“Digital transformation” and AI are still very popular terms in the enterprise software world, and today a startup from Romania has built a platform that leverages both concepts: And has been popular with users in the financial sector and has raised a sizeable round of financing. FlowX.ai — which allows companies to port legacy and newer software in a single place to build and run applications and services based on it — has raised $35 million, a Series A that the company will use to continue developing its product and the international expansion of its business.
Dawn Capital led the round, which was also joined by PortfoLion, SeedBlink and DayOne Capital – which had previously backed the company in a $9 million seed round.
FlowX.ai now mainly works with companies in the financial sector – clients include BNP Paribas, OTP, Banca Transilvania and Alpha Bank – and relies heavily on third parties such as system integrators (IBM, KPMG, etc.) to reach out to potential clients. User. Its advantage is to help these big legacy players launch new services faster, which can be used internally or alternatively externally to compete with the new products that so-called neobanks and other new players are bringing to the market. FlowX.ai states that since launching four years ago, about 30 million users have interacted with products and services built on its platform.
FlowX.ai has not yet announced its rating PitchBook lists some of the startup’s recent financials. As a result, revenue for the year ended December 2022 was just $1.55 million, but increased by over 735% year-over-year. We’ll be speaking to Ioan Iacob later – the CEO who co-founded the company with Radu Cautis and Serban Chiricescu – and we’ll ask for the numbers and update this post as we learn more.
The problem that FlowX.ai deals with is not new. Companies like MuleSoft, Boomi, Sapho, Tray.io and Snaplogic and many others have been working for years on solutions that make it easier for companies to use older and newer applications and to build services on top of them faster and easier.
The fact that the top three on this list were acquired by Salesforce, Dell and Citrix respectively is a strong indication of just how great the business potential is in this space and the value it holds for the larger technology companies in the industry.
The particular approach of this startup in this area is the application of AI, in particular to automate some of the integration, application and service creation that companies spend a lot of time and money to do manually.
This is an interesting problem and solution, especially given FlowX.ai’s target market, the financial sector.
Many banks and other financial services organizations have been on a long “digital transformation” journey for years – adding some new software to meet more regulatory requirements, others to improve or launch specific new products, and some in response to the fact that newer startups are stealing customers with better services. However, the reality is that many of these companies are still operating with a combination of tools, many of which are very old legacy systems. The perennial challenge in these organizations is getting old software (and old data) to work with new applications and new data, or simply getting older software to work in a more modern and less isolated way.
Not only is this common in the financial industry, but it’s also often seen as one of the more painful industries to modernize and, according to Iacob, it’s empty promises.
“Companies have long been promised useful tools to modernize their business. Many promises have been made over the years regarding the speed of digital product development, no-code/low-code, citizen programmers, and many others. But those promises have not been kept,” he said in a statement. “Instead, companies received a thousand disjointed point solutions and ended up locked into inflexible solutions, vendors and proprietary technologies. FlowX.AI addresses this problem. We’re proud that our platform consistently enables customers to accelerate application modernization in unprecedented ways: what used to take years now takes weeks.”
Romania is an interesting country when it comes to starting a business.
It has been known for years for its strong technical talent, but it has only relatively recently carved its place on the map of Europe’s startup ecosystems. A few years ago, some investors struck gold when another startup from the region, UiPath, emerged as one of the fastest growing and most successful corporate startups in years, essentially leading the burgeoning category of robotic process automation (it’s going public now traded).
That prompted many to look more closely at startups outside of the country. As a reminder, UiPath’s Series A was just over $29 million in 2017. The $35 million announced today by FlowX.ai is significant not only for Romania but for the entire market, where the average round size has fallen significantly as there has been greater pressure on technology funding over the last year.
Some argue here that this is valuable because it will help stimulate more business in another valuable sector, finance. FlowX.ai cites research results estimates that about $2 trillion was spent on digital transformation projects last year, and that $2 trillion was also lost to software bugs during the same period — the idea being that the company’s tools will reap a portion of that investment as well as a reduce part of this loss.
“Technical innovations continue to accelerate, but the companies that make up our daily lives are based on centuries-old technologies. We can use our phones to get AI to create a travel plan in seconds, but it takes years for our banks to offer new mortgage products,” Evgenia Plotnikova, general partner at Dawn, said in a statement. “Business leaders want to accelerate the pace of change, and FlowX.AI offers an elegant and intuitive solution. It abstracts the outdated infrastructure of horses and carriages, ensuring users are only ever exposed to one spaceship experience. Ioan and his team are further proof that technical innovations are on the rise across Europe and we look forward to supporting them as FlowX.AI becomes a true global player.”
