Whatfix acquired Leap.is in a cash and equity deal, bringing 10 people, including the cofounders, onboard
Whatfix has achieved 76% year-on-year revenue growth, an 85% increase in new business revenue, and a 250% increase in revenue from existing business
The deal will see Leap form the mobile product line, bringing its mobile DAPs to Whatfix
Enterprisetech startup Whatfix has acquired Leap.is, a mobile-first onboarding and assistance platform that brings the digital adoption platforms (DAPs) to mobile apps.
This is the largest M&A deal for Whatfix so far, and the first deal that involves mobile DAP products. According to Whatfix, this acquisition will allow the startup to augment its platform by extending mobile capabilities.
The startup said in a statement that Leap’s toolset will be integrated into Whatfix’s apps, which will help the startup improve activations and adoption, reduce time-to-ship for onboarding experiences, and increase the customisation of user experiences overall.
Founded in 2013 by Khadim Batti and Vara Kumar, Whatfix enables enterprises to maximise productivity over digital tools and project management applications or software besides enabling employees to automate parts of their workflow.
It claims to increase the return on investment (ROI) on enterprise software by mapping non-use or overuse of software, while also enabling the training of employees in various processes.
Last year, Whatfix announced a $90 Mn Series D round led by SoftBank Vision Fund 2, taking its valuation to $600 Mn at the time. It is also backed by the likes of Sequoia and Eight Roads Ventures, which invested $32 Mn in the SaaS startup in 2020.
Whatfix has achieved 76% year-on-year revenue growth, an 85% increase in new business revenue, and a 250% increase in revenue from existing business.
To discuss the latest move made by Whatfix, and its future goals and plans, Inc42 sat down with Khadim Batti.
The Multiple Rationales Behind Whatfix Acquiring Leap.is
The Whatfix cofounder highlighted the various reasons the company went and acquired Leap.is.
Khadim pointed out that Whatfix has been working in the digital adoption landscape, and saw Leap.is as a potential way to augment their services and bring them to the mobile’s fold.
“We thought we’ll augment this and try to accelerate this by acquiring a company in this space, which during this terrific work for the last three-four years. So that’s how we went and got Leap.is,” Batti said.
According to Khadim, Leap.is will help Whatfix wrap up its product roadmap, by allowing them to integrate technology developed by Leap.is.
Founded by Kushagra Sinha and Sahil Sachdeva, both ex-Flipkart, in 2017, Leap.is allows its users data adoption for their mobile apps.
Khadim noted that Leap.is had been doing great work in the field for the past three-four years, and the primary rationale behind the acquisition was to help Whatfix bring a better mobile experience to its customers – Whatfix claims to have more than 550 enterprise customers.
These include customers such as Microsoft, Westland Insurance Group, Allstate Insurance Group, Datacom Group, The Netherlands Red Cross, Coca-Cola Beverages Africa, Geodis, Telenor, Ayr Farmers Mutual Insurance Company, Aggreko, and many others.
Under the acquisition terms, 10 people from the Leap team will be joining the Whatfix team.
Incidentally, to support its continued business growth, Whatfix increased its headcount by 40% in 2021 in sales and technology departments, including key leadership hires. Its current global full-time employees number is 729.
When asked if the acquisition marks Whatfix’s foray into consumer tech, Khadim confirmed the same.
“Of course, we were focusing on internal applications, but there was a lot of demand coming in for end customer-facing applications where we only had one solution which was catering to it. But now with Leap, I think we can help our enterprise customer-facing application as well as pure customer experience,” Khadim informed.
Sharing more about the acquisition, Batti also noted that Kushagra and Sahil, the two cofounders of Leap.is, played a crucial role in Whatfix going for the company.
Kushagra, Sahil, and the team’s experience and what they have built over a period of time in building their understanding of the experience a user would need, helped make the decision easy, Khadim noted.
Talking of the status of Leap.is within the larger Whatfix umbrella, Khadim commented that the startup will form the mobile product line, alongside its other product lines such as web, tech stocks, and analytics.
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As such, the acquisition becomes a product acquisition, as Leap.is will bring its technology to the Whatfix fold and augment its product line.
Khadim noted that while creating their mobile line would have taken Whatfix time – several quarters of it, to get the product-market fit right over multiple iterations – Leap is a company that has already done that.
He added that while having a team come in that already understands the market is indeed good, the main rationale was to save time, and this was termed as a ‘major advantage’ by Khadim.
“Sahil, Kushagra, and the team have been validating this market for quite some time, and have built that knowledge, that expertise,” Batti told us.
How The Deal Went Through
Talking about how the deal materialised and went through, Khadim told us that he met Kushagra about three and a half years ago, and while they had been exchanging thoughts regarding the field, they did not have the idea of joining hands until very recently.
“So, in fact, Kushagra and me met like three and half years back. And we’ve been on and off, talking like every three-six months like exchanging thoughts,” Khadim divulged.
He added, “I think over the last several months when we met several times, we realized that joining hands and working together actually will be beneficial for both the companies and we thought okay, that’s the right path to take.”
In all, the deal has been a work in progress for quite some time. Even though Whatfix was in touch with several other startups in the field, in the end, he went with Kushagra.
When asked about the financials of the deal, Khadim did not specify a number, but he did mention that the deal consists of cash and shares.
“It’s a part-cash, part-equity deal because we want founders to have some skin in the game,” Khadim informed, adding that while the investors in Leap will get a liquid exit, the amount is still under wraps.
What The Deal Brings To The Table
Talking about the potential benefits of the deal, Khadim told us that Whatfix will look to enter adjacent markets as well, with the acquisition.
He said that since Leap.is has already achieved product-market fit it would be easy for Whatfix to enter the market and hit the ground running once the deal is completed and the team is on board.
“Since the product is already achieved Product-Market Fit they have validations in the market, they hit the ground running. So, as soon as the acquisition is completed [and the] team is on board, we will take this offer to the market and start accelerating the sales,” Khadim told us, adding that within the next 18-24 months, mobile will contribute to at least 10% of the revenue of the enterprisetech startup.
Along with that, Whatfix is also looking at a 76% ARR growth in CY21 and 100% growth as CY22 targets, while it declined to share the profitability status of the startup.
Talking about the challenges that might come with the deal, as Whatfix adheres to a strict standard and there might be some friction implementing that pedigree throughout the company, along with challenges with streamlining clientele, Khadim said that they will not change the entire business model, so the friction will be minimised, adding that the company will be more selective going forwards.
He said that since Whatfix prefers large customers, such as banks or ecommerce companies, these companies remain much more stable as compared to others, and will continue to do so, as they are Whatfix’s ‘staple market’.
“Of course, we’re not ignoring the other fast-growing technology companies which are starting so we’ll definitely be more selective in that particular segment,” Khadim further explained.
Khadim also delved into how Whatfix works with other companies.
“In general, we are a very horizontal platform,” the cofounder noted, adding that some of the sectors Whatfix operates in, apart from banking and ecommerce, are telecom, tech, and manufacturing. He said in every segment, top companies are using Whatfix’s products.
He said that the reason for quoting that is because these segments tend to have the most customer-facing applications, which have been developed using Whatfix. So, in general, Khadim said that the company is a horizontal solutions provider.
The Pandemic And Whatfix
When asked how it has been since raising funds in June last year, the cofounder informed that since the pandemic, the startup has managed to grow, with 2021 being an unprecedented year in terms of growth for Whatfix.
He explained that as was with every company, during the start of the pandemic, Whatfix saw a decline, and in an environment where everyone was trying to save money, it was hard for them to convince CXOs to make digital adoption a priority. However, after the first six months, the need for a solution like Whatfix was felt more, Khadim said, and that was when the startup first started recording acceleration.
He noted that then, Whatfix’s ARR shot up to 133%, and over the last four quarters, Whatfix has seen accelerated growth.
“So in 2021, we grew faster than in 2020,” he said, adding that this year, the startup will look to further expand what they have been doing so far.
“Most of the world is in remote or hybrid [mode]. They need a solution that can get that new normal and a new form of adoption, and that is where I think we fit really well,” Khadim concluded, stating that the startup has seen accelerated growth for the last three to four quarters.
When asked how that acceleration came to be, Khadim explained that initially, the companies wanted to try only one or two applications and see if they delivered on their promise, as the adoption and the category were new. Then, he said, the companies started to expand rapidly, going from two to four, and four to eight, and so on.
“They started realizing that it is not only relevant to my SaaS products or web products, it is also applicable to the custom software that I have built. It is also relevant to my legacy applications which are on my desktop, and they have given explosive growth,” Khadim pointed out.
He further added that those companies not only entered the enterprise, but went deep into the same, deploying 30s, 40s, and 50s of applications.
Talking about their major clients, Khadim said that the startup had added more than 130 enterprise customers over 2021, that includes the likes of ExxonMobil and Microsoft, which have driven the sales for Whatfix.
Whatfix’s acquisition of Leap.is may well be the start of its venture into consumertech, but right now, the startup looks all set to expand its enterprise reach and value generation. With the addition of an experienced team, both the companies look set to hit the bottom line with ease.
With inputs from Nikhil Subramaniam