LTN Smart Contracts

Last week, smart contract technology provider Clause announced the conclusion of a $5.5 million Series A round of venture capital financing led by crypto firm Galaxy Digital with strategic investment from DocuSign.

Peter Hunn, founder of Clause, said the funding will be used to grow the company's engineering department and capitalize on some of the opportunities that have opened up within the contract space now that law firms and other large enterprises have begun to embrace the data-mining possibilities therein.

“The opportunity that we see is that you can begin to really integrate those contracts with the systems that provide data to it and need data from it. … It's really important to begin to integrate these enterprise systems together. The contract is the missing link,” Hunn said.

When it comes to trying to close that link, business appears to be good, both for Clause and the smart contract sphere in general. Last September, legal services provider LegalZoom announced a deal with the company that allows its users to edit, sign or augment contracts using the Clause platform.

The platform can be used on top of any of the leading blockchain networks to provide for an  automatic contract execution. For example, a signature applied to a contract might trigger a preprogramed action such as a payment made to a specific place, at a certain time. Clause can also connect contracts to external data sources like IoT platforms or web services to ensure that other conditions of an agreement are automatically executed as outlined.

The market for those kinds of services may be growing along with the volume of contracts in the market. In a statement accompanying the Series A round announcement, Greg Wasserman, co-head of investing at Galaxy Digital, indicated that smart contracts are addressing a significant pain point that has emerged within organizations.

“Major enterprises sign millions of documents per year across many different business units. It's extremely difficult for companies to monitor and manage all of the terms within those documents,” Wasserman said.

Such a clearly defined need could translate into a prime target for investors, especially if audience recognition of that need continues to grow. Per Hunn, while the term “smart contract” isn't a household phrase yet, the idea is “having its moment.”

He attributed that sentiment to a broader interest in the underlying blockchain and distributed ledger technology. There's also the notion that with the onset of data-mining, smart contracts are approaching the next organic evolution towards full maturity. “The promise of smart contracts is really coming into fruition and a lot of investors are really excited about that,” Hunn said.

So what does all of that mean for Clause moving forward? Spurred by capital from the Series A round, a newly-expanded engineering team will be directed towards both improving and building upon the platform's features. In a nutshell, this means broadening the number of business functions within an organization that can be connected to a smart contract and its underlying blockchain network.

“We want to make it easier for people to create smart legal contracts. We want to enable you to integrate with pretty much every enterprise system that's available, be that [contract lifecycle management] systems, payment processes, blockchain, you name it,” Hunn said.