HFS Highlight: WorkFusion’s Series F $220M war chest – a lot of money – not a lot of surprises

WorkFusion’s $220m Series F investment injection will be spent going deeper into the banking and financial services and insurance (BFSI) sectors – a strategy which if executed well could make it the dominant industry-specific automation choice in the lucrative category.

Whilst still harboring ambitions of claiming the 2^nd spot in the generalist RPA market (where UiPath appears unassailable in the near term), the leadership team believes their focus on BFSI is the route to scale that will work for WorkFusion. HFS notes that there has been a decided lack of industry-specific solutions within process automation – with other players opting for broad general-purpose scale rather than fit-for-purpose industry use cases that require more time and deep industry expertise (not to mention forensic security and compliance requirements).

CEO Alex Lyashok explained that their direct and deep relationships with the financial services sector had allowed them to become expert in solving the particular problems of the regulated world of banking. They plan to scale their reach by going deeper within existing customers and broader to more banking customers, with GTM investment earmarked for expansion in Europe and APAC.

Continuing with the regulated industries theme, healthcare payers and providers are next on the roadmap, with a possible ramp-up in 2022.

Funds for GTM and Cloud – but the focus remains on regulated industries

“Our mission is servicing regulated industries,” Lyashok told HFS.

Alongside the budget for expanding GTM activity, cloud is also a WorkFusion priority for pragmatic investment – in an industry they recognize remains heavily-wedded to on-premise.

We understand WorkFusion is working on a cloud-based ecosystem strategy to allow for improved data training sets. The ambition is to enable customers to pool learning and training data – while having the necessary controls to meet the concerns of heavily regulated industries. In this, they do at least have deepening experience to draw on – and a continued focus.

$220m latest round is double the total investment made to date

WorkFusion, arguably the original intelligent automation platform, ranked fourth overall in HFS’s Top 10 Robotic Process Automation Software report last year – behind the “big three” Automation Anywhere, UiPath and Blue Prism. Its embedded auto-ML capabilities helped it lead the Innovation assessment category, securing its number four spot overall. Its recent raise – $220m in Series F Funding – is the latest in a flurry of investments in what remains a fast-growing market. It is almost double all prior investment in the business to date, taking total investment in WorkFusion to $341.3m since launch in 2010.

WorkFusion solutions are powered by learning bots, proprietary artificial intelligence and advanced analytics, working together to automate a wide range of business operations specializing in the needs of banking and insurance and healthcare companies. The company is headquartered in New York City with operations across the globe.

Integrating cognitive and RPA capabilities deliver ‘OneOffice’ processes

Theirs was the first process automation product to natively integrate RPA with machine learning to address unstructured data challenges.

Customers like its integrated cognitive and RPA capabilities, which enable straight-through processing of end-to-end processes, not just tasks – in line with the HFS OneOffice vision for silo-busting process.

WorkFusion’s Triple-A Trifecta approach (the intersection of three critical change agents, Automation + AI + Analytics) continues to help it stand apart from the RPA pure-plays – a reality HFS recognizes in the examples we provide in our OneOffice Emerging Tech Platform (Exhibit 1). WorkFusion is listed with representative examples in Intelligent Document Processing. HFS has always seen it as ‘more than’ a straight RPA vendor.

Exhibit 1: The OneOffice Emerging Tech Platform

RPA is still attracting big valuations – some are off the scale

Automation Anywhere secured $290m from SoftBank on a $6.8b valuation in November 2019, Blue Prism raised $124m in April 2020 – on a valuation of $1.24b. And UiPath raised a further $750m in February 2021 on a valuation of (yes, you’re reading this right) $35b. Just for a small snippet of sanity, the UiPath valuation is bigger than the entire RPA product and services market, which HFS estimated at $8b for 2021.

The Series F investment in WorkFusion was led by Georgian – a leading fintech investor, and an existing investor in WorkFusion, with an existing board presence.

WorkFusion’s updated valuation has not been published. HFS estimates its annual revenue in the range of $75 – $100M. RPA – if you remove UiPath from the pack, has been attracting investment on valuations of an average 12x revenue (Exhibit 2:) over the past 12 months – outstripped by high-performing enterprise apps but more than 4 times higher than the S&P 500 (itself running at an all-time high).

Exhibit 2: Price to Sales ratios have been running at close to 12x multiples for RPA

Source: HFS Research 2021

Bottom Line: Going deep in BFSI is WorkFusion’s best shot to remain a viable automation player in a rapidly commoditizing market

WorkFusion is becoming a vertical champion, scaling through depth rather than breadth with industry-specific solutions and a use-case-driven approach to GTM. The specialization sets them on course to dominate banking and, potentially, adjacent regulated sectors. By becoming the go-to automation choice in two or more sectors, WorkFusion’s revenue could come to establish it among the automation front-runners – by revenue volume, if not by coverage.