Should you have been in the legal service landscape for a while, you should hear about Notarize – a Boston-based startup that touts itself as the first on-demand notary platform, allowing any person or business to get their documents legally notarized online.
Obviously, whilst the notarization process isn’t a particularly techie one, this is considered by many as a lengthy and burdensome procedure. Things have got more complicated since the advent of the “black swan” COVID-19 pandemic, when in-person contact is not recommended and the whole world shifts toward virtual. Fortunately, Notarize comes into place, disrupting the outdated business models and technologies to demystify notarization.
So, what is the story behind Notarize’s success? How has the company gained huge momentum within the legal service spaces? Let’s read on to find out!
Notarize: Born Out of a Notary Mistake
Founded in 2015, the Boston-based Notarize is the golden child of Adam Pase and Pat Kinsel, who was previously a product manager at Microsoft as well as the Founder and CEO of Spindle, a mobile data collection startup.
And the “aha” moment of Notarize came upon the selling of Spindle to Twitter in 2013.
Understandably, that transaction resulted in tons of paperwork with all documents required to be notarized. Yet, mistakes were made as the notary stamped, but forgot to sign them – and as a result, the documents became invalid. This began a weeks-long process to ratify the situation, which Kinsel vowed to never do again.
“That was really the moment where I said, there’s just got to be a better way,” commented Pat Kinsel. Notarize was then established and brought the remote online notary category into life.
Incredible Interest Besides Incredible Pushback During Its Every First Beginning
It’s fair to say that Notarize got off to a good start: Upon the product launch, several corporations, especially those suffering from inconveniences of the notary process, expressed their interest in adopting Notarize to automize their business practices.
“Initially, I was just trying to solve my own problem, which was that I didn’t want to have to get something notarized again. When we launched the product, almost immediately some very large enterprise contacted us and they said, “If you think it’s a pain to get something notarized, reimagine that process… That’s when I realized that this was really kind of standard digital transformation opportunity,” shared Pat Kinsel.
He added, “Not only are companies looking to get something notarized but they’re also trying to automate a business process – leasing a car, selling a home, etc. That’s really what they’re focused on.”
Despite such a promising prospect, Notarize, as the first-mover in the online notary sphere, had to navigate against the thorny notarization regulatory system. “It was just incredible interest, but at the same moment, there was just incredible pushback. We had a bunch of regulators and commercial organizations that came out against us – either in principle, saying “No, this is the devil’s work” or simply saying “Wait, we have no idea if this is legal.”
Actually, with Notarize product launch in February of 2016, almost immediately in March 2017, the National Association of Secretaries of State (NASS) launched a task force and studied the issue. “Their policy was against us. So, we had a big review session and that’s what really kicked it off.”
In response, Kinsel himself has traveled to 40 states and helped pass 31 pieces of state legislation to help pave the way for Notarize, which proved critical for this company’s stunning success.
“My partner and I went to 40 states. Ultimately, I’ve testified in 30-some states across the country. We did a whole host of legal research which is now getting into here – and ultimately convinced people first that it was legal so that they can do it across state lines,” stated the Notarize Founder and CEO. Besides, “we created model legislation. We got the GSEs (Government-Sponsored Enterprises) Fannie and Freddie to accept. At this point, it has been very widely accepted.”
Whereas players within heavily regulated industries may come up against a similar problem, this is obviously not the usual challenge that normal startups tackle with. As a category first-mover, Notarize managed to weather through this regulatory infrastructure and it deserves to succeed.
More than its core stamp and sign function, it’s the platform’s ability to navigate regulatory compliance that made Notarize a phenomenal success. “Identity and trust are such core themes and I think Pat Kinsel and his team can expand into much greater function than just notary,” commented Neil Underwood, Partner at Canapi Ventures. He went on to say, “Anything where you have to validate a transaction, that market is so huge, and the fun thing to think about is that Notarize can be the standard of trust.”
Notarize as a Rare Thriver Amidst COVID-19 Socio-Economic Crisis
When Covid-19 hit and the world went on lockdown, all industries and sectors that operated exclusively on paper were left behind, scrambling to navigate against the regulatory intricacies between the physical world and the Internet. Meanwhile, the Boston-based legal tech startup had the process down cold.
“The reason we were doing well prior to COVID is because we had really created legal clarity in the market. Online is infinitely more convenient, but if it doesn’t have legal standing, it’s pointless,” stated Kinsel. This explains why when people take on social distancing and the world shifts toward virtual, online notarization emerges as one of a few services that witnesses heated demand.
Indeed, amidst the COVID-19 outbreak, the ability to get a document notarized without leaving one’s home suddenly becomes more of a necessity than a luxury. “It was as though the entire world tried to digitize in a 10-day period.”
Over the past year, with such a meteoric rise of off-person notarization demand, Notarize managed to ink new partnerships and onboard major companies – such as Adobe, Dropbox, Stripe and Zillow Group, among others. The Boston-based legal tech has been experiencing a massive increase in transactions, yielding staggeringly 600% year-over-year revenue growth. Particularly, in 2020, it’s seen big spikes in demand from the real estate (up to 835% growth), financial services (up to 324% growth), automotive insurance sector (up to 219% growth).
“In 2020, the world rushed to digitize. Online commerce ballooned, and businesses in almost every industry needed to transition to digital basically overnight so they could continue uninterrupted,” Kinsel shared. “Notarize was there to help them safely close these deals with trust and convenience.
The Digital Notary Platform Tripling Valuation to Whoppingly $760 Million
Following a year of explosive growth, in late March, Notarize has announced $130 million in Series D funding led by legal tech-focused VC firm Canapi Ventures to fuel its continued expansion.
The round does value Notarize at $760 million, which is more than triple its valuation at the time of its $35 million Series C in March of 2020. Actually, this latest round is larger than the sum of all of the company’s previous rounds to date and brings Notarize’s total raised to $213 million since its 2015 inception.
“It was clear when Covid hit that there was going to be extraordinary demand for our service,” commented Kinsel. “What I’m most proud of this year was that we were able to serve the volume.”
Besides Canapi Ventures, the Series D has the participation from Alphabet’s independent growth fund CapitalG, Citi Ventures, Wells Fargo and True Bridge Partners. Prior backers Camber Creek, Ludlow Ventures, Second Century Ventures and Fifth Wall Ventures also took part.
In a statement, Neil Underwood, a partner at Canapi who is joining Notarize’s board, called it the “last mile of multi-billion-dollar business models” that promise digital transactions. “Notarize is disrupting outdated business models and technologies, and there’s massive potential, particularly in the legal space, as more companies will need to offer secure digital alternatives to in-person transactions,” he emphasized.
The company plans to use its new capital to expand its platform and product and scale “to serve enterprises of all sizes,” in addition to doubling down on future hiring. “We are very focused on making these things possible. We want to be first and move these markets forward,” Kinsel affirmed. “There is still so much regulatory momentum, new industries being clarified or large commercial organizations moving in the space for the first time. Our growth is continuing month over month.”
“Over the past year, the market for remote online notarizations has grown explosively as businesses across sectors have grasped the critical need for end-to-end digital processes,” said Jesse Wedler, Partner at CapitalG. “While Covid was an initial catalyst for adoption, we are seeing an acceleration of demand driven by process efficiency gains and compliance improvements made possible by remote online notarization. Notarize is the only enterprise-grade solution in this space that meets rigorous regulatory and compliance requirements, and it does so while also delivering delightful user experiences.”
From Entrepreneur to Entrepreneur: Top Advice for Successful Fund Raising
As the founder and CEO of $760 million legal tech star, Pat Kinsel is also the winner of HousingWire’s Rising Star Award and the NBA’s Technology All-Star Award. Notably, he’s also partnered with the VC from Polaris Partners. Not only raising capital multiple times but also leading a handful of VC investments, Pat Kinsel gets to have a unique perspective, when it comes to fundraising – one typical yet tough challenge for all entrepreneurs.
Kinsel shared, “When I was raising money the first time for Spindle, I got some advice. Someone said, ‘Why do you sound so damn apologetic’ and that stuck me for a long time… What I realized for myself when I’ve been raising money more recently, or when I’ve heard people pitch, is that there has to be real intentionality.” This means, “you have to have a real plan. You have to say, ‘I’m gonna do these things”.
Remarkably, he advises against raising capital for “the bare minimum”.
“You can’t just launch a company by doing the bare minimum of the bare minimum set of things. I do recognize that’s how some people have to start because they don’t have resources. But when raising money, you have to really lean into what you believe in, what you’re trying to accomplish, and just be unapologetic about what you need to get it done.”
From an investor’s perspective, he affirmed, although all VCs are looking for a return on their investment, “what I’ve learned from my seat in the investor’s chair is it’s actually truly okay to lose money.”
“As the entrepreneur, you need to understand that it’s okay for me to lose money. The social trade – or whatever you want to call it, is that, ‘I’m going to do whatever I can to give you the maximum return’, ‘I’m going to be ambitious and I’m gonna have this great plan’”.
“There’s a dangerous middle ground where people raise the capital as though they’re playing the game for break-up but then they frankly play too safe. That ends up in a middling spot.”
He continued by sharing his own stories, “My first company was my life. I never imagined doing anything afterward. But then, it’s sold; I woke up and I was like, ‘oh, the earth is still turning!’. So, as for companies, it’s fine to just be very intentional, about driving them, having an exit plan, whatever it may be, going for the most ambitious thing possible – and for failing.”
After all, being intentional, instead of getting unapologetic, comes as a strong plus point for entrepreneurs who wish to raise money for their startups.
The Bottom Line
As the creator and market leader of the remote online notarization landscape, Notarize has been “redefining client expectations by delivering a seamless experience that will be the future of all trusted transactions.” On the heels of 600% YoY growth and COVID-19 lock-down as an initial catalyst for product adoption, the Boston-based legal tech stands high chances of fueling its explosive success and yielded more momentum within the legal service space.