4 Takeaways From a Legal Startup Gone Wrong

For 8 years, Tiyani Majoko practiced commercial and corporate law in South Africa. Though she left big law to open her own firm in 2015, Majoko’s ultimate goal was to make legal services more accessible to small businesses. 

“I’ve been thinking about how to do that for the last decade,” she says. “The next step was finding the solution through a technology-based approach.”

The solution became Anü, a platform founded in 2020 that matched early-stage startups with small law firms that could handle common legal needs, such as preparing for a seed round or incorporating a business. 

Majoko, who came to Cornell in 2019 to pursue her law degree in the US, came up with the idea for a class assignment with a data science grad student, Max Wulff. The pair decided to turn the project into a real business, and got the venture off the ground with $12k from Wulff’s family. 

Majoko (middle) with co-founder Wulff (right) and their intern Audrey Yee (left).

The company offered 3 pricing tiers to startups, ranging from free to a one-time $50 fee, and charged law firms a $250 monthly subscription to stay on the platform and be matched to new clients.

The co-founders prided themselves in their vetting process and their retention rate: once startups were paired with law firms, they had zero no-shows out of the 100 startups they paired, a sign of their customers’ interest and reliability.  

“We wanted to introduce law firms to high-quality clients who were almost at the point of purchase and who were ready to pay for services,” says Majoko. 

While the founders were solving a real problem for the industry, their business model fell short in a highly regulated sector that made growth and profits difficult. 

Below, Majoko shares the lessons she learned from the experience as well as the mistakes other founders should try to avoid.

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Lesson 1: Create a business model that can scale. 

From the start, Anü’s customer base was limited by the number of viable startups and the tight budgets many early-stage businesses maintain. 

Furthermore, law firms abide by very strict rules on how they’re allowed to market themselves, and some worried about sharing legal fee information with a non-law entity like Anü. 

Yet the company was attempting to pair each law firm with 5 startups per month — a cadence Majoko now says was unrealistic. 

“If we had 10 law firms, that would be 50 startups per month. And 600 per year. And if we increase the number of law firms we work with, we’d have to increase the number of startups,” she remembers. “From that perspective, scaling wasn’t ever going to be easy.”

Even if that number of startups wanted to sign up for the service, Majoko says her team didn’t have the capacity to handle the work — particularly when the legal sector often requires lawyers and clients to be in the same state. 

“There were only 2 of us working full time,” she says. “How were we going to actually target that many lawyers and startups in each state?”

Lesson 2: Find focus in your customer acquisition strategy. 

To recruit startups for their network, Anü’s team concentrated their efforts at universities that had startup programming — such as incubators, boot camps, or accelerators — knowing many students would be looking to continue their businesses after graduation. 

They also found connections through the small business administrations of different cities. The company couldn’t compete with big law firms who target startups from well-known accelerators like Y Combinator or Techstars, so they thought approaching early-stage firms in smaller metros would be an effective strategy. 

“That wasn’t generating leads fast enough,” Majoko says. “We didn’t have the type of velocity that investors were looking for.”

To find more clients, the co-founders attempted customer acquisition via social media. Majoko regularly published to LinkedIn and used Twitter to build brand awareness, hoping that they could get leads to find them organically. 

“Our marketing strategies were all over the place,” says Majoko. “Pursuing universities, talking to SBAs in small cities, using social media — we had a lot going on and we were spread very thin.”

Looking back, Majoko thinks the company should have focused on one customer acquisition strategy and created reasons for startups to come to their site. For example, Anü could develop some sort of tool for startups that would draw them to the website, ultimately turning free users into paying customers. 

Lesson 3: Flesh out your business before seeking investors. 

The co-founders started pitching Anü to investors while they were in their final year of grad school, with the aim of raising $500k. After speaking with a new investor every week, Majoko says they began hearing the same pieces of feedback. 

“What we kept hearing from investors was that it was ‘too early,’” says Majoko. 

Anü’s ultimate goal was to create an algorithm that matches startups and law firms, eliminating human biases and labor from the process. But at the time, the founders didn’t have enough transactions to create the data pool needed for the algorithm to work properly. 

Investors thought the proprietary tech was too immature, and feared the startup didn’t have enough traction among its users. A waitlist of law firms would have proven demand, but Anü didn’t have that in hand either. 

“No one ever disputed that we were solving a real problem,” says Majoko. “We just didn’t have enough transactions for users to start shaping the tool in the way the investors wanted.”

Lesson 4: Evaluate the viability of your business model.  

In hindsight, Majoko says her business strategy was a bad idea. While Airbnb can take a percentage of the fees a user pays to rent a house, and Uber can take a percentage of the amount a user pays to take a trip, Anü cannot earn a percentage of what the user pays a law firm because it would be considered “fee sharing” under industry regulations. 

That meant Anü could only charge law firms the $250 flat fee, severely hindering the startup’s growth potential. The only way to make more was to add more firms and more startups to its network, a much harder task. 

Majoko sees now that a more workable solution would be entering a less regulated industry that allows fee sharing. “Offering other services that a startup would need, such as marketing, accounting, HR, we could have been a one-stop place,” she reflects.

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Majoko has since left the startup space, and now works in legal operations at International Finance Corporation. 

Though her venture failed, Majoko says there’s a lot she’s proud of — particularly giving opportunities to other women in business. 

“Every single contractor we hired was a woman,” she says. “We didn’t have much, but whatever we had we gave it to women-owned businesses and entrepreneurs.” 

That sentiment is behind her final piece of advice: Do not go at it alone. 

“You can’t do this startup thing alone; you need community,” she says. “Even if you are a solo founder, you need people around that believe in you and support you.”

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