Company president Rephael Sweary: Because of our rapid growth, we need the money to avoid a cash flow risk.
Just a year after raising $75 million at a $500 million company valuation and two years after raising $50 million at a $400 million valuation, US-Israeli digital adoption platform WalkMe, whose products are designed to adapt the user experience on websites to the user's personal needs, has raised $40 million more. Informed market sources say that the current round is at a valuation of $1 billion. Insight Venture Partners led the round with participation from Mangrove Capital Partners, the first investment institution recruited by WalkMe. Other shareholders in WalkMe are Scale Venture Partners, Greenspring Associates, Flint Capital, Gemini Israel Ventures, and Giza Venture Capital.
WalkMe cofounder and president Rephael Sweary told "Globes" that the financing round was necessary for the company, mainly in order to avoid a cash flow hazard. "When a company is growing at a constantly increasing pace, you want it to grow even faster. There was enough money even for that, but had there been some delay in performance, we could have been exposed to cash flow risk. So it was worthwhile raising a safety cushion when we could, not when we had to. Since there was a great offer, we took it. We didn't take more in order to avoid diluting shareholders," Sweary explained.
Sweary added that as far as revenue was concerned, the company would be ready to go public in early 2019. "We'll hold an IPO. There are no concrete plans at the moment, but we're on the way, and it looks like something in 2019 in terms of our readiness - in revenue, infrastructure, and internal measures necessary in order to support a public company listed on Nasdaq. When we're ready, we'll decide, because it's sometimes better to spend a little more time as a private company, mainly in order to make long-term investments more easily with less consideration for the short term," he said.
The announcement of the financing round comes only three months after WalkMe's June acquisition at an undisclosed sum of Israeli startup DeepUI, which automatically performs operations in various apps for users. This was WalkMe's third acquisition in 2017-2018, following Abbi in January 2017 and Jaco in April 2017.
All three acquisitions were aimed at improving the analytical and learning capabilities of the algorithm used by the company. The acquisition of Abbi facilitated analysis of user behavior at the hardware level, in addition to the software level. Jaco's visual analysis technology helps in displaying analysis and insights as a video clip. All three companies' technology were fully integrated into WalkMe's R&D department in Israel.
"The company is still looking for more acquisition opportunities in many areas, such as image identification and optical character recognition (OCR)," Sweary said.
WalkMe's products can be compared to a GPS navigation system for websites, apps, and enterprise information systems. We use Waze instead of looking a map and choosing the best route for ourselves. WalkMe's system treats complex information systems and websites the same way - it guesses what users want and guides them step by step until they achieve their objective quickly and efficiently, so that they don't leave the website in despair or have to call customer service. Guidance is through text windows appearing on users' screens that guide them correctly. On enterprise systems, the system can also do some of the work for the user through an artificial intelligence (AI) chatbot that asks the user what actions he or she wants to take. Based on the answers, the bot itself fills in the information in the right places in the complex system.
WalkMe's AI systems learn users' habits, deduce insights, and propose solutions. Sweary says that, in the future, the company plans "to extend its products to desktops, so that it will be capable of providing guidance not only on websites, but also in programs such as Word and Excel, in addition to processes such as installing peripheral equipment like printers, which may not be critical for private users, but is likely to be more significant for large enterprises."
Sweary told "Globes" a year ago that WalkMe's product helps its customers in two ways: it enables customers to make more effective use of digital services and platforms, and helps employees in an enterprise use dozens of different systems. Sweary said that 30% of the Fortune 500 companies were WalkMe customers, and that the company's revenue amounted to tens of millions of dollars a year. At the same time, he said, "The company is not making a profit yet, because we're growing very substantially and building more offices around the world. We're investing in expansion and recruiting employees in Singapore and Europe, and we have offices in the US, Japan, and Australia."