EchoSign is the web’s No. 1 electronic signature service. It cuts the time it takes for documents to be signed and delivered electronically to just minutes; companies no longer need to wait for weeks to get back signed contracts. All users need to do is email the document, so the other party can e-sign it or print, sign and fax it. All parties then receive a PDF copy, and EchoSign handles the filing of the documents. There are various levels of membership. Fewer than five signatures are free, with other packages ranging from $12.95 to $299 a month depending on the number of users.
EchoSign was founded in 2005 by Jason Lemkin, CEO, a licensed corporate attorney and co-founder of NanoGram Devices. He was also previously at NeoPhotonics Corporation and BabyCenter.com. The prototype of EchoSign was self-funded by Lemkin. The company raised a $2.5 million series A from Storm Ventures in Q4 2005 and a $6 million Series B from Emergence Capital Partners in October 2007. At present, the company is cash flow breakeven. They may raise additional capital later to fund aggressive growth plans in 2009. EchoSign is based in Palo Alto, California.
As business is increasingly being carried out over the Internet, the need for electronic signatures is apparent. After the Electronic Signatures in Global and National Commerce (ESIGN) Act was signed by the US Congress in 2000, businesses everywhere in the US and most parts of the EU turned to electronic signatures to expedite business. EchoSign provides a simple, 100% web-based, fully digital solution, with no hardware or software to install, thereby bringing e-contracting to the mass market.
The market of e-signature providers is still quite small but it is evolving. According to eFax/j2 Global, electronic faxing is a $500 million market. A remarkable statistic: up to 40% of FedEx business, over $10 billion, is for signatures. Although there are no exact figures, the e-signature market to date is possibly under $30 million. One of EchoSign’s direct competitors is DocuSign.
When asked about market penetration, Lemkin said that viral accounts for 50% of new users. The key issues which helped the company early on were landing British Telecom (BT) as a marquee customer and a partnership with Salesforce.com.
EchoSign has over 8,000 customers and 500,000 users. Of that more that 80% are in sales. According to Quantcast, estimated monthly traffic is 23,000. Compete says there were 51,000 unique visitors for September. EchoSign’s key customers include BT, Qualcomm, Time Warner, Comcast, Lennar Homes, Facebook, and Salesforce.com. EchoSign’s revenues are confidential, but Lemkin said that they are ‘in the millions per year’. The company has no thoughts of exit during this recessionary climate. Lemkin simply said, “Build a great business that grows fast, is profitable, and with insanely happy customers. The exits follow – you don’t actually have to work at it in that case. Make our 8,000 customers very successful. They will get us another 80,000.”
Clearly, EchoSign is creating a new category, trying to move the physical contract signing business via Fedex/UPS to an electronic workflow. It requires changing human behavior, something that takes time. However, it is certainly an efficiency that businesses need to adopt, and the market will, most likely, develop nicely over the next 5 years. Given the recessionary climate, cost-cutting will be a strong objective for businesses, and EchoSign’s value proposition should resonate well.
*Concept Arbitrage: eFax
* An interview with Brian Jacobs of Emergence Capital where he explains the investment thesis of the firm around services
* Interview with Rene Bonvanie on Salesforce.com’s platform strategy
This segment is a part in the series : Deal Radar 2008