DocuSign, the $1.45 billion revenue esignature business, has formally launched an investment arm, Ventures, which will target the legal tech sector. It has also unveiled a recent investment in VC-focused ‘The Legal Tech Fund‘.
DocuSign has been making investments in several legal tech companies – some that were not well-publicised – such as: DataGrail (data privacy), Pactum (automated contract re-negotiation), and Snapdocs (mortgage deal closing), as well as more publicised ones such as BlackBoiler (pre-execution contract review).
It has also invested in and then bought Seal Software (post- and pre-execution contract analysis) and Clause (smart contracts). It has also bought CLM company Spring CM, and they took the founding team of contract analysis company Paperflip, after that business folded.
In short, it has already shown itself to be an astute and major investor in legal tech with a focus on products that connect with its agreement-centric business, which all started with esignature.
What is happening now is that these investments and its strategy for future investments is being formalised. It is also firmly joining the legal tech sector, not just as a company connected to this world via esignature, but moving right into the centre of it.
In terms of the unusually named ‘The Legal Tech Fund (LTF)’ – this is a US-based VC group that has made its own investments in the sector, often in less well-known companies. These include: LeasePilot (lease drafting), Qualytics (compliance), and Quanlex (litigation finance platform). But, they’ve also invested in some companies that are better known, such as Josef (no-code automation).
Artificial Lawyer asked Zach Posner, co-founder of the LTF, how this relationship would work.
Posner explained that they would be working on behalf of DocuSign to help find companies for it to invest in, as well as introducing the companies they already have in their portfolio to Ventures. When asked if they might co-invest, he said: ‘[That is a] possibility and we are excited to surface opportunities for co-investing.’
But, why do this deal? (Note: The sum invested in LFT was not disclosed).
‘DocuSign represents much more than capital. They are the largest legal tech company in the world and we are beyond excited to have the opportunity to be able to introduce our portfolio companies into the DocuSign ecosystem.
‘We are humbled to have DocuSign as a partner in our fund. When we launched the fund, part of the vision was to accelerate our portfolio by getting them exposure to the industry leaders, and to help those leaders unlock new opportunities. We have really enjoyed getting to know and are excited to continue our relationship with the DocuSign Ventures team,’ said Posner.
In terms of how DocuSign sees things, this is what Eric Darwin, Head of Corporate Development, said: ‘More and more businesses are recognising the power and urgency of digitising their agreement processes in order to meet the new ‘anywhere expectations’ of their customers, partners, and employees. DocuSign Ventures is excited to partner with the disruptors who are propelling smarter, simpler and frankly better ways of executing and fulfilling agreements.’
Is this a big deal?
This formalisation of DocuSign’s investments into the legal tech field is important in multiple ways.
- First, platformisation and consolidation – with the deals it has done already and the ones it is likely to do, given that DocuSign has a tendency to buy the companies it invests in, then they are likely going to build a really major platform that could take a big bite out of market share across several legal tech segments.
- DocuSign is strategically placing itself at the heart of the legal sector, not just working as a general esignature company. With its size and resources, and huge client reach, (because so many law firms and corporates already use its esignature capabilities), it has a major opportunity to make an impact. And it was interesting to see Posner call DocuSign ‘the largest legal tech company in the world’. Definitions here remain a bit loose, but the fact that it’s seen this way now is significant. (P.S. if we’re going to define by overall revenue then probably Thomson Reuters would be larger…and then we get into the whole debate of how we define what actually is ‘a legal tech company’, which appears to be increasingly open for discussion.)
- This is further proof of the maturity of the legal tech market. We have seen IPOs, we have seen billion dollar valuations, and in DocuSign Ventures we see a very established company that no doubt could succeed without needing to expand its products further into the legal sector, nevertheless choosing this sector to build out its business. That shows that its management believes there is much growth to be had in the legal tech world.
The following questions are naturally: which are the next companies they will buy and/or invest in? And which will be the next major corporate that is outside of the core legal sector that now chooses to come into the field to take market share via a range of new product offerings?
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What Are They Looking For?
If you’ve read this and are wondering if DocuSign will invest in you, check out the info below:
‘DocuSign Ventures focuses on co-investing in and partnering with companies raising early stage funding to innovate around the agreement process. It is also another demonstration of DocuSign’s commitment to customer success. By staying close to and working with the startups innovating at the edge, DocuSign can help its customers identify and integrate new solutions. This includes technologies that facilitate pre-agreement work and negotiation, in addition to the logistics and workflows that may result after an agreement is signed.
DocuSign Ventures is interested in a diverse range of innovative technologies being used to transform how agreements are created, executed, and managed including:
- Agreement process automation and workflows
- AI and smart contract technology
- Identity verification and management
- Digital payment platforms
- Legal and compliance automation technologies
- Vertical solutions in areas such as mortgage and lending.’
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