Digital transformation — upgrading a company’s legacy apps and processes with new tech — has long been a buzzy and lucrative business. But the pandemic supercharged the market.
Covid pandemic lockdowns and the widespread move to work-from-home spurred brands relying on old technology to modernize their organizations. According to Statista, worldwide spending on digital transformation reached $1.85 trillion in 2022, up more than 16% from the previous year.
WhatFix is among the digital transformation firms that have benefited enormously from the boom. The San Jose-based company, which offers a platform that demos how to use third-party software, this week closed a $125 million Series E round led by Warburg Pincus.
CEO Khadim Batti says that the round, which also had participation from SoftBank’s Vision Fund 2, values WhatFix at a figure 50% higher than its Series D valuation in 2021. WhatFix never disclosed that valuation, but my colleague Ingrid Lunden ascertained that it was close to $600 million. We can assume, then, that the Series E brings the company’s valuation to around $900 million.
Batti co-launched WhatFix with Vara Kumar in 2013 after the pair met while working at Huawei. The Chinese electronics giant had just opened an office in India, near the founders’ home cities.
WhatFix wasn’t an overnight success. Batti and Kumar originally tried building a business around a search engine optimization tool called Search Enabler, but roadblocks kept arising — including user confusion. Few customers knew how to implement the tool’s suggestions, Batti says.
“The recommendations were generally quite basic, such as the webpage not having a title, but customers didn’t know how to use applications like WordPress to correct the error,” he told TechCrunch. “Most were small businesses without technology know-how.”
Out of this early failure sprang inspiration. Batti and Kumar decided to pivot to try their hands at a different challenge: teaching people how to use new software.
Together, the two entrepreneurs built WhatFix, which provides on-screen tutorials for around 750 apps, drawing on a database of tens of thousands of pages of documentation. The platform effectively “lays” on top of desktop and web apps to provide guidance for onboarding, suggested actions, and self-service support.
“We’re able to provide single-line answers from existing knowledge repositories and present them right inside software applications, in the flow of users’ work,” Batti explained.
Batti says that WhatFix has over 10 million users and 700 customers, including Shell, Microsoft, Schneider Electric, Cisco, and the EU’s European Centre for Disease Prevention and Control. The company’s annual recurring revenue grew 4.5x year-over-year this year, driven by sales of its software-as-a-service plans, he says.
WhatFix occupies the software segment known as digital adoption platforms, or “DAP.” DAP is massive; Gartner predicts that 70% of organizations will use a DAP by 2025. DAP vendors were generating roughly $646 million in revenue combined in 2022, and VC investments in DAP grew sixfold to $470 million that same year.
With the competition getting fiercer — SAP this month paid $1.5 billion to acquire DAP platform WalkMe — WhatFix is doubling down on expansion and diversification, Batti said.
Since its last funding round, WhatFix has rolled out connectors for customer relationship management and enterprise resource planning software, as well as a monitoring dashboard for managers to view app engagement metrics. (Batti says that these products now make up 15% of WhatFix’s revenue.) WhatFix has also doubled its already-massive workforce to over 960 employees to open new offices in Singapore, Germany, Australia, and India.
Looking ahead, WhatFix, with its $280 million in total capital raised, plans to make strategic acquisition (adding to the acquisitions of Airim, Nittio Learn, and Leap.is it has made over the last four years) and invest in product development. Like practically every company these days, WhatFix is keeping a pulse on generative AI; Batti says that WhatFix is experimenting with automated “agents” that can take actions inside certain apps, akin to robotic process automation.
“Looking ahead, the DAP market is expected to evolve toward more AI-driven, personalized experiences with deeper enterprise system integration,” Batti said. “We’ve been very disciplined with our now-$265 million capital, and our ability to grow profitably while expanding within our customer base has helped us maintain strong financial health.”
Is an IPO in WhatFix’s future? Batti wouldn’t say. But he did note that funder Warburg Pincus has a “proven track record in guiding companies to IPO and operating with public companies positions.” Take that how you will.