Why we continue investing in Klarity: A Vision for the Future of Workflow Automation and Building Exponential Organizations

At Picus Capital, we take pride in identifying and partnering with founders and companies at the earliest stages, always with a focus on building long-term relationships across the company lifecycle. Our investments in Klarity’s Pre-seed/Seed, Series A, and now Series B are a testament to this long-term commitment. Since initiating our partnership in 2018, we have witnessed Klarity’s remarkable journey from a promising innovator in contract operations, to becoming a generative AI-native workflow automation platform for accounting functions, to eventually automating all enterprise business processes in real-time with high compliance and intelligent feedback loops. With the recent launch of Klarity 3.0 and the subsequent announcement of their $70 million Series B financing round led by Nat Friedman & Daniel Gross, our excitement about Klarity’s potential to redefine the industry has only grown stronger.

Automation versus Outsourcing and Offshoring

From the very early days of our partnership, Klarity has followed the vision of exploiting advancements in generative artificial intelligence to drive value for enterprise customers, particularly in the area of workflow automation via document comprehension and processing. While Klarity was early to market with its first applications for legal use cases, the company continuously evolved and ultimately found exceptional product-market fit with its technology to automate currently outsourced and offshored services with an initial focus on accounting operations — a much larger opportunity to serve. Historically, this broader sector has been characterized by highly manual and complex workflows managed through significant human-intensive in-house operations or via outsourcing and offshoring, in itself a more than $300 billion market (Accenture alone employs over 730,000 people globally, with a significant portion in lower-labor cost countries, dedicated to human-first operational support for enterprises, and generating in excess of $60 billion in annual revenue).

Klarity leverages the fact that businesses run on physical and digital documents (e.g., emails, contracts, purchase orders, invoices, tax certificates), with human teams providing the required connectivity between these unstructured documents and core business applications (CRMs & ERPs), as well as vertically specialized applications (HRMS, AP & AR, spend management, etc.). This underlying limitation shapes organizational structures, creating significant inefficiencies and complexities that are addressed by human intervention. Existing automation solutions (e.g., Automation Anywhere, UiPath) have to some degree attempted to add efficiencies by structuring document data through templates, RPA, and automating cognitive rule-based workflows — nevertheless, these approaches are focused on internal (and not external workflows), failed to scale well, and only work in fairly standardized situations.

Transforming Enterprises into Exponential Organizations

Klarity’s product exemplifies what has become possible with recent technological generative AI advancements in clearly defined workflows and use cases, and has added tremendous value to workflow automation through hyper-efficient document extraction, text-matching, semantic search, and analysis — provided via co-piloting and auto-piloting. Prior to the Klarity 3.0 launch, the platform has processed over 600,000 documents with an average turnaround time per document of less than 3 minutes, representing a 77x efficiency improvement over human turnaround times, while still being 1.3x more accurate than human reviewers. The platform helps enterprises save time and costs, reduce errors, and improve overall efficiency.

Klarity is becoming the enabler for the next generation of globally leading exponential enterprise organizations. In the 1970s AT&T was the largest public company in the world with c. 1,000,000 employees, in 2016 Google became the largest public company in the world with c. 60,000 employees, and recently Nvidia became the largest public company in the world with c. 30,000 employees — the exponential organization of the future will achieve this milestone with a fraction of the workforce, powered by Klarity. Achieving operational excellence through automation will become table stakes for category-leading businesses.

Accounting Process Automation — Just the Beginning

By initially targeting the accounting function and CAO office of large enterprises, Klarity identified a very interesting wedge for several reasons: Meaningful budgets for software, large internal teams, and significant BPO spend; underserved, with existing new-tech companies generally focusing on the CFO office and FP&A functions; highly entrenched function across the entire organization with significant reliance on underlying documents and records as sources of truth; and most importantly, significant requirements for accuracy, compliance, and reliability — which Klarity can provide.

The current offering truly excels in automating complex workflows, involving multiple stakeholders, various systems, and large non-standardized data & document volumes with existing use cases including revenue accounting and audit, order management, billing processes, financial statement verification, tax remittances, treasury services, and broader commercial operations — while seamlessly sitting at the workflow intersection of the GTM stack (GoogleDocs, Salesforce, Docusign, etc.) and the ERP stack (SAP, Oracle, NetSuite, etc.).

Illustrative Workflow Example: Purchase Order <> Invoice <> ERP Matching

Klarity’s impressive roster of existing enterprise customers such as Google, DoorDash, Moody’s, MongoDB, and CrowdStrike, underscores its capability to deliver robust, at-scale solutions that meet the high demands of leading enterprises across a variety of industries.

Klarity 3.0 — A Significant Inflexion Point

The recent launch of Klarity 3.0 demonstrates the company’s high product velocity and commitment to continuously deliver next-generation product offerings that enable enterprises to evolve into these exponential, automated organizations. By further replicating human cognition to understand cognitive workflows, Klarity is setting new benchmarks in automation depth and data breadth, boosting operational efficiency and enabling entirely new possibilities for workflow automation. Klarity 3.0 enhances the existing value proposition by introducing enterprise AI that understands both structured and unstructured data at the level of human cognition. The recently developed capabilities will provide for more use cases, higher accuracy, and significantly faster set-up speed, eventually driving increased ACVs and faster speed-to-market. Select product features include:

• Automation: Any document to structured table conversion; bulk exporting
• Dynamic formulas & tables: Doc <> Doc, Doc <> ERP, Doc <> Doc <> ERP matching
• Set-up efficiency: Expert self-service, model set-up in minutes instead of months, via automated learning / text-based prompts; instant improvement via UAT and in production

These recent product innovations have strongly resonated with existing as well as aspiring enterprise customers, resulting in significant commercial success, generating a strong pipeline, and eventually providing tremendous tailwinds for the Klarity team to accelerate their growth.

Artificial Intelligence for Software-enabled-Services

At Picus Capital, we are tremendously excited about the potential that generative AI provides for professional services and BPOs. While historically the buyer of vertical and horizontal software solutions to gain — at times limited — operational efficiencies in these traditionally labor-intensive industries, there is now a transformational shift underway. While companies such as Klarity are enabling large enterprises to reduce their dependency on outsourced and offshored professional service providers, we see massive opportunities to provide efficiencies in other labor-intensive industries across B2B sales, custom software build, professional advisory services (tax, legal, financial), system migration & integration, IT operations, etc. — we have actively invested across these verticals and are excited for the next phase of generative AI-enabled services.

Since our initial investment in 2018, Andrew and Nischal — the co-founders of Klarity — have relentlessly innovated at the forefront of AI-driven enterprise use cases, and exhibited remarkable drive and focus on execution, with a true customer-centric approach. Our Series B investment reflects our deep belief in the company’s potential to become a massive, category-defining business in enterprise workflow automation. We are excited to continue supporting the entire Klarity team on the journey ahead.

Co-authored by Julian Roeoes, Partner and Head of Americas, and Daniel Niklas, Senior Vice President at Picus Capital