WhatFix Raised a Staggering $125 Million for Its In-App User Guides

Digital transformation—improving legacy applications and company processes with new technologies—has long been a thriving and profitable business. But the pandemic has supercharged the market.

Covid lockdowns and a widespread shift to remote work have led brands to rely on legacy technologies to modernize their organizations. According to Statista, global spending on digital transformation reached $1.85 trillion in 2022, up more than 16% from a year earlier.

WhatFix is ​​among the digital transformation companies that have benefited greatly from the boom. The San Jose-based company, which offers a platform that demonstrates how to use third-party software, this week closed a $125 million Series E funding round led by Warburg Pincus.

CEO Khadim Batti says the round, which also included SoftBank’s Vision Fund 2, values ​​WhatFix at 50% more than its 2021 Series D valuation. WhatFix never disclosed that valuation, but my colleague Ingrid Lunden found it was closer to $600 million. So we can assume the Series E raises the company’s valuation to about $900 million.

Batti co-founded WhatFix with Vara Kumar in 2013 after the pair met while working at Huawei. The Chinese electronics giant has just opened an office in India, near the founders’ hometowns.

WhatFix wasn’t an overnight success. Batti and Kumar originally tried to build a business around a search engine optimization tool called Search Enabler, but obstacles kept popping up—including user confusion. Few customers knew how to implement the tool’s suggestions, Batti says.

“The recommendations were generally pretty basic, like the website title was missing, but customers didn’t know how to use apps like WordPress to fix the error,” he told TechCrunch. “Most of them were small businesses with no tech knowledge.”

From that early failure came inspiration. Batti and Kumar decided to change direction to try their hand at a different challenge: teaching people how to use new software.

Together, the two entrepreneurs created WhatFix, which provides on-screen tutorials for some 750 apps, drawing on a database of tens of thousands of pages of documentation. The platform effectively “layers” on top of desktop and web apps to provide implementation guidance, suggested actions, and self-service support.

“We are able to provide single-line answers from existing knowledge repositories and present them directly in software applications, as users work,” Batti explained.

Batti says WhatFix has more than 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 has grown 4.5 times year over year this year, driven by sales of software-as-a-service plans, he says.

WhatFix operates in a software segment known as digital adoption platforms, or “DAPs.” DAPs are huge; Gartner predicts that 70% of organizations will use DAPs by 2025. DAP vendors collectively generated about $646 million in revenue in 2022, and VC investment in DAPs jumped sixfold to $470 million that same year.

Faced with intensifying competition — SAP this month paid $1.5 billion to acquire DAP platform WalkMe — WhatFix is ​​doubling down on its efforts to expand and diversify, Batti said.

Since its last round of funding, WhatFix has introduced connectors for customer relationship management and enterprise resource planning software, as well as a dashboard so managers can see app engagement metrics. (Batti says those products now account for 15% of WhatFix’s revenue.) WhatFix has also doubled its already massive workforce to more than 960 employees, opening new offices in Singapore, Germany, Australia and India.

Looking ahead, WhatFix, with $280 million in capital raised, plans to make a strategic acquisition (joining Airim, Nittio Learn, and Leap.is it has made over the past four years) and invest in product development. Like virtually every company these days, WhatFix is ​​following the rise of generative AI; Batti says WhatFix is ​​experimenting with automated “agents” that can take action on specific applications, similar to robotic process automation.

“Looking forward, the DAP market is expected to evolve toward more AI-driven, personalized experiences with deeper integration into enterprise systems,” Batti said. “We’ve been very disciplined with our current $265 million in capital, and our ability to grow profitably while expanding across our customer base has helped us maintain strong financial health.”

Is an IPO in WhatFix’s future? Batti wouldn’t say. But he noted that the Warburg Pincus founder has “a proven track record of steering companies to IPOs and manipulating public company positions.” Take that as you will.