Melbourne brothers who quit their jobs less than a year ago to launch a legitimate startup have raised $700,000 in seed funding, reinvigorating faith in Australia’s emerging entrepreneurship.
Umar, 27, and Abdulrahman Butler, 25, jumped on the boom in artificial intelligence (AI) with their family company, Isaacus. Isaacus is an AI software model that the brothers describe as a “legal superintelligence.”
Melbourne brothers Abdulrahman and Umar Butler have founded legal AI research company Isaacus. Supplied
In less than 12 months, Isaacus is used by more than 600 law firms, governments and businesses, paving the way for Victorian startups to scale internationally.
The brothers are part of a new generation of Gen Z technology founders, following in the footsteps of fellow Australian startups Canva and Atlassian.
But the Butlers say gaining investor trust in Australia is difficult and the risk of a “brain drain” is increasing as top talent leaves in droves for places like Silicon Valley.
“It’s very important to us that we’re based in Australia. Australia is where we grew up and Australia is like home to us,” Umar, a former assistant director of data science at the Attorney General’s Office, told nine.com.au.
“In fact, there is also a commercial dimension to this, which means that the quality of Australian talent coming out of top universities such as the University of Melbourne, the University of Sydney and the University of Sydney is comparable to the quality of talent found in the US and UK.
“But a lot of Australians tend to move overseas because there aren’t as many opportunities here.”
Isaacus secured the world’s first VC-backed foundational legal AI investment in September after raising $700,000 in pre-seed funding from Aura Ventures and Galileo Ventures.
We are currently in the process of raising capital and expanding into the US, UK and Canada.
“The ultimate goal is to cover all valuable uses of AI in law. We have a very broad scope, ambition and vision,” Umar said.
“But we were able to accomplish a lot by focusing on this area and doing it really well.”
Isaacs founders say there is a “brain drain” that is negatively impacting Australia’s startup culture. Supplied
Isaacus’ rapid success is a subtle reflection of the impressive cash AI founders are making on a global scale.
Behemoth Open AI is aiming for a historic $1 trillion listing on Wall Street, while Anthropic was valued at $965 billion before going public.
Isaacus’ founders do not join the cynics who predict that the AI bubble will burst and eventually burst.
But they say Australia is unlikely to benefit from trillions of dollars without significant local investment.
“Unless we have our own AI companies and significant digital infrastructure companies, we won’t be able to get a piece of that,” Umar said.
The technical whizzes needed for early stage startups like Isaacs are becoming a rare breed in Australia.
Mr Isaacs’ latest hire lives in the UK for half the year, and the brothers are currently recruiting staff in the US and UK.
According to HR payroll platform Deel’s 2025 Global Employment Situation Report, software engineers are the most common cross-border hire for local companies.
Thousands of Australian companies have also set up operations overseas.
The Australian Computer Society (ACS) revealed last year that 11,000 start-ups and other companies had left Australia for the US, UK and Canada over the past 20 years.
“People sometimes have the assumption that if it’s happening in Australia, it can’t be innovative, or that it’s logically impossible for someone to build an AI lab in Australia, and essentially it should be in San Francisco,” Umar said.
“There’s a bit of a challenge there, our venture capital (VC) industry is a bit less mature, so most of Australia’s capital comes from outside Australia.”
Business leaders have sounded the alarm after the federal government announced plans to scrap the 50% capital gains tax (CGT) in the 2026 federal budget, warning that there could be a mass exodus of entrepreneurs overseas in search of more favorable tax treatment.
Isaacs has already secured $700,000 in pre-seed funding. Supplied
While other governments around the world are encouraging start-ups, some argue the Australian government is erecting further obstacles.
Economist and data scientist Abdulrahman said Australia’s start-up culture should be fostered by the federal government, unhindered by changes to tax laws, before it becomes a bigger problem.
He warned that maintaining the status quo here for startups may be “less attractive” and far riskier.
“It’s just going to make an already pretty bad situation worse in terms of brain drain in Australian start-ups before CGT,” he said.
“When you’re in a highly competitive, innovative field, you’re competing with Americans and Europeans who are well-funded with government funding.
“I think the government should do more on the tax front to encourage people to invest in startups,” Umar added.
“If we’re very successful, we’re happy to pay a lot of tax through the company, but there has to be some incentive for people to start these businesses.”
