e-Sig authentication

Update: On March 27, Angel Capital Group CEO Rachael Qualls confirmed for VNC the ACG has invested in SIGNiX's capital raise, but did say how much ACG invested. Original story follows:

SIGNiX Inc., the electronic-signature player based in Chattanooga, has set out to raise up to $5 million through its first institutional round of capital.

Across the past decade, the company has previously raised a total $15 million, according to management, but the latest push is its first institutional round.

The SIGNiX venture and its predecessors were energized by technology invented by a University of Georgia researcher in the Nineties.

Since then, the venture now known as SIGNiX has been pummeled by the Dot.com collapse, upset by a Canadian tech incubator's bankruptcy, and challenged by the Great Recession.

Today, with his customer base growing, SIGNiX President and CEO Jay Jumper (at right) isn't focused on the past. Instead, after nearly eight years with the venture, Jumper is focused on raising money.

Jumper told VNC in a recent interview that the $3 million to $5 million he hopes to raise will be used, first, to support execution of recently landed contracts with Merrill Lynch, TransAmerica, McKesson, Allstate and others.

The capital will also support new technology initiatives, which he declined to reveal for this story; and, will roll-out SIGNiX technology to such key allies as IBM Lotus Software, and at least nine other OEMs the company has signed during the past year.

Jumper said he is leading the new capital round, with no investment bankers involved. Jumper will be assisted by SIGNiX EVP Pem Guerry (at left). Previously, Guerry, 52, was president of World Healthcare Systems, a small medical-supplies manufacturer; and, president of nonprofit RiverValley Partners in Chattanooga. He was also once a deputy to now-U.S. Sen. Bob Corker, when Corker was former Tennessee Gov. Don Sundquist's finance chief.

Discussions with venture-capital funds have only recently begun, Jumper said, and no investments had been completed, as of yesterday. Thus far, Jumper said, interest has been highest among potential investors in Northeast and among those he met during his recent participation in the Southeast Venture Conference.

Jumper declined to provide SIGNiX revenue or profitability data, but said the company has 17 employees, including 8 at its headquarters in Chattanooga, with the balance in Atlanta and Baltimore.

Controlling interest in SIGNiX is held by ProNvest Inc., an advisory firm that provides financial advice and money-management services to retirement plans' participants.

Jumper is CEO of ProNvest, which has a 12-person call center in Chattanooga. ProNvest is joined in SIGNiX by six outside investors, whom Jumper declined to identify. The six outsiders are also investors in ProNvest, itself, he said.

SIGNiX offers a patented electronic signature solution that lets executives affix their signatures to documents via the Internet, over the phone or face to face. Jumper said the company also enjoys authentication and certification advantages, which he declined to discuss at length for competitive reasons.

Company materials provided VNC indicate SIGNiX is targeting "core industries," which are identified as "brokerage, annuities, credit unions and...real estate."

The e-signing industry argues that electronic, digitally secured systems mitigate risks associated with user authentication, repudiation of signatures, admissibilty as evidence in litigation, compliance and other risks.

Jumper said the market for secure digital-signing and -authentication sofware delivered as a service (SaaS) has ignited within the past 18 months - 10 years after then-President Bill Clinton signed the Electronic Signatures In Global and National Commerce (ESIGN) Act.

He explained that awareness of the return on investment in electronic signing and digital authentication has been spurred by case studies of successful adoption and by pronouncements from such influentials as Gartner Inc., the technology advisor. In June 2008, Gartner issued a framework for decision-making regarding adoption of e-signing for an array of industries and channels.

Evidence is mounting that e-signing works well in the most "serious" legal matters, while speeding transaction closings dramatically, reducing labor and expenses, and more rapidly generating revenue - while minimizing use of paper documents.

The backstory: Without ProNvest's intervention, this transplanted and arguably unique Tennessee venture would almost certainly have expired several years ago.

In the fall of 2006, Jumper and others owners sold the entire ProNvest enterprise to Jacksonville-based SunGard Data Systems Inc. The two companies had long had a close relationship, because ProNvest provides retirement-account management services to clients who had also adopted SunGard software.

Once inside SunGard, Jumper and his colleagues found they faced pressures resulting from an $11.4 billion leveraged buy-out of formerly public SunGard by Silver Lake Partners, Bain Capital Partners, The Blackstone Group, Goldman Sachs & Co., Kohlberg Kravis Roberts & Co., Providence Equity Partners and Texas Pacific Group.

In July 2008, ProNvest bought itself out of SunGard. Jumper told VNC that, among other factors, a SunGard hiring freeze, difficulty marketing then-ProNvest's technology among SunGard competitors, and SunGard's determination to shed SEC-registered investment advisor ProNvest made company's exit from SunGard mutually desirable.

While a fresh infusion of capital may allow ProNvest/SIGNiX to avert another dance with a strategic investor, the company faces another formidable force: Competition.

Jumper said SIGNiX has ten major competitors. Some of those companies - notably Seattle-based DocuSign and Montreal's Silanis - have banded together in a consortium known as the Electronics Signature and Records Association (ESRA). (Jumper said SIGNiX was once a member of ESRA, but is no longer, because in his view ESRA is "struggling" and adds no significant value for SIGNiX.)

Jumper said at least $6 million of the cumulative $15 million raised for what is now ProNvest's SIGNiX was raised before he joined the company.

The company was founded in 1999 by Gregg Rosenberg, Ph.D., who was then an artificial-intelligence scientist at the University of Georgia, as well as a researcher and engineer with Atlanta-based Equifax Inc.

Reached Sunday at his home in Northern Virginia, Rosenberg told VNC that his startup had run out capital amid the Dot-com bust. The company had then been bought by ITEMUS, a Canadian mining company-turned-tech incubator.

VNC research shows ITEMUS invested about $3 million in cash and services in the company - an amount Jumper indicated is reflected in the $15MM total raise for SIGNiX to date.

Soon after making that investment, ITEMUS suffered a blow when another tech acquisition went bad, and was forced into bankruptcy. At that point, other investors, including a group assembled by erstwhile NetCertainty CEO Tim Gelman, bought NetCertainty intellectual property out of bankruptcy for a reported $200,000 and created a company called Internet Integrity Systems Inc.

After that, ProNvest, which had been a client of Internet Integrity, became an investor in NetCertainty, then gained control and eventually integrated what is now SIGNiX into ProNvest. An interim CEO - a serial tech entrepreneur named Randy Keith - briefly took the helm, before Jumper assumed the CEO responsibilities he holds today. Jumper had already been a ProNvest shareholder and board member, for some time.

Rosenberg told VNC he hadn't heard of the 2008 spin-out and had assumed his creation was still property of SunGard. He expressed delight that his creation had survived the Dot-com implosion.

Rosenberg, now 43, is senior director and practice manager of an $18 million IT strategy and management best-practices consulting unit of the Corporate Executive Board, a $400MM company in Washington, D.C. ♦

Resources:ABA tutorial on e-signatures. SIGNiX page containing link to its patent.