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A Founder's Guide to Legal Contracts | Aditya Pandranki (Doqfy)
11 Plays4 days ago
"India's complex regulatory landscape, often seen as a hurdle, can actually be a powerful competitive advantage for startups."
Aditya Pandranki shares how Doqfy strategically leveraged the intricacies of varying state-wise stamp duty regulations, turning a common business challenge into a unique selling proposition and a significant moat.
Aditya Pandranki is the Founder and CEO of Doqfy, a B2B SaaS platform revolutionizing contract lifecycle management in India, founded in 2019. Drawing from over 18 years in IT and pivotal experience in banking with institutions like Standard Chartered, Aditya launched Doqfy, which now empowers over 1,000 businesses across 10+ industries. The platform has managed over 100 million contracts, achieved a $1.3 million revenue in FY24 (approx. Rs 9.05 Cr) with a stunning 110% year-over-year growth, and has successfully raised around $2 million in funding after an initial bootstrapping phase of Rs 25 lakhs.
Key Insights from the Conversation:
👉The critical legal necessity of stamp duty for contracts in India and why it's often misunderstood or sidestepped.
👉A deep dive into various digital signature mechanisms like Aadhaar eSign, DSC tokens, and electronic signatures, including their validity and use cases in India.
👉Doqfy's strategic evolution from a focused contract execution tool to a comprehensive Contract Lifecycle Management (CLM) platform.
👉The transformative role of AI and NLP in modern LegalTech, automating contract drafting, review, summarization, and proactive risk assessment.
👉Actionable strategies for customer acquisition, market penetration, and scaling a B2B SaaS business tailored for the Indian enterprise landscape.
Chapters:
00:00:00 - Introduction: Aditya Pandranki & The Doqfy Mission
00:01:25 - The Personal Story Behind Doqfy's Founding
00:03:15 - From Contract Execution to Full CLM & COVID's Impact
00:04:22 - When is a Contract Legally Binding in India?
00:05:25 - Stamp Duty: Why It's Crucial (and Often Skipped)
00:18:02 - Doqfy's High-Volume Use Cases: Banking & Beyond
00:24:00 - Automating eStamping & The Tech Behind Doqfy
00:27:00 - Decoding Digital Signatures: Aadhaar, DSC, Electronic Explained
00:43:45 - Doqfy's Revenue Model & Market Landscape
00:49:30 - The Role of AI in Modern Contract Lifecycle Management
01:00:15 - Client Acquisition & Scaling a B2B LegalTech in India
01:02:41 - Doqfy's ARR & Future Growth Projections
#LegalTech #ContractManagement #eSignature #eStamping #CLM #SaaS #B2BSaaS #StartupIndia #IndianStartups #Entrepreneurship #BusinessLaw #DigitalTransformation #AIinLaw #FounderThesis #MakeInIndia #DigitalIndia #RegulatoryMoat Disclaimer: The views expressed are those of the speaker, not necessarily the channel.
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Transcript
Introduction to Aditya and DocuFi
00:00:00
Speaker
Hi Akshay, my name is Aditya, I'm the founder and CEO of Docify. Docify is a contract management platform. We have been in the market for more than six years. Aditya, welcome to the Founder Thesis podcast.
Legal Challenges for Small Businesses
00:00:22
Speaker
arita welcome to The is, the reason why i really wanted to speak to you is you know as a and As ah like a founder of a very small-sized business, one struggles with things about laws, contracts, what's the right way to execute an agreement with a client, um what is legally valid, what is not legally valid.
Guidebook for Founders on Legal Navigation
00:00:46
Speaker
And you run DocFi, which is essentially a legal tech startup. ah So I'd love to... create a kind of a guidebook for founders on, which would help them navigate the legal challenges around contracts. So ah let's begin with, the give me an overview of what exactly is DocFi? What are you, what is the platform and the product?
00:01:11
Speaker
Sure. Thank you so much for the opportunity actually.
DocuFi's Evolution and COVID-19 Impact
00:01:15
Speaker
I'm Aditya Puntankhi. I'm the CEO and founder of DocuFi. DocuFi is a contract management platform. We started in 2019 predominantly to manage the contract execution to begin with.
00:01:29
Speaker
As a founder, we started in 2019. However, I've been in the IT industry for more than 18 years. Before starting DocuFi, I was also ah part of banking system for more than five to six years initially and that was when i started my career i worked with banks and nbfc's and uh so also we have identified a problem statement in the banking system and so the idea of docfac came in uh when my father had a requirement for one of the home loan documentation in way back in 2013-14 uh
00:02:03
Speaker
thirteen fourteen So i left my banking and I was working in IT. So he had a document requirement that he has to fulfill for the contract of home loan agreement and that I have to travel from Bangalore to my hometown to get this documentation completed.
00:02:24
Speaker
That has actually triggered me like I was doing the same thing for my customers way back in 2001 when I was working with Sundar Mohan Finance as as a home loan manager.
00:02:34
Speaker
So the same thing i have to do it after a decade. So that has actually given me a trigger that, OK, things have not changed much. later so and we want to digitize the journey of the contract execution and the banking system to begin with that's how the journey of docifest started in 2019 and we have been in the market for more than six years now and and most of the banks and nbfc's use our platform for their different sorts of loan documentation vendor contact service contracts uh employment agreements so so that's that's how the the journey started
00:03:12
Speaker
and the and Docify manages the end-to-end life cycle of contacts though we have started for the contact execution we have pivoted from contract execution to contract lifecycle management so when we started in 2019 it was like a push product right so people were not not so much welcoming in terms of digital contract movement. So it's like, and then suddenly COVID hit. so There was no movement of documents here and then so on.
00:03:43
Speaker
We have an IT Act 2000, but it clearly says that you can execute contracts, like agreements in a digital form, but as India, like we, the adoption, like unlike the Western countries, the adoption of digital contracts is slower when comparing to the Western world.
00:04:01
Speaker
So when COVID covid hit, it it became like a full
Legal Binding and Contracts in India
00:04:04
Speaker
product. So all all the customers started reaching out to DocuFam and they have integrated our system into their system so that they can actually digitally execute contracts, exibents, deeds, vendor contracts.
00:04:19
Speaker
So let's start with understanding when is the contract needed? So the contract is needed whenever more than two parties would want to get into an engagement of fulfilling a certain obligation.
00:04:35
Speaker
So the basic needs of a contract is an offer, acceptance and an offer concentration. So when these three things are covered and if both the parties agree to oblige to the the requirements, then they can get into a contract and then execute the contract.
00:04:54
Speaker
the Is there a difference? So, you know, for example, if I am an agency owner and I'm providing some sort of a service to a client, let's say some marketing service to a client, ah is there a difference between me sending a proposal on email and him accepting it on email versus us having a contract?
00:05:16
Speaker
What is, ah you you know, which, what is the correct way to do this? so in order to get a legal binding of the contract so even the email acceptance also considered as acceptance but if there is a future obligation or a litigation to to take this to the arbitration or any any court kind of thing right so it has to be executed a on a document where both the parties have have agreed for the terms and then they sign the document
00:05:48
Speaker
and especially in India right if you have to execute a contract that has to be appended with a stamp duty which is a state subject again right so stamp duty is something like which brings the legal binding of the contract sometimes few contracts are done without the stamp duty and then there are scenarios where the court would ask you to go back to the stamp counter and then Pay the stamp duty to accept the document in the court.
00:06:16
Speaker
So in this scenario, usually if the stamp duty was supposed to when you were supposed to execute a contract of 100 piece stamp duty, you people would end up paying 10 times to 15 times So of the of the actual stamp duty. So it's going it's going to be the impounding will be applicable so so they have to pay extra fee of the stamp duty routine and then submit the documents to the court so you said that email acceptance is legally binding why do i need a contract then which is signed and stamp may not be legally binding uh email email acceptance that legally binding man it's it's only for the internal understanding right if you have to submit this
00:06:59
Speaker
In the court of law, it can act as an evidence, but it cannot stand as a contract because is not defined as ah as a kind of contract. It is only an email communication. But as email communication can stand as an evidence.
00:07:11
Speaker
So, email contact cannot act as a contract. So, you can use email to show intention. But you if you really want to be on strong footing, then you should have a signed contract.
00:07:22
Speaker
yeah Should ah you do a contract with a stamp duty for every client ah when you're signing up a client and offering them some service? Should you go for a stamp duty also? What is the way to decide that do I need to do stamp duty contract or just the contract?
00:07:40
Speaker
So usually right see within the organization
Digital Signatures and Stamp Duty
00:07:42
Speaker
if you want to execute some documents between within an organization any any contracts any contacts any here documentation you can do that but when you are executing contracts beyond a certain contract you are doing a business services agreement so you would need an agreement in that contract to be executed on a on stamp duty and then execute with a digital signature Earlier it was wedding signatures, now we have digital signatures, IT Act 2011 digital signatures of different formats starting from Aadhaar signature and Aadhaar has been introduced, before that it was DSC token signatures which comes in a format of encrypted format in a DSC token and electronic signature which can be an image upload of the signature or a stylus based signature.
00:08:31
Speaker
So these signatures are legally accepted. and then you can execute these contracts but electronic signatures may not be applicable for all sorts of contracts and agreements so for example electronic signature signatures are not valid for conveyance of property so you have to have vertex signatures for that so your party should be present the signature should be present in the presence of the submission office when you are doing the conveyance of property similarly if you are giving a power of attorney the electronic signature will not be accepted. And and one more thing is a will.
00:09:06
Speaker
If somebody is writing a will, electronic signature is not valued. so So the three, four scenarios where you cannot execute in an electronic format. but you can execute any other agreement or contract or deed and then ah there is one more like trust deed, you cannot do a trust deed with electronic signatures, so four scenarios that cannot do it with electronic signatures, but the rest of the documents you can do it in a digital format differently.
00:09:34
Speaker
then Stamping is another challenge that we do not have a uniform stamping mechanism. right So each this is a state subject and and this falls under the revenue department of each state and we do not have a uniform stamping mechanism like GST or income tax.
00:09:50
Speaker
Since this is a state subject, each state follows their different ways of stamping methods. Thanks to Stockholding Corporation. Stockholding Corporation is one technology entity which is actually bringing in all the states to a uniform mechanism of at least issuance of the stamp papers but it not it will not cover the uniformity but in terms of the technology it's it's uniforming the entire journey of e-stamp issuance so we have stamps issued by stockholm corporation which we call as e-stamps so there are certain states which still follow the traditional stamping methods like maharashtra telangana we have kova we have west bengal
00:10:33
Speaker
they still follow the traditional stamping method I'm sure that this is going to be changing very soon into electronic format and we have eGRASS portals like for the states of Haryana, Jharkand, Madhya Pradesh they have their own way of stamping which is called eGRASS so they issue these stamps through the eGRASS portal however it is an electronic stamp right so so So when the government is also moving into the direction to to actually give a feasibility to the to the citizens to execute contracts in a digital format.
00:11:10
Speaker
Unlike the Western world, you you can sign the document with Adobe signature or a Taki sign. and But that does not work in India. So it has to be it has to be executed and ah in the local law acceptance.
00:11:29
Speaker
And we have seen a regular practice, the common practice of banks following all their contracts in the ah with Aadha-based signatures. right So, its it has become practice of capturing the contracts in Aadha-based signature places.
00:11:49
Speaker
So, again, coming back to the decision of do I need a contract with stamp duty or is just a Yeah, definitely. Contracts signed by both parties enough.
00:12:04
Speaker
i real second yeah yes As I said that, if you have to bring the legal binding of a contract, you must execute the contract with stamp duty appended to the agreement of the contract.
00:12:17
Speaker
Otherwise, it will not bring you a legal binding. It becomes a regular document. so okay it's It's good to have the document where something goes wrong between the parties. or They want to go for arbitration or some litigation.
00:12:29
Speaker
then they have to, again, as I said, that they have to do the stamp duty impounding and then let's submit this document to the court. Okay. Okay. Okay. Got it. Got it. Okay. And there is a risk at that stage that if you want a stamp duty on the ah document and then the counterparty needs to sign again and they may refuse to sign those those kind of things. No, there is no signature. Signature is already done right. So, if you would have done an agreement with honor on a plain paper which was already signed, okay on that you can do the inbounding of this time duty. So, that shouldn't be problem.
00:13:05
Speaker
The signature will not be asked at that point of time. Okay. Okay. Understood. So, stamp duty is essentially for a worst case scenario. in In case things go into the legal domain, then you would need stamp duty. No, no, no. You need to have the stamp duty on any contract or an agreement that you want, you want to execute as per the law. Right. So,
00:13:31
Speaker
it's It's again, it's ah one of the tax forms of reminiscence for the government. So there are certain scenarios people want to avoid stamp duty.
00:13:43
Speaker
So there is an area where on on what do you say? And the property registration, somebody they want to do a less stamp duty payment. So they will actually it is the value of the property.
00:13:58
Speaker
Though the value of the property is higher set, they would want to reduce the stamp duty payment. So they would put the cost of the the the property in less value. right So just avoid stamp duty, which is not a good practice.
00:14:12
Speaker
I would suggest that it's okay. I'll tell you where I'm coming from. um I've operated businesses in two sectors. One is like an agency business where you're providing some sort of a marketing agency service. Second is...
00:14:26
Speaker
i used to run a hiring business both of these are like b2b services and typically b2b services contracts don't have stamp duty like and this is across the industry like like yeah typically when you sign a hiring services agreement with a client um i had maybe two or three clients out of 50 clients who insisted on a stamp duty.
00:14:55
Speaker
And these were typically like a publicly listed company which would have insisted on that. But other than that, this is not an industry practice to have a stamp duty on the contract.
00:15:05
Speaker
um And I think something similar happens even in, like say, marketing agencies. There is ah there is ah like a scope of work document which it could be signed. But I don't think stamp duties are par for the course. So, but but that is what I'm trying to understand.
00:15:25
Speaker
you have you have you have You have the answers in your questions. okay So, how many of these contracts that you have signed have gone to an arbitration or a litigation? None.
00:15:36
Speaker
Zero.
00:15:39
Speaker
Right. and Which is, unfortunately, because as a small entrepreneur, you... No one want to get into that problem. If something is not working, will actually drop off. You know the cost of trying to recover whatever is going to be lesser than the cost of paying lawyer fees. Yeah.
00:15:59
Speaker
That's that's the that's your answer right and when you start as a business when you start putting this time duty the the counterpart will think that oh okay this is a stamp duty is coming along with the agreement then it's like okay is there's one caveat which is coming on top of it so nobody wants to get into kind of anticipated legal obligations right so which may erase like so so it has become a fact you're saying it will also hinder your ah sales process you you clo your closure cycle right so it becomes like when you the the movement you the moment you the moment you happen to stamp duty if the counterpart is a small business okay they'll sign but if it is a
00:16:43
Speaker
Like the other other things that you said, like you three of your customers have and like insisted you to put this down to the list of companies. So for them, it's the complaints.
00:16:56
Speaker
i As a listed company, any any document that you're executing, everything that right so it becomes the corporate governance of an organization and they want to follow the structure so that's why they have insisted you to put the stamp duty of the agreement even that is a it is a small agreement right it may not be a major agreement right it may be a two-page three-page agreement for services that is the hiring service that's why they have insisted you to put the stamp duty as a part of the corporate governance unlike the other businesses that you work with they may not be following the corporate governance in the structured way where they are answerable to the to to the investors like the retail investors or their corporate governance so that has become a practice so technically you have to append the stamp duty on any contract or an agreement that you want to execute
00:17:46
Speaker
And that is also revenue loss to the government. So people like you and me like who is trying to do this without the stamp duties, it's like revenue loss to the government also. So that's
DocuFi's Automation in Banking and Real Estate
00:17:56
Speaker
as simple as that.
00:17:59
Speaker
OK, understood. Understood. um okay so What is the ah use case, and like, you know, the larger use case for ah your service, which is like contracts with stamp duty? Essentially, from what I understand, you are automating the what you saw your father's case where yeah he had to sign a contract for which you had to travel maybe to the location of the bank branch and sign in person.
00:18:28
Speaker
ah You needed to take a day's holiday or something like that. yeah That is the problem you are trying to solve. so So, what is like a larger high volume use case ah that you are catering to where there is ah high volume of ah contracts which have to be signed and with stamp duty paid?
00:18:46
Speaker
Sure. The highest use case for us is the banking sector, correct followed by the real estate and the rest of the industries. banking Because it's a regulated entity, like they have set formats. it Earlier, banks used to print the loan agreements or application forms, with the bunch of documents like you would set, it has a docket of documents to execute these things. right through For us the highest use case is the banking and NBFC sector.
00:19:15
Speaker
Where they used for, f we start with retail assets that is a loans, right, specifically starting from your personal loans, gold loans, commercial loans, vehicle loans, all sorts of loans. They they have this once the loan is approved, there is a set of document that after the disbursal is done before the disbursal, there's a set of documentation that has to be completed by the borrowers typically this used to go as a bunch of physical documents to the to the customers via the sales team members which i used to do it for my customers also at that point of time right so we have eliminated all those journeys
00:19:52
Speaker
in terms of printing the documentation, taking this document to the sub-distro office or paying the stamp duty to the sub-distro office or doing the franking at the sub-distro office and then take the same document to the customer and then do the execution part. So that entire journey is- What is franking?
00:20:09
Speaker
Franking is a method of stamping again, like as I said, like you have these stamps, traditional stamps, franking is also another method of stamp duty. Franking usually happens like for the printed documents which you already have like these set of documents that you take.
00:20:27
Speaker
So wherever there is no e-stamp paper there is a combination of traditional stamp papers and franking. So for example this predefined traditional stamp papers comes in standard templates like standard denominations like hundreds and five hundreds.
00:20:44
Speaker
for example, West Bengal, if you have to pay a stamp duty beyond 500 rupees, so you you will buy it in multiple 500 rupees, for example, 5000 rupees, you will buy five hundred ten papers of fine rate.
00:20:59
Speaker
What if we have to pay a stamp duty for 50,000 rupees? So in that case, so there is a franking service at this SRO offices, service offices. where the customers have to go there and then do the stamping.
00:21:10
Speaker
Pay the chalan in the bank, take the chalan to the sub-destro office, submit the chalan and they will do the franking. So that's the franking mechanism. Okay.
DocuFi's Sector Applications and Government Integration
00:21:20
Speaker
Yeah, so the coming back to my use case, it's it's predominantly the banking which covers the entire loans.
00:21:29
Speaker
And then we have now we started with additional so the product lines like locker agreements, escrow accounts. have the POS agreements which bank use and banks do that and then the POS is the credit card machine given to a merchant. Yeah, the POS machines, point of sale machines. So when they give you a point of sale machine, there is an agreement that has to be executed between the merchant and the bank.
00:21:55
Speaker
So every service that bank provides, there some sort of agreement or contract between the borrower or the service provider and the bank and that has to be appended with the stamp duty as per the regulator.
00:22:06
Speaker
So we the major use case for us is the banking. followed by the real estate, except the conveyance of property, you have sale agreements, you have deeds that has to be executed.
00:22:18
Speaker
That's one more use case that we do it. However, have sector agnostic. What do you mean by the conveyance of property? Like you're saying transferring the- Conveyance of property is that you whenever there is a registration of property, right? so okay So, I mean the sale agreement between the builder and the customer.
00:22:35
Speaker
sail between this builder and the the
00:22:41
Speaker
where both of them have to be available at the sub-registro office to get the registration that is the convenience of property so once there is a registration between the parties then they have to be present in front of the sub-registro officer he will sign the document and he will approve like the customers will sign the document and then the sub-registro approves that Again, they will validate with the Aadhaar cards. and That signature is also sometimes they they take the biometrics and then capture the photo also during the signature process just to be on an on a safe side.
00:23:13
Speaker
Okay, got it. And however we have sector agnostic, we have multiple use cases. There like we have customers who who use it for franchise renewal agreements. We have Cloud Kitchen agreements which they use it for.
00:23:28
Speaker
There's is endorsement agreements that they execute on our platform. so Services agreement, master services agreements, vendor contracts. across different industries starting from banking, real estate, logistics, hospitality, healthcare, all industries, manufacturing.
00:23:48
Speaker
So, so that's that's how we have been expanding in our services. Okay. um How do you replace this process through technology? Like, are you able to procure stamps through API calls and is that how you do it or like how you automating this?
00:24:11
Speaker
So we cannot replace the government systems. we can only leverage the government system. So we are automating certain processes for procuring stamp papers. we We have to get approvals from Stop Holding Corporation or NESL who actually provides these APIs to help us to provide these services to our customers.
00:24:29
Speaker
So we leverage these platforms and then provide this service. So so that's the search box. We cannot replace the government services. So we can only leverage the government support and then do these services.
00:24:44
Speaker
for a better quick service to the customers and then ease of use. So they dont they don't need to travel anywhere. They can execute the contracts or agreements sitting at their place and then be done with it.
00:24:57
Speaker
ah Is this a service that anybody can get into? Like if all you need is APIs from NESL, then anybody could start offering this service of automating contracts?
Innovation in AI Features and Signatures
00:25:12
Speaker
yeah anybody can do that but again it's see the domain knowledge and the team that you have been working upon results that's that's the best part also uh anybody and everybody like there are certain approvals that you need to work in and then you have the domain expertise that you have been working for so while and you're able to do this and identifying the problem statement and there's certain scenarios like customers this is not more of a b2c kind of scenario right there's more of b2b requirements a lot of b2b requirements b2c requirements are like one one off kind of scenario they may not have for example if somebody wants a rental agreement they would want it only once in 11 months kind of
00:25:54
Speaker
fix However, if if a company has to execute contracts, they'll have day in day out, they'll be executing a lot of contracts and agreements between different parties.
00:26:05
Speaker
so So that's how they have to do it. No, but what is your moat? oh Why are you not easily replaceable? I am saying that I am not easily replaceable. In today's world, its everything is replaceable. That is pretty much rep replaceable, but a continuous innovation in the product and the passion. Give me examples of what kind of innovation.
00:26:28
Speaker
Continuous innovation is in terms of the AI features is that we are integrating now into the system, right? So one is the continuous innovation. The third one is the domain expertise that you have. And the third one is the team that you have, which has been there, which has started this service. And then we are able to to do this to the the of like most of the prominent names in the industry that we are working with. So yeah. OK. You said that there are,
00:26:58
Speaker
So from what I understand to automate the service, the the the parts in it are, ah one is the stamp duty part, which you told me through NESL, you can get APIs and you can automate that.
00:27:12
Speaker
Second is the actual signature. And for that, you told me there are multiple ways to do signature, including electronic sign, other sign, et cetera. So which of these do you offer? what What is the way in which contracts are signed on your platform?
00:27:26
Speaker
All the ways. right So a so we have we provide options to the customers. It's dependent upon the business requirement. As I said, like ah the banking industry, they would prefer capturing the signatures via Aadhaar-based signatures.
00:27:40
Speaker
Somebody would want to... like why is Why is there a preference of one over another? Is there a difference in the legal validity? This is as per the rba RBI. RBI is mandated to capture the signatures Aadhaar for the banking industry.
00:27:56
Speaker
And it becomes the ultimate route because the other is the one thing that is getting into multiple identities of individuals and businesses. So that's that that was mandated by the RPA to get the signatures through others.
00:28:11
Speaker
So, there certain scenarios like if you have to sign on we have your we behalf of your company there is a class 3 DAC token. So, it will be on the name of the organization not on the name of the individual but you are a representative of the organization. So, you will sign on be behalf of your organization with a DAC token.
00:28:31
Speaker
So the bank if youre if if the bank is giving a loan, a business loan, so they would capture two types of signature one is on behalf of the organization, other one is on behalf of the director.
00:28:42
Speaker
a So our director will be sending the document with Aadhar and the organization will sign the document with the DAC token signature that's class 3. okay and So we we we provide all the options available in the system, ADHA, DSC, elect electronic, biometric, band based signatures, all these things along with the different type of stamping and customers can choose according to their business requirements. So the the business use case, they can they can pick and choose this business requirements and then customize those scenarios for them and then make this available for their usage.
00:29:18
Speaker
ah Can you zoom in on each of these, how they happen? how does and How do you offer Aadhaar West Sign? Do you have some access to a government portal through which you are able to trigger that? like How does it happen?
00:29:32
Speaker
So the signatures are provided by a central certifying authority. This is the government body which gives the licenses to the certifying authorities. Certifying authorities are somebody like Emutra, Capricorn, Jio kind of companies where they would become a certifying authority.
00:29:51
Speaker
and we become ASP or DSP of this service of of certifying authorities and then we offer this in our platform.
Aadhaar Signatures and Security Measures
00:29:59
Speaker
So we we become a part of the certifying authorities that is EMUTRA so we predominantly use EMUTRA protein or Capricorn to provide the e-signatures services and then we integrate the systems with their systems like and then we provide the signatures yes can Help me understand this certifying authority a little better.
00:30:22
Speaker
is this a Is this a government body or is this it's a private body? CCA is Central Certifying Authority is a government body. Central Certifying Authority is a government body and they and they have defined a certain framework to get the license of c that is certifying authorities like companies like eMudra or Capricorn of companies. These are private companies, eMudra, Capricorn. These are private companies. These are private companies and these private companies would offer the technology service provider licenses to companies like Lockify or
00:30:53
Speaker
where we we become a technology service provider for them and we integrate with their system. But why why why does an eMudra exist? Why are you not directly working with a central certifying authority? What is the role of eMudra here?
00:31:07
Speaker
So, we will also there is a certain plan that we have to become, there certain vintage that a company has to have it. So, they there they have certain framework which is defined by the CCA.
00:31:18
Speaker
right so once we fall under that category any company can become a ca right there's certain deposit that has to be maintained with this with the cca and so and and but what is the value out of a ca what is it providing a ca so bank authority has access to the aadhaar database and it can No, CCA will not also have any authority to have, they will not have any access to the other. Again, there is an integration between UIDA and CA.
00:31:49
Speaker
Okay. So when they leverage, rich they also leverage through the UIDA, but UIDA cannot give the access to companies like me to do the other signature integration.
00:32:01
Speaker
So they will give access to only to the CS, Certifying Authorities only. Companies like Protein, Emutra, Capricorn kind of companies. So the UIDA will give access to these companies, which are approved by the CCA.
00:32:16
Speaker
okay to give access to this level. So none of these companies will not access any sort of data of UIDAI, nothing. It's only that there is an API call that goes that, okay, this is the Aadhaar number, but the customer is entering the Aadhaar number and UIDI validates the Aadhaar number and sends a response that this is a valid Aadhaar number.
00:32:35
Speaker
So based on that, it captures the signature that it's Aadhaar number is valid. and it captures the rest of the details of the IP address, email address and all those things which becomes a part of the signature.
00:32:50
Speaker
It's not just valid Aadhaar, you also get an OTP or something, right? but When you want to sign it. Yeah, yeah. So, that is triggered by the UIDA. Okay. okay so Okay. So, whenever somebody uses Aadhaar-based signature, they'll enter the Aadhaar number and Aadhaar will actually send an OTP.
00:33:07
Speaker
That OTP has to be entered on eBudra's or protein's signature link. Then it gets validated and and the signature signature is captured at that point of time. OK, got it.
00:33:19
Speaker
OK, understood. So like a e-mudra or a protein are
00:33:26
Speaker
In a way, you could say like a MasterCard or a Visa, and then there are payment gateways which are using MasterCard and Visa. Perfect example. So you are like a payment gateway. In a very simplistic understanding of it. Correct. Correct. Correct.
00:33:41
Speaker
Got it. Got it. Issues aggregators and payment gateways. Yeah. This is a similar. What's so? OK. OK. OK. Understood.
00:33:52
Speaker
ah So that's how Adhaar signature works. How does the electronic signature work? Electronic signature is as you don't have a dependency on the CA. The CA will define a certain framework again.
00:34:04
Speaker
So it has to be in a definite size and within that size you have to capture the IP address, email address and all those things. So again, you can create your own other electronic signature nature and this is in-house built product for electronic signature, but there is there is a specific framework which is defined by the CA.
00:34:25
Speaker
and then we create that so electronic signature signature can be in the form of stylus based signature you can do a stylus based signature on the mobile app mobile or or tab within which is a touch base right so and then uh other way of doing is that you can actually upload an image of your signature That also becomes as an electronic signature. So then you can ask. But how do you make sure that it's not somebody else who's signing? You need a way to validate that this is the actual, the the signature belongs to the person. So that is the framework which is defined by CREC. It clearly says that capture the email address, phone number,
00:35:06
Speaker
and the MAC address, those things latitude, longitude of the person who will sign it up. So, you do that through OTP, like you will trigger an OTP to validate. OTP is also there. So, it depends upon certain customers would want to be an OTP to send.
00:35:22
Speaker
Certain customer says that we don't need an OTP, you can capture the signature. So we have created ah one more layer of doing this as like liveness check of the signature who is actually signing the document. We take a small snippet of the video while doing the signature or a photo capture of the signature. So as DocuFay we provide this. So those is not defined by anybody but as DocuFay we provide one more layer of security aspect just for the evidence purposes where we capture the liveness of the signature or a photo capture of the signature while doing the signature.
00:35:56
Speaker
And this eSign is typically In the presence of a bank employee something, i assume know a bank employee would give a tablet to a customer and the customer would sign. Is that? No, it's not mandatory. It's not mandatory. So, an email link link will be sent ah via WhatsApp, regular WhatsApp message and regular message, SMS and to the email.
00:36:18
Speaker
So, the customer will open up a link and then they'll actually sign the document by entering the details over there. So, there's no requirement of... the bank representative to be present at the point of signing the document.
00:36:32
Speaker
Got it. Okay. This is what, say, a DocuSign offers? and Yeah. yeah yeah Electronic signatures. Yes. Okay. Okay. okay Okay. Got And I guess for this service agreements, most businesses use electronic signature only.
00:36:49
Speaker
Correct. Correct.
DSC Signatures and Market Trends
00:36:51
Speaker
Okay. Okay. Okay. Got it. Got it. Okay. Okay. Understood. um Okay. And how does DSC work? DACs are issued by these certifying authorities like EMUDRA. What is the full form of DAC? Digital?
00:37:04
Speaker
Digital Signature Certificate. Certificate, okay. Yeah. So, this is an encrypted signature. so So, before getting your DAC signature, you have to apply to EMUDRA or Capricorn kind of companies, right?
00:37:18
Speaker
There is an application process to procure the digital signature token. So they would validate your KYC has to be done. So there is a process. So immediately you will not get a DAC token immediately.
00:37:31
Speaker
So there's a process where there an application process. When you say DAC token, what is that? Is that a piece of code? Is that a hardware? It's like a pen drive. Okay. It's like a pen drive.
00:37:42
Speaker
So, you have to insert that in the in the drive and then it captures signature via the Adobe reader.
00:37:53
Speaker
Adobe, okay. soon go yeah okay So, ah so this there is an application process, so you will have to apply to eMudra or Capricorn. they will send you a link to your email address and phone number for KYC.
00:38:09
Speaker
so so So, the applicant has to fulfill the application process, the KYC has to be done and then ah they'll also capture the... man or ah at So, they'll they'll hold the PAN number, there is a certain code which will be sent by iundra prote and foot of or of Capricorn that they need to read that specific lines which were sent by the CA while holding the band number as good as I'm talking to you right so I'll hold it and else I'll tell that this is my name I'll tell my name and this is the code that I have received then it gets approved so after that it's an encrypted file which is an encrypted format that encrypted file will be uploaded to the pen drive and you need to collect it from the agencies so usually
00:38:57
Speaker
The CAs will have the agencies for EMUTRA DAC tokens. So, CA forms you can apply through a CA form or you can apply directly to EMUTRA or Capricorn and you would get your DAC token.
00:39:12
Speaker
And how how what is the validity of this token? How long is it? it ah Sometimes it is two years or sometimes it is one year like this. I think it is almost two years. And I think for corporate things like… That is a class three, that is a class three corporate and class two is for individuals.
00:39:32
Speaker
Okay. Okay. I believe DSC is what you need for like say MCA, Ministry of Corporate Affairs. Exactly. Yeah. Any kind of filing. Yes. Absolutely. You need that. so Yes. Yes. like Okay.
00:39:45
Speaker
Okay. ah All the MCA filings happens to the DSC. MCA filings would be about, I think your your annual... P&L statement, balance sheet, and all of those are filed with the MCA depending on the type of entity. to file those, you need the DSE. Yeah. yeah yeah no Even if you go for tenders, common tenders, or if you have to do the income tax filing returns for the organization.
00:40:12
Speaker
So, all those things usually happens via DSE. Okay. okay And a person can have more than one DSE? It's only once one DSE. A person should hold only one DSE.
00:40:24
Speaker
but I'm asking because often your DAC is with your CA, it's not with you mostly, right? Because the CA is doing the filing. ah so that Which I don't want to comment now.
00:40:38
Speaker
i Yeah, usually, yeah that's a pattern that's that's a fact, right? Most of the DSCs are with your CS or your CA. yeah Ideally, that's not the scenario. Your CA or the CS has to send the document to you, you sign the document and send it back to you.
00:40:56
Speaker
You are the custodian of your DSC token, not your CA. Right, right, right. That's not a good practice. Okay, understood. Okay, understood. Okay, okay, okay, understood. Okay. And ah how does ah your platform do the DSE sign? Again, is it through an eMudra? Yeah, eMudra and Capricorn, we have it. so So in in the DSC token signature, there is a small local client that has to be downloaded while while the signature link is sent.
00:41:26
Speaker
So a small application that has to be downloaded on the and the signatories device. And it identifies the moment it identifies the DSC token, it identifies and then it will capture the signature through the DSC token.
00:41:40
Speaker
So okay once the DSC token is inserted, they'll have to enter the password. Each DSC token comes with a passcode. to the passcode to capture the signature. Okay.
00:41:50
Speaker
So, this downloading a local software, is so is this software available across Windows, Mac, Linux, Chrome, because there many operating systems. I think it's certainly available for to Mac mac and iOS and Android.
00:42:07
Speaker
and Windows, these two, not Linux. like Or if if you're using a Chromebook, then you can't execute DSC signatures. I doubt if I can do that, yeah. It's primarily available on Windows and Mac, iOS. is So, this sounds like a little bit of an outdated technology, right? Like to be relying on something getting downloaded instead of all happening on cloud.
00:42:32
Speaker
Yeah, yeah it's it's because if you have to identify that it's not on the cloud, right? So, it's on the local device. So, that's how it is set down.
00:42:46
Speaker
I'm sure that it's going to fade away in some time, right? So, most of the things will happen via Aadhaar, definitely, right? Okay, you see Aadhaar is the way forward. Yeah, I think it's going to Even companies have Aadhaar, right? There is that.
00:43:02
Speaker
ah MSME Udyog. MSME Udyog number, yeah, which is something something like an Aadhaar. Yeah, it's like an Aadhaar of companies. Yeah, correct. Yes, yes, yes, yes. But I guess that MSME Udyog is not that prevalent.
00:43:18
Speaker
Not every company. I mean, right now the government is not pushing for every company to have that number,
DocuFi's Market Position and Revenue Model
00:43:23
Speaker
right? Like, I think that is a problem there.
00:43:28
Speaker
Okay, understood. Okay. So, you know, how much do you earn for every contract you execute?
00:43:37
Speaker
so Like a blended average? Blended average, like, but it it depends upon the type of the signatures and the stamping. So, typically our revenue model is based on the per-per transaction market. So, it would vary anywhere between 49 rupees for a stamp duty.
00:43:57
Speaker
And then for signature, we charge 10 rupees, 15 rupees per signature. That's the kind thing. It's a transaction based. So like double digit basically, like anywhere from 30, 40 rupees to 80, 90, something like in that range broadly speaking. okay okay And oh what is the the the total addressable market for this? Like how much could your revenue go up to?
00:44:24
Speaker
and see this There's a a lot of market is there. I think we have not even covered 1% of the market yet. So there's huge scope in terms of the contract execution and contract lifecycle management.
00:44:37
Speaker
The addressable market, if you ask me, it's around like contract lifecycle management and contract execution signature would combine around like 50 billion market across the globe.
00:44:49
Speaker
Okay. then If you can consider that, well that's where companies like DocuSign and FBA have been there in the market for more than 20, 22 years. And they have been inspirational in terms of actually a digital transformation to contract execution.
00:45:06
Speaker
Okay. Though the difference between a DocuSign and a DocuFi is, I think DocuSign is more SME focused, right? Whereas you are more enterprise focused.
00:45:17
Speaker
No, DocuSign is also enterprise focused. DocuSign is DocuSign is enterprise focused. But yeah yeah, mostly on the other side of the world.
00:45:29
Speaker
Only after COVID, DocuSign also got like a kind of acceptance in terms of Indian market also people started executing signatures through DocuSign.
00:45:41
Speaker
Later it was only a few few players now. A lot of people know DocuSign in India also. DocuSense is mostly used by enterprises. yeah Even India also, they use enterprise.
00:45:54
Speaker
OK. Got it. Got it. OK. ah So i mean like you are specifically looking at high volume users. right You're not looking at like an SME user, like say ah an agency which might sign two to five contracts in a month with clients.
00:46:12
Speaker
That wouldn't be your market. ah we we We don't say no to any of our customers. That is a different matter. of The focus is the volume. But yesterday only have seen one customer actually coming in for some requirement rate.
00:46:29
Speaker
So he walked into our office and asked for it. I wanted an agreement to be executed. I said, like yeah, please come. yeah okay Yeah, they are not more focused on the B2C. It's mostly on the B2B and high volume. Yeah, that's great. OK.
00:46:47
Speaker
So who are the other players in this enterprise market, the high volume market? Yeah, we have signed us to start and we have- These are Indian or?
00:46:59
Speaker
Yeah, Indian indian companies. okay So on the on the signature side and contract execution, they also do what we do and they have been in the market even before us.
00:47:12
Speaker
So if they are the other players who does the contract execution in the Indian context.
Funding and Growth in Contract Management
00:47:20
Speaker
Okay. And have they raised funds? And have you raised funds? How much funding has this space seen?
00:47:27
Speaker
Are VCs interested in this space? Definitely, yes. so v v So we we are a contract management platform, whereas legality is is with an infrastructure, kind documenting for our company.
00:47:43
Speaker
They have also raised funds. I think, I believe, Sinesk is bootstrap.
00:47:50
Speaker
They have been in the market since 2015 and their companies like SpotRef in the contract like SEDEA and MNMN they have recently raised about 54 million Though Spot Draft is more of a US story, right? I don't think India is their focus. india They are India also, right? They were focusing on the US market to begin with, but eventually like they also start focusing on the Indian market.
00:48:15
Speaker
So they have good enough customers in market also. Okay, got it. ah Have you raised funds? Yeah, we have raised two rounds of investments. Earlier was friends and family when we started in 2019, it 25 lakhs that we raised.
00:48:36
Speaker
And after that, we raised two quotes from TurboStart, our first investor, institutional investor. And in 2022, we raised one million round from Pentaflon Ventures, Silver Needle, Let's Venture, Lead Angels, who participated in this round.
00:48:58
Speaker
Okay, got it. So, you know you know, what is your right to win in this market? You know, it is not a, I mean, there's it's not a technology moat as such, because there are equally talented engineers in India who can build and getting an API is something which is possible for other companies to also get.
00:49:24
Speaker
So what's your right to win? A guide to win is like, see it's now everything is moving into the AI, right? So there's a lot of things that you can do with AI that we have already started doing it.
00:49:37
Speaker
So AI is not in the contract execution domain, right? Because most of that is fairly of automating operations. Yeah, that's more of automation of operations, right? So AI is not there in the contract execution, but AI is definitely there in the contract lifecycle management.
00:49:54
Speaker
So, for example, some... how much of your business execution? How much of your business contract lifecycle management? So, I don't know, like 70% execution, 30% is contract lifecycle management, and we intend to do it as 50-50 in this next year.
Contract Lifecycle Management and AI Integration
00:50:10
Speaker
Help me understand what is this business of contract lifecycle management? Contract lifecycle management is something in which... The contract execution is after you finalize a contract.
00:50:21
Speaker
but whereas contact lifecycle management is from the base of your contact like you have to create contracts for a business then you can actually create contacts collaborate within the organization outside the organization to do the negotiations once the negotiations are complete you can move this to the execution once the contract is executed there is a certain lifetime of the contract during the lifetime of the contract there are certain milestones that you need to manage for the contract lifecycle So there is an obligation management that you can do it in the CLM platform, the contract lifecycle management platform.
00:50:57
Speaker
And so there are repetitive renewals of the contracts. Your contracts will be renewable, if your contracts get terminated automatically. So organizations will not have enough time and resources to manage these contracts.
00:51:14
Speaker
So enterprise businesses, they'll definitely have specific legal teams who will be able to manage these contracts. ah with certain tools whereas mid-size businesses may not have resources and and and the legal teams to manage this contracts that's where we are focusing on so the CLM um platform would be able to manage your end-to-end contracts so all the contracts that you have executed will also be part of the contracts by a segment So it becomes a full 360 degrees coverage of your contracts, which are available for your disposal at any given point of time.
00:51:49
Speaker
What is the critical information in the contract lifecycle management? I mean, obviously, date would be one because you need to track the date. If the contract is expiring, does it need to be renewed?
00:52:00
Speaker
But besides the date, what else is there which needs to be tracked and So there are certain commercials that you need. For example, there is a software services segment. And so you will decide the payment releases depending upon the modules that the service provider is going to release.
00:52:20
Speaker
So you can actually trigger this creative workflow between your finance team and your operations team and the product team telling that if these milestones have been met or not met. All these players say that, all these stakeholders say that, okay, this is met, this is not met, this is met.
00:52:35
Speaker
So if all these all the stakeholder says that yeah all the obligations are met, then it will trigger for the finance telling that you can go ahead and release the payments. So commercials are one obligation because one obligation. to There are certain dates which gets expiration. The expiration date also one more obligation.
00:52:58
Speaker
So based upon different type of the documents, we can define different milestones on the contract. Or if, let's say, there is a minimum order quantity, like a minimum monthly order has to be given to a particular vendor. I'm OK. Yes.
00:53:15
Speaker
But how how would you know that the minimum order has been given or not? Will you integrate with the, because the company would be using like a SAP, Oracle, yeah to do the procurement. So do you integrate with them? can integrate with their CRM applications or ERP applications or any other third-party application that they want to integrate.
00:53:34
Speaker
which which captures the policies, which captures the data inputs that has to be linked to the contracts. We can do those integrations and then a trigger can be initiated from the CLM platform.
00:53:47
Speaker
OK, got it. OK, got it. OK, OK. And what is the use of AI in this? So in the contract, Usually in the CLM there is a lot of paralegal things that are managed by the illegal legal professionals. One is most of the time is spent on the contract drafting, ah other one is review.
00:54:08
Speaker
These are the two things that consumes a lot of efforts from the legal professionals. So we help them to automate these things with the help of AIR. With the help of prompt engineering, legal professionals can actually create contracts with with a less turnaround time.
00:54:24
Speaker
So drafting would not need so much of time. And each organization has their own style of doing the drafting. tactics It may not be the same same for organization. It is customizable.
00:54:39
Speaker
So you can actually define those policies. How do you want to draft the contracts with help of AI we have created a small language model which would help the living professionals to create the contracts.
00:54:52
Speaker
Another one is the review of the contracts. So the AI system would review the contracts. You can actually define the policies. Based upon the policies, if the contract that you have received from your counterpart is matching to your policies with the internal policies not but not matching with your policies if it is not matching then it it will trigger the uh anomalies or the highlights that is not matching with the policies and they they can quickly go back to the counterpart and tell that okay this is not matching as per the policies so maybe maybe the payment terms is not matching or the
00:55:28
Speaker
or the the jurisdiction is not matching, the jurisdiction is Bangalore but you are given Mumbai so they may not be able to do the contract so they can actually do so otherwise they have to go do line by line review for contracts right so another thing is that we do the summarization of contracts for example few contracts go beyond 400 to 300 page document and somebody is sitting and reviewing these contracts and understanding the summary summary of the contact is a tedious task so we have integrated a system which can actually summarize the contracts for the label positions and then it can help them to save time and resources so this these are the three four features that we have integrated there's a lot of things that we are that's ah that's in the roadmap
00:56:19
Speaker
on the air side which can save a lot of time ah resources for the companies as well as legal professionals so it's like it's more of automation and innovation which is required right so they they can actually do this with the help of air and utilize the So, they can actually utilize the resources for more more creative work or innovative tasks than doing the regular mundane tasks.
00:56:47
Speaker
So, that is how we do, we eliminate a lot of manual interventions. Okay. um You said you use a small language model. What is a small language model?
00:56:58
Speaker
Why did you not use a large language model?
00:57:03
Speaker
See, large language model we can integrate, but again, as I specified, each business will have their, for example, law firms, they have their own way of doing drafting and pre reviewing and other things. So they'll have their own internal policies that they want to do it.
00:57:22
Speaker
And especially the law is not same. If the reason why we have to link for India and the US, the that's a federal law and and we have an Indian law, which is not the same. So integrating a large language model will actually put a lot of load in terms of managing these things. Rather, you can actually modularize the small language models, which can become a part of large language model and and deploy it as per the business requirements, as per the. children What is a small language model? Just help me understand that.
00:57:50
Speaker
So large language models are for the big data sets. So small language model is for the- ChatGPT, Gemini. Claude, these are large language models.
00:58:04
Speaker
So we use Mistral. Mistral is also a large, so we use Mistral. So it's modularization of the law large language model. so So that it becomes a modular aspect and then it becomes a part of large language model.
00:58:17
Speaker
As we move forward and the data gets more, the GPU utilization becomes more for the large language models, whereas the GPU utilization is less for the small language models. so and So a small language model from what I understand then is,
00:58:31
Speaker
A large language model is trained on a lot of data. Huge data set. Huge, huge, massive data set. So a small language model is essentially trained on a smaller data set. That's the only difference. yeah And this smaller data set would be curated. So you would, for example, only train it on Indian law and Indian contracts and you would feed it hundreds of different types of contracts and templates.
Client Acquisition and Future Goals
00:58:56
Speaker
That's correct.
00:58:57
Speaker
Yeah. OK. OK. OK. Got it. and So you and this is available off the shelf, the small language model, or you have to build it? Or how does the business use? this is This was built in-house.
00:59:08
Speaker
OK. And what is the connection with Mistral here? I mean, we felt it is ah flexible for us. So weve we worked with Mistral. So we have integrated Mistral for that.
00:59:21
Speaker
So Mistral is a large language model, right? It's not a small language model. Yeah, it it's a large language model. So we leverage Mistral to deploy a small language model. How are you doing your ah client acquisition?
00:59:34
Speaker
Because from what I understand, the i mean the right to win here, to me, seems like client acquisition. Because I think from a technology perspective, India has enough talent to to create competitive and technology other companies can also create. But ah possibly the ability to acquire enterprise clients would be a differentiator.
01:00:00
Speaker
Right. The best part is for us, there's the references. The first thing we use is the references from the existing customers. It's one of the
01:00:11
Speaker
aspects for us. So our customers refer their friends, other companies which are actually looking for similar services. Another way of doing is this through the ah We have our sales team, business development team, in-house team, where they do the reach outs through cold emails, cold calling. And and there is we also attend events, we also conduct events and then we become part of those events and reach out to those customers.
01:00:39
Speaker
We leverage tools like LinkedIn Navigator, LinkedIn Sales Navigator, and we reach out through Lucia or Apollo kind of things.
01:00:52
Speaker
And there are inbound activities that we do that some digital marketing which would help the customers to reach out to us. So there is inbound channels. So we do both inbound as well as outbound reach outs to our customers. and this is Who is the person you want to reach out to? It can't be the CEO, right? This wouldn't be...
01:01:11
Speaker
there There are specific criteria. One is the digital transformation heads in the organization. Those are the people who would want to bring a digital transformation. So we reach out to digital transformation heads.
01:01:23
Speaker
We reach out to the chief legal officer officers who wants to put a process, automation process in place. and in the banking there is details at operations team and team members when we reach out.
01:01:37
Speaker
And in certain scenarios we reach out to the CFOs or the COs. So, whoever is like ah more into operations who is looking for the operational optimization, ah those are the ICPs that we reach out.
01:01:50
Speaker
Okay, okay, okay. Got it. And what's your ARR now, currently? We are, ARR is around like 20 crores, 24 crores.
01:02:01
Speaker
Okay. By when do you think you will hit like say a hundred crore year or by which year? I think by 2027, 2028 we'll be able to reach that number.
01:02:15
Speaker
Okay. Okay. Okay. Awesome. ah Thank you so much for your time, Aditya. It was a real pleasure. Thanks. Thanks a lot, Takshay. Thank you so much. thank Thanks a lot for the opportunity. Have a good one.