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26 September, 2016 - 12:11 By Tony Quested

HP eat your heart out – Lynch backs new AI due diligence software

Serial entrepreneur Mike Lynch is backing a new Artificial Intelligence company in Cambridge whose machine learning technology is set to revolutionise the due diligence process in dealmaking.

While Dr Lynch doesn’t list irony as a key element of the business plans for his ventures, the significance of the new technology surely won’t escape US giant Hewlett Packard.

Despite spending hundreds of millions of dollars with due diligence big guns when they paid $11 billion for Lynch’s Autonomy, HP is still fighting a legal battle to reclaim cash they claimed they had to write down because the Cambridge company’s finances were mis-represented – allegations Lynch and colleagues are fighting in the High Court.

Luminance, a new company in Lynch’s Invoke Capital stable in Cambridge, has just the technology to ensure those expensive due diligence ‘suits’ get the proposition right.

Invoke has invested an unspecified sum in Luminance, which has been collaborating closely for several months with Slaughter and May, the international law firm, in testing and piloting the software.

Luminance was founded by a combination of lawyers, experts in Mergers & Acquisitions and mathematicians. Its technology is based on research and development at the University of Cambridge.

Luminance harnesses the power of Artificial Intelligence to automatically read and understand hundreds of pages of detailed and complex legal documentation every minute. This offers companies the ability to carry out essential due diligence work with much greater speed.

Luminance CEO, Emily Foges, said: “Luminance has been trained to think like a lawyer. With Slaughter and May's help, we are designing the system to understand how lawyers think, and to draw out key findings without the need to be told what to look for. 

“This will transform document analysis and enhance the entire transaction process for law firms and their clients. Highly-trained lawyers who would otherwise be scanning through thousands of pages of repetitive documents can spend more of their time analysing the findings and negotiating the terms of the deal.”

Steve Cooke, senior partner of Slaughter and May added: “The legal due diligence process is ripe for the revolution that Artificial Intelligence offers. It is clear to us that the brains and technical capabilities of the Luminance team, backed by Mike Lynch and his Invoke Capital fund, are a winning combination in this area and one with which we are delighted to be collaborating. Luminance is an exciting development in this key area of legal process innovation."

Lynch believes the new venture is a real game-changer. He said: “It is not an understatement to say that this is an application of Artificial Intelligence that will completely transform the due diligence process, which is perhaps long overdue.

“Like our investments in Darktrace and Sophia Genetics, there is a technological advantage in this particular product that outstrips its rivals. AI has been famous for winning complex strategy games and this now puts it in the workplace, and in boardrooms, where its impact will be felt. 

“Invoke is delighted to be backing Luminance and we are particularly pleased that it is collaborating with Slaughter and May – a law firm which leads the way when it comes to innovation and quality of service.”

Invoke was founded by Dr Lynch, members of the senior management team from Autonomy, and a group of technology experts, with access to $1 billion in capital. It markets itself as the only investment team in Europe with a dedicated, in-house R & D division. It launched cyber security company Darktrace in 2013, which is now valued at £400 million, and invested in genomics specialist Sophia Genetics in 2014, which is already servicing 25,000 patients across the world.

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