E-signature Software

by mike on August 1, 2007

This is an introductory post on electronic signature or e-signature software. I’d like to preface this post by saying that I have not spoken to many entrepreneurs in this space, and would be happy to include comments/interviews for a follow-up post concerning business models, market challenges, industry-specific solutions and a detailed technology review.
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Let’s start with a brief history. In 2000, the ESIGN (Electronic Signatures in Global and National Commerce Act) legislation was passed. This legislation essentially gave legal recognition to e-signatures and online contracts. Adoption was slow going for a few years following the legislation probably due to the required paradigm shift in consumer behavior and immaturity of technology.
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Fast forward to today. Adoption has been growing steadily and is rapidly approaching a tipping point. EchoSign, a leading vendor in the space, boasts 200 enterprise customers and over 80,000 users of their software. DocuSign also said it has processed more than three million online signatures since it was founded four years ago and is on track for transactions to increase 400% this year.

That being said, there still is plenty of room for growth. The market is relatively fragmented with no clear leader. Opportunities exist for pure platform plays and vertical-niche solutions.

Most contracts today are negotiated via email (or some other communication mechanism) until both parties have agreed on the terms. Final execution almost always takes place when each party prints out a hardcopy, signs it and faxes it to the other party. The process is generally cumbersome and disorganized. With recent advances in web technologies (e.g. AJAX, Flash) low cost solutions can be deployed faster and cheaper than their predecessors. At the same time, the success of the sector will ultimately come down to return-on-investment (ROI) and convenience. Companies recognize ROI through increased efficiency leading to higher processing volumes and cost savings on a per unit basis.

A significant challenge for the e-signature market is still security and fraud prevention. Consumers and companies want to feel comfortable that ample measures are in place to prevent abuse, especially for high cost transactions such as closing on a new home. I’m not sure we’re there yet, but are definitely heading in the right direction with bundling of audit trails, authentication and encryption.

I’ve listed a few e-signature companies below and would love to hear from entrepreneurs in the space, e-signature software users and any others folks that I have missed.

DocuSign, EchoSign, Topaz Systems, Interlink Electronics, Sertifi, Silanis, Encomia, eSign Systems, ARX, CIC

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