-Harvey AI, a fast-growing legal startup, is in advanced talks to raise over $250 million in a new round of funding at a valuation of $5 billion, sources familiar with the matter told Reuters. 

The funding round, led by venture capital firms Kleiner Perkins and Coatue, would mark a significant leap in Harvey's valuation from $3 billion in just a few months. Sequoia Capital, an existing backer, is also expected to increase its investment in this round.  

Investor interest in Harvey is driven by the company's revenue growth, according to people with knowledge of the company's numbers. Its annualized run rate reached $75 million in April, up from $50 million earlier this year.

This 50% increase in a matter of months has been fueled by strategic partnerships with major consulting firms like PwC as well as direct sales to large corporations for in-house general counsel use, said the sources, who requested anonymity to discuss private information. 

Harvey, Coatue and Sequoia did not respond to requests for comment. Kleiner Perkins declined to comment. 

Harvey, founded in 2022, has become one of the most high-profile legal startups in the age of generative AI.

The company uses AI models and machine-learning algorithms to assist lawyers and legal professionals in various tasks, including document review, contract drafting and legal research.

It has focused on selling to elite law firms and the biggest corporations, and building specific modules for tasks such as M&A compliance. 

The startup, which began by partnering with OpenAI to build a custom-trained model for legal professionals, announced this week that it expanded its offerings by adding foundation models from Anthropic and Google to its platform. 

The round, once finalized, would mark a doubling down in Harvey for Kleiner Perkins, which co-led Harvey's $80 million Series B in December 2023.

The adoption of AI technology has fueled surging interest from venture capital investors in the legal sector, which used to be overlooked by VCs for not having a growing addressable market and being dominated by a handful of big players.

In 2024, global investments in legal technology startups reached $2.1 billion, according to data from Crunchbase. The enthusiasm has grown, with February 2025 seeing one of the highest investment totals in U.S. legal tech history. 

This surge in funding reflects the increasing adoption of AI and other advanced technologies in the legal industry, as firms seek to improve efficiency, reduce costs and enhance the quality of their services in an increasingly competitive market.

Goldman Sachs analysts estimated last year that about 44% of legal work could eventually be automated.