FlowX.ai raises $35 million for its AI-based approach to application integration

“Digital transformation” and AI remain very popular terms in the enterprise software world, and today there is a startup operating in Romania that has built a platform that taps into both concepts, And attracts users in the financial sector, has raised a decent round of funding.

FlowX.ai — which enables companies to bring legacy and newer software into a single place to build and run applications and services based on it — has raised $35 million, a Series A that it will use to further develop its product and its business to grow internationally.

The company’s headquarters are in New York, the technical team is in Romania, and all current investors are also European. Dawn Capital led the round with PortfoLion, SeedBlink and DayOne Capital – who previously backed the company in a $9 million seed round – also participating.

FlowX.ai today primarily 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 connect with future users. The plan is to keep focusing on financial clients for now, but to broaden the funnel over time.

The sweet spot is to help these big legacy players launch new services more quickly that can be used internally or externally to compete with the new products that so-called neobanks and other new players are bringing to market. FlowX.ai claims that since its launch four years ago, some 30 million users have interacted with products and services built using the platform.

FlowX.ai doesn’t disclose the valuation, but PitchBook lists some of the startup’s recent financials. According to them, revenue for the year ending December 2022 was just $1.55 million, but increased by more than 735% compared to the previous year. Ioan Iacob – the CEO who co-founded the company with Radu Cautis and Serban Chiricescu – declined to comment on the valuation and those sales numbers, but confirmed that the growth figure was accurate.

The problem that FlowX.ai addresses is not new. Companies like MuleSoft, Boomi, Sapho, Tray.io and Snaplogic, among many others, have been working for years on solutions to make it easier for enterprises to bundle and use legacy and newer applications, and to provide services around them faster and more easily. build .

The fact that the top three in that list have been acquired by Salesforce, Dell, and Citrix, respectively, is a strong sign of just how big the business potential is in this space, and its value to the larger tech players in the industry.

This startup’s particular approach to the space is the application of AI, specifically using it to automate some of the integration, application, and service creation that companies spend a lot of time and money doing manually.

This is a particularly interesting problem and solution given FlowX.ai’s target market, the financial industry.

Many banks and other financial services companies have been on long paths of “digital transformation” for years – some new software has been added to meet more regulatory requirements, some to improve or launch specific new products, and some in response to the fact that newer startups steal customers with better services.

But the reality is that many of these companies are still working with a combination of tools, including many very old legacy systems. The eternal challenge for these organizations is how to make old software and old data work with new applications and new data, or how to make older software work in a more modern and less isolated way.

Not only is this endemic in the financial world, but it is also often seen as one of the most painful sectors when it comes to modernization and what Iacob says have been empty promises, not least because many digital transformation platforms required too much input of time-poor engineers, or substandard what non-technical personnel could actually accomplish without those engineers involved.

“Whatever good things were promised [in previous integration and digital transformation projects], no code does not work in the enterprise. The cake is a lie,” he said in an interview (the latter is a reference to this). “We believe the future belongs to bringing business development teams and engineers together, augmenting that with AI, empowering them to build quickly and use any language to do that.”

The core of the platform is an open architecture, which can be extended with any programming language, he said. This “connector technology,” he said, allows users to “integrate any system.”

“It’s a completely new paradigm for building,” he added, using AI and specifically generative AI to let users ask for new services in natural language to produce results that can in turn be refined by engineers.

Romania has been an interesting country when it comes to business start-ups.

It has been known for years for its strong technical talent, but it was only relatively recently that it staked its place on the map of European startup ecosystems. Several years ago, a number of investors struck gold when another startup from the region, UiPath, turned out to be one of the fastest growing and successful enterprise startups in years, essentially leading the emerging robot process category. automation (it is now listed).

That led many to take a closer look at startups abroad. For the record, UiPath’s Series A, in 2017, was just over $29 million. And also for the record: FlowX.ai has all European investors, all its R&D in Romania and three Romanian founders, but doesn’t consider itself Romanian, or didn’t believe I should describe them that way.

Still, I will point out that the $35 million announced today by FlowX.ai is significant not only for a startup with roots in Romania, but for the market as a whole, where average round sizes have dropped significantly in what is a larger has been busy about technology financing over the past year.

The argument here is, in part, that this startup is valuable because it helps drive more business in another valuable industry, finance.

FlowX.ai cites research that estimates that $2 trillion was spent on digital transformation projects last year and that another $2 trillion was lost to software bugs over the same period. also reduce some of that loss.

And that potential to serve financial companies and beyond is what Dawn sees as the big opportunity.

“We’ve seen a similar pattern before, where the company starts with financial services, which is a very demanding industry, and then moves on to other categories,” Evgenia Plotnikova, a general partner at Dawn, said in an interview.

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