COVID-19 has acted as a major change agent across every inch of every industry around the world. It significantly impacted the way humans work, live, and play, and as a result, fundamentally changed the way people, processes, and ecosystems interact with the built world. Prior to shelter-in-place, and over the previous decade, the built world was already experiencing a foundational transformational shift from offline to online. However, as COVID-19 was unfolding, and even in light of the existing tech shift, general consensus was that the real estate market would come to a grinding halt. Fast forward six months and the impact of COVID-19 has actually been the opposite (excluding some sectors, such as hospitality, restaurant, retail, etc). Transaction volumes have meaningfully returned, and financing markets have remained open, but even more surprising has been the astounding velocity in which new cloud technologies have been adopted and integrated into existing workflows and paradigms. The rapid acceleration of technology adoption is a testament to just how critical, resilient and deeply engrained the tech backbone has become within the broader industry. As markets “re-open” and the willingness-to-pay of incumbents increases, it only bodes well for those PropTech companies filling mission critical voids.
One example of a mission critical digital technology helping drive the transformation of the built world from offline to online is eNotary or otherwise known as “remote online notary”. Notarization is a function that has been an integral part of every real estate transaction for centuries. For those unfamiliar, a notary is a person who verifies signatures and plays a fraud-deterring role in real estate transactions. Notaries are empowered to put an executor under oath in order to verify a legal instrument’s claims and statements.
Up until now, notarization has traditionally been completed offline and in person using pen and paper. That said, eNotary isn’t new. Companies such as Notarize, NotaryCam and Safedocs have been around for years. Even though online notary is a seamless experience with a comparable price, it was tough to beat the convenience of walking to the neighborhood notary or using the in-house notary recommended by a buying agent which made remote online notary adoption slow. That all changed with the advent of COVID-19.
Walking to the neighborhood notary is no longer a clear, safe or reliable option. People are afraid to interact with others outside of their social “bubble”, let alone sign a physical piece of paper with a pen touched by strangers that oftentimes requires travel. It is this change in mindset that has led to the rapid adoption of remote online notary. It’s as if only a global pandemic could have forced this change in behavior that had been in existence for two millennia dating back to the Roman Empire.
Notarize, for example, is the largest eNotary by transaction volume and capital raised and is an online marketplace that connects 1099 notaries with executors (ie an Uber-like model). Notarize’s notaries witness executor signatures online and upon successful completion, Notarize and the notary both get paid a fee from the executor. Notarize’s product enables real estate transactions to be completed and is a key pillar in keeping the real estate industry “open for business”.
Prior to COVID-19, remote online notary was generally not accepted and was only legally approved in approximately 20 states. Today, all 50 states have temporarily legally approved remote online notary so it’s certainly possible that the temporary status across the country could be removed and the status quo reinstated as soon as shelter-in-place is lifted. However, we find that hard to believe. The longer COVID-19 lasts, the likelihood only increases that new behaviors such as, remote online notary, will become more permanent.
Then, of course, there is the “500-pound gorilla” in the tangentially related eSignature space, DocuSign, along with a plethora of other formidable eSignature players including HelloSign (which was acquired by Dropbox), for instance. Those companies are very different from companies such as Notarize because they are SaaS businesses and not marketplaces. That said, the difference in business model probably wouldn’t be enough to prevent them from entering the remote online notary space. As a result, and although technology differentiation is low, go-to-market strategy will be critical and a first mover advantage will be just as important when building supply/demand dynamics (ie attracting and aggregating the best supply which will in turn attract the most demand) in the marketplace. All things being equal, and similar to the eSignature market, the total addressable market for remote online notary is massive, extends way beyond real estate into IT and can most likely support multiple winners.
If you’re a founder working on eNotary please get in touch! It would be a privilege to learn more about your business and explore co-stewarding this exciting potential together.