Sanrio, the Japanese conglomerate behind “cute” merchandise like Hello Kitty, presides over thousands of brands—making the task of keeping track of licenses and collecting royalties a tall order. To streamline its licensing operations, Sanrio turned to Brainbase, a Los Angeles startup run by a 23-year-old wunderkind named Nate Cavanaugh.
Launched last summer, Brainbase has already amassed a diverse customer list that includes BuzzFeed, home decor maker Kathy Ireland, and the Vincent Van Gogh museum. And on Tuesday, Brainbase announced it has raised $8 million in a Series A funding round led by Bessemer Venture Partners and other investors, including Rent the Runway cofounder Jenny Fleiss.
Brainbase occupies a decidedly unsexy corner of the tech landscape known as legal tech, which typically entails entrepreneurs seeking to automate a variety of legal work. While the field offers the prospect of high margins, some legal-tech firms have struggled—including buzzy startup Atrium, which raised $75 million only to implode earlier this year.
In an interview with Coins2Day, Cavanaugh explained that Brainbase began by setting itself a relatively easy task—helping brand owners track their trademark licensing arrangements. After achieving a projected growth rate for this year of 450%, Brainbase plans to use its new funding round to pursue related services. These include a payment feature for clients to collect royalties more promptly, and tools to manage other forms of IP such as copyrights and patents.
“Brainbase is bringing the archaic, paper-shuffling world of IP management into the 21st century. We’re thrilled to partner with this team as they help owners of IP assets capture more value while saving a boatload of time and effort,” said Kent Bennett of Bessemer Venture Partners in a statement.
Oddly, Cavanaugh and his cofounders have no background in law but rather in fields like product design and economics. Cavanaugh says he was inspired to launch a startup focused on intellectual property when he was 19 and heard a talk by venture capitalist Fred Wilson about the problems created for startups by “patent trolls”—firms that don’t make anything but amass IP in order to pursue legal action against companies that do.
The idea for Brainbase took further shape after he learned of Tesla founder Elon Musk’s decision to make the company’s patents available to anyone who wished to use them. Realizing that he lacked the background to build a startup focused entirely on patents, he turned to building a broader licensing platform.
Today, Cavanaugh says, Brainbase works with an outside law firm to handle legal issues, while the company’s 20 employees—a figure he expects to nearly double after the funding round—focuses on software. The startup’s advisers include the former managing director at Sanrio, Ray Rehito Hatoyama, and former Mattel CEO Bryan Stockton.
Cavanaugh notes that he takes pleasure in the complexity and challenge of helping firms manage intellectual property.
“Legal tech is very unsexy, but it suits me as I wanted to do something difficult,” he says.
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