In the landscape of modern business, digital transformation — the process of updating a company’s outdated systems with cutting-edge technology — has always been a buzzworthy and profitable venture. The COVID-19 pandemic, however, has accelerated the need for such transformation at an unprecedented rate.
With lockdowns and the shift to remote work becoming the new norm, companies relying on outdated technology found themselves pressured to modernize. Data from Statista indicates that global spending on digital transformation soared to $1.85 trillion in 2022, marking a remarkable 16% increase from the previous year.
One company that has thrived in this environment is WhatFix. Based in San Jose, WhatFix specializes in providing a platform that offers interactive tutorials for using third-party software. Recently, the company secured a $125 million Series E funding round led by Warburg Pincus, with additional investments from SoftBank’s Vision Fund 2.
CEO Khadim Batti revealed that this latest funding round values WhatFix at 50% higher than its Series D valuation in 2021. Although the exact Series D valuation was never disclosed, estimates put it at around $600 million. Therefore, the Series E round likely values the company close to $900 million.
Batti co-founded WhatFix with Vara Kumar in 2013, after they met while both were working at Huawei. Initially, they ventured into creating a search engine optimization tool named Search Enabler. However, they encountered numerous obstacles, including user confusion regarding the tool’s implementation. Most of their clientele, comprised predominantly of small businesses, lacked the technical know-how to utilize the tool effectively.
This experience spurred a pivotal shift in their business model. Realizing the need to educate users on new software, Batti and Kumar developed WhatFix, a platform that now features on-screen tutorials for approximately 750 applications. By leveraging a comprehensive database of documentation, WhatFix overlays desktop and web applications to provide guidance for onboarding, suggested actions, and self-service support.
Batti explains that WhatFix can offer instant, context-specific answers directly within the flow of users’ work, thanks to its integration with existing knowledge repositories. The platform has found traction, boasting over 10 million users and more than 700 clients, including industry giants like Shell, Microsoft, Schneider Electric, and Cisco.
This success is reflected in the company’s financial performance, with its annual recurring revenue growing 4.5 times year-over-year, largely driven by its software-as-a-service plans.
WhatFix operates within a sector known as digital adoption platforms (DAP), an area forecasted to see significant growth. Gartner predicts that by 2025, 70% of organizations will implement a DAP. In 2022, DAP vendors collectively generated around $646 million in revenue, while venture capital investment in DAP surged sixfold to $470 million.
To stay competitive in this burgeoning market, WhatFix is expanding and diversifying its offerings. Since its last funding round, the company has introduced connectors for customer relationship management and enterprise resource planning software and developed a monitoring dashboard for app engagement metrics. These new products now contribute to 15% of WhatFix’s revenue. The company has also significantly increased its workforce, opening new offices in Singapore, Germany, Australia, and India.
Looking ahead, WhatFix plans to utilize its $280 million in total capital for strategic acquisitions and continued product development. The company is exploring generative AI, with Batti hinting at experimenting with automated agents capable of performing tasks in specific apps, similar to robotic process automation.
Batti envisions the DAP market evolving towards more AI-driven, personalized experiences with deeper integration into enterprise systems. He emphasizes that WhatFix has been prudent with its $265 million capital, focusing on profitable growth and expanding its customer base, thereby maintaining a strong financial footing.
As for an initial public offering (IPO), Batti remains tight-lipped. However, he notes that lead investor Warburg Pincus has a strong track record of guiding companies through IPOs and managing public companies, hinting at potential future developments.
