“Digital transformation” and AI remain very buzzy terms in the world of enterprise software, and today a startup out of Romania that’s built a platform that taps into both concepts, and is seeing user traction in the financial sector, has raised a decent round of funding. FlowX.ai — which lets enterprises port legacy and newer software into a single place to build and run applications and services based around them — has raised $35 million, a Series A that it will be using to continue developing its product and growing its business internationally.
Dawn Capital led the round with PortfoLion, SeedBlink, and DayOne Capital — which previously backed the company in a $9 million seed round — also participating.
FlowX.ai today primarily works with enterprises in the financial sector — customers include BNP Paribas, OTP, Banca Transilvania, and Alpha Bank — and leans heavily on third parties like systems integrators (IBM, KPMG, etc.) to connect with would-be users. Its sweet spot is helping these big legacy players launch new services faster that can be used internally, or alternatively externally to compete with the new products that so-called neobanks and other new players are putting out into the market. FlowX.ai claims that since launching four years ago, some 30 million users have interacted with products and services built using its platform.
FlowX.ai isn’t disclosing its valuation but PitchBook lists some of the startup’s recent financials. According to those, its revenues for the year that ended December 2022 were a mere $1.55 million but grew by over 735% compared to the year before. We’re due to talk later to Ioan Iacob — the CEO who co-founded the company with Radu Cautis and Serban Chiricescu — and we will ask about the numbers and update this post as we learn more.
The problem that FlowX.ai is tackling is not one that is new. Companies like MuleSoft, Boomi, Sapho, Tray.io and Snaplogic, and many others, have for years been working on solutions to make it easier for enterprises to corral and make use of legacy and newer applications and to build services around them faster and easier.
The fact that the first three in that list were respectively acquired by Salesforce, Dell and Citrix is a strong sign of how big the business potential is in this space, and the value of that to the bigger tech players in the industry.
This startup’s particular approach to the space is its application of AI, specifically using it to automate some of the integration, application and service creation that businesses are spending lots of time and money on doing manually.
This is particularly an interesting problem, and solution, given FlowX.ai’s target market, the finance sector.
Many banks and other financial services organizations have been on long “digital transformation” roads for years — some new software has been added to meet more regulatory demands, some to improve or launch specific new products, and some in answer to the fact that newer startups are stealing customers with better services. But the reality is that many of these companies are still working with a combination of tools, including a lot of very old, legacy systems. The forever challenge at these organizations is how to get old software (and old data) to work with new applications and new data, or to simply get older software to work in a more modern and less siloed way.
This is not just endemic to finance, but it’s often seen as one of the more painful industries when it comes to modernization and what Iacob believes have been empty promises.
‘For a long time enterprises have been promised useful tools for modernizing their business. Many promises have been made over the years related to speed of digital product development, no code / low code, citizen programmers, and many others. But these promises have not been kept,” he said in a statement. “Instead, enterprises got a thousand disjointed point solutions and ended up captive to inflexible solutions, vendors, and proprietary technologies. FlowX.AI addresses this problem. We are proud our platform has been consistently enabling customers to accelerate application modernization in an unprecedented way: what used to take years is now being done in weeks.”
Romania’s been an interesting country when it comes to enterprise startups.
It has been known for strong technical talent for years but it was only relatively recently that it marked out its place on the map of European startup ecosystems. Several years ago, a number of investors struck gold when another startup out of the region, UiPath, turned out to be one of the fastest-growing and successful enterprise startups to emerge in years, essentially leading the charge in the emerging category of robotic process automation (it’s now publicly traded).
That led many to look deeper at startups out of the country. For the record, UiPath’s Series A, in 2017, was just over $29 million. The $35 million getting announced today by FlowX.ai is sizable not just for Romania but for the market as a whole, where average round sizes are down significantly in what has been a bigger squeeze on technology finance in the last year.
The argument here in some part is that this is valuable because it will help spur more business in another valuable sector, finance. FlowX.ai cites research that estimates that some $2 trillion was spent on digital transformation projects last year, and that equally $2 trillion was lost from software errors in the same period — the idea being that its tools can both nab some of that investment, but also reduce some of that loss.
“Tech innovation continues to accelerate, yet the businesses that underpin our everyday lives are running on century-old technology. We can use our phones to get AI to generate a travel itinerary in seconds, but it takes years for our banks to offer new mortgage products,” said Evgenia Plotnikova, a general partner at Dawn, in a statement. “Enterprise leaders want to rapidly increase the pace of change, and FlowX.AI offers an elegant and intuitive solution. It abstracts away horse-and-carriage legacy infrastructure, and ensures users are only ever exposed to a spaceship experience. Ioan and his team are further proof that tech innovation is on fire across Europe, and we are thrilled to be supporting them as FlowX.AI becomes a truly global player.”