less powerful chips.

DeepSeek quickly overtook Baidu in China’s AI race, despite the company being one of the first in the market to launch a ChatGPT-like chatbot with its Ernie Bot, according to Wei Sun, principal analyst of artificial intelligence at Counterpoint Research, who noted other tech giants like Alibaba and Bytedance have also pulled ahead.

“Baidu’s competitiveness hinges on whether its new models truly deliver on the promised performance and cost advantages,” Sun said, noting, however, that AI pricing, particularly in China’s market, is highly fluid.

Baidu’s latest models, similarly to DeepSeek’s R1, have been released as open-sourced, meaning the source code is freely available on the open web for possible modification and redistribution. 

This represents a change from Baidu’s prior strategy of focusing on proprietary models. 

“By open-sourcing its models, Baidu seeks to once again position its technology as an industry standard, strengthening its influence in the AI community and expand its market share,” said Sun.

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Software startup Rippling sues competitor Deel, claiming a spy carried out ‘corporate espionage’

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Software startup Rippling sues competitor Deel, claiming a spy carried out 'corporate espionage'

Co-founder & CEO of Rippling Parker Conrad speaks onstage during the TechCrunch Disrupt conference in San Francisco on Oct. 20, 2022

Kimberly White | TechCrunc | Getty Images

Human resources software startup Rippling sued competitor Deel in federal district court on Monday, claiming that “Deel cultivated a spy” to orchestrate a trade-secret theft.

The employee met with Deel executives and passed internal Rippling records to a reporter, according to San Francisco-based Rippling’s complaint in the U.S. District Court for California’s Northern District.

Rippling claimed in the filing Deel violated the 1970 Racketeer Influenced and Corrupt Organizations Act and misappropriated trade secrets.

The two startups are among the most world’s most valuable. Investors valued Rippling at $13.5 billion in a funding round announced last year, while Deel told media outlets in 2023 that it was worth $12 billion. Deel ranked No. 28 on CNBC’s 2024 Disruptor 50 list.

“Weeks after Rippling is accused of violating sanctions law in Russia and seeding falsehoods about Deel, Rippling is trying to shift the narrative with these sensationalized claims,” a Deel spokesperson told CNBC in an email. “We deny all legal wrongdoing and look forward to asserting our counterclaims.”

Rippling confirmed its findings earlier this month. The company’s general counsel sent a letter to three Deel executives that referred to a new Slack channel, and the Deel spy quickly looked for it. Rippling subsequently served a court order to the spy at its office in Dublin, Ireland requiring him to preserve information on his mobile phone.

“Deel’s spy lied to the court-appointed solicitor about the location of his phone, and then locked himself in a bathroom — seemingly in order to delete evidence from his phone — all while the independent solicitor repeatedly warned him not to delete materials from his device and that his non-compliance was breaching a court order with penal endorsement,” Rippling said in Monday’s filing. “The spy responded: ‘I’m willing to take that risk.’ He then fled the premises.”

Rippling hired the person whom it calls the Deel spy for a management role in 2023, as the two companies were becoming more competitive, the filing says. Deel had used Rippling’s software, but Rippling opted to not renew Deel’s contract, according to the legal filing.

The spy repeatedly accessed information about Rippling customers, quotes, sales calls, demos and support requests in internal Slack repositories, according to the filing. He found and downloaded Rippling’s guidance on how to go up against Deel for prospective business, too, the filing says.

Then, in February, a reporter at The Information sent an inquiry to Rippling that included Slack messages from inside Rippling, which the startup concluded were collected by the Deel spy, the filing says. Additionally, email records suggest that the spy met with Deel executives in December, Rippling said in the complaint.

“We always prefer to win by building the best products and we don’t turn to the legal system lightly,” Parker Conrad, Rippling’s co-founder and CEO, said in a Monday X post. “But we are taking this extraordinary step to send a clear message that this type of misconduct has no place in our industry.”

This isn’t Conrad’s first legal entanglement over data access. In 2015, ADP dropped a defamation lawsuit that claimed his previous HR startup, Zenefits, had obtained information from clients in order to provide them with payment processing services.

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