IPO of the Year: DocuSign

Founded in 2003, DocuSign helps organisations connect and automate how they prepare, sign, act on and manage agreements, aiming to accelerate the process of doing business. As part of its cloud-based system of agreement platform, the company offers e-signature services enabling users to electronically sign documents on practically any type of device. Claiming to be “simplifying people’s lives”, DocuSign reports having more than 425,000 customers and millions of users in 180 countries worldwide.

In April last year, the e-signature company floated in a $629m upsized public offering that enabled several shareholders to either exit or reduce their stake in the group. Shares were priced at $29, above the $24 to $26 range originally set, giving DocuSign a market capitalisation of more than $4.4bn. The company issued 16 million shares on the Nasdaq Global Select Market, making around $466m of proceeds while shareholders sold $164m worth of shares in the offering.

In the year preceding its IPO, DocuSign more than halved its net loss to $52.3m while increasing its revenue by 36% to around $518m. Since 2003, the group gathered an estimated total of $525m of funding via numerous rounds, including a $300m series F in 2015, which featured chipmaker Intel’s corporate venture capital (CVC) arm, Intel Capital, as well as computer producer Dell and telecommunications firm Deutsche Telekom. The round, in which DocuSign was valued at $3bn, was completed by hedge fund Brookside Capital, alternative investment firm Bain Capital’s VC branch Bain Capital Ventures, global equity manager ClearBridge Investments and sustainable investment manager Generation Investment Management.

In 2009, DocuSign had raised a $12.4m series C led by then-new VC investor WestRiver Capital, and joined by existing VC investors Ignition Partners, Frazier Technology Ventures and Sigma Partners, which had already provided a $10m series B in 2006. The following year, VC investor Scale Venture Partners led a $27m round, completed by the same three investors and by enterprise software provider Salesforce’s CVC arm Salesforce Ventures. In 2012, internet conglomerate Alphabet’s subsidiary GV [then known as Google Ventures] provided $8.2m of the $55.7m that DocuSign received in a series D round joined by Comcast Ventures, investment arm of global telecoms group Comcast Corporation, as well as fellow VC firms Sapphire Ventures [formerly SAP Ventures], Kleiner Perkins Caufield & Byers (KPCB) and Accel.

A further joint investment of $85m featuring many of DocuSign’s existing investors brought its valuation up to $1.6bn in 2014. The same year, the company secured a $115m series E funding featuring NTT Finance, owner of telecoms firm NTT; Samsung Ventures and BBVA Ventures, respective investment vehicles of electronics maker Samsung and bank BBVA; and human resources firm Recruit and conglomerate Mitsui. These corporate investors were also joined by a number of non-CVC investors.

As part of DocuSign’s IPO, GV sold 407,000 shares representing a total $11.8m, diluting its stake from 1.4% to 1%. Comcast Ventures, meanwhile, divested 48,000 shares for $1.4m, equating to 10% of its stake. Sigma Partners, which was DocuSign’s largest shareholder at the time, sold $24.9m worth of shares and came out with a 10.8% stake, down from 12.7%. Real estate-focused VC Second Century Ventures, which had become a shareholder in 2009 by investing an undisclosed sum, made $46.4m from its share sale, reducing its stake from 4.1% to 2.6%. The other selling investors were Ignition ($22.7m with a 9.8% stake post-IPO), Frazier ($14.4m/6.1%) and Scale ($14m/2.9%). Morgan Stanley and JP Morgan acted as lead book-running managers for the IPO.

Following the transaction, DocuSign’s shares rapidly rose by almost 50%, which according to GCV was yet another illustration to the fact that IPOs were back with a bang for tech companies. Shortly after going public, the group acquired SpringCM, a cloud-based document generation and contract lifecycle management software company based in Chicago, for approximately $220m in cash. Dan Dal Degan, CEO of SpringCM, commented: “SpringCM shares DocuSign’s passion for transforming and automating the foundation of doing business – the agreement process. That is what we have been focused on since inception, and it is why we power the contract lifecycle management processes for more than 600 of the world’s leading companies – including ADP, Aetna, Facebook, Hilton, Lenovo, Spotify, and the US department of agriculture. By joining forces with the market leader, we can continue to simplify and accelerate the process of doing business, and drive innovation both before and after agreements have been ‘docusigned’.”

While DocuSign’s shares reportedly dipped 20.2% in October according to S&P Global Market Intelligence, company CEO Dan Springer shared his “very optimistic” outlook on the future, with the recent acquisition of SpringCM representing “a big opportunity to sell much larger products to a much larger customer base,” he said.

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