Hungarian startup lands €2.3M pre-seed funding to modernize legacy software with AI

Kodesage's AI-powered platform streamlines modernization, accelerates employee onboarding, while ensuring compliance and data security for enterprises. With paying customers and active pilots, the funding will accelerate platform development and support the company’s mission to empower enterprises to enhance their most complex legacy systems.

The legacy IT system conundrum

Kodesage aims to tackle a critical challenge in enterprise IT: understanding, maintaining, and modernizing legacy systems. These systems, deeply embedded in enterprise workflows, present significant risks, including outdated technology, poor documentation, dependence on key employees, and performance issues. Enhancing them is essential for organizations to remain competitive, as outdated systems can hinder performance, increase security vulnerabilities, and drive-up maintenance costs.

Maintaining these systems often requires continuous updates, patches, and ad hoc fixes from multiple sources, complicating employee training and escalating risks and costs. Market research highlights the urgency of this issue: with the global market for modernization services projected to hit $75 billion by 2032 and Gartner reporting that application modernization was among the top two priorities for IT executives, especially in the banking sector, in 2023 and 2024.

As organizations pursue digital transformation, the demand for AI-powered tools to streamline legacy system management and boost productivity has never been greater.

How Kodesage solves the legacy puzzle with AI

Kodesage acts like a compass for engineers, simplifying code navigation by providing the essential guidance needed to upgrade even the most complex legacy systems without any prior knowledge of the project. Built enterprise-first, the platform supports on-premise and even air-gapped deployments, ensuring compliance and data security. Key benefits include:

Maintenance and preparation for migrations: Simplifying the maintenance of legacy systems and streamlining transformation projects as organizations execute lift-and-shift migrations.

Automated documentation: Always up-to-date documentation that meets compliance requirements and lets engineers focus on building new solutions.

Accelerated onboarding: New team members can quickly grasp complicated systems through AI solutions that can take the role of an experienced engineer when explaining and mapping codebases.

In technical terms, KodeSage’s platform stands out due to its lower hardware requirements compared to others like OpenAI, enhancing cost efficiency for companies. It is model agnostic, not only utilizing the latest language learning models (LLM) but also allowing clients to choose preferred models. Additionally, Kodesage generates a proprietary knowledge graph from diverse sources including codebases, database schemas, past tests, issue tickets, wikis, and existing documentation. The firm’s approach to language-specific parsing also significantly improves LLM performance, especially in dealing with complex legacy codebases.

"At Kodesage, we believe understanding and modernizing legacy software shouldn’t feel like an endless uphill battle. Our AI-powered platform empowers teams to simplify and secure modernization efforts, allowing organizations to focus on building future-ready solutions instead of wrestling with technical debt." said Co-founder & CEO, Gergely Dombi.

Expert team for a complex problem

Kodesage’s founding team brings decades of hands-on experience with enterprise IT modernization and software development. Co-founders Gergely Dombi and Miklos Szurdi built Sonrisa, a 300-person consultancy specializing in legacy systems. Gyorgy Szilagyi, co-founded encrypted collaboration platform Tresorit (successfully exited in 2021), and adds proven expertise in creating secure, enterprise-grade software. This deep expertise has shaped Kodesage’s mission: to deliver an AI-powered platform that addresses the unique challenges of maintaining and upgrading legacy systems while minimizing costs and risks.

Investor confidence in a bold vision

The VC and private equity arm of OTP Group, one of the largest banking groups of the CEE region, PortfoLion Capital Partners led the funding round, bringing deep expertise in scaling enterprise software companies like Seon and FlowX.ai. Angel investors, including three former UiPath senior executives and other enterprise software veterans, also participated.

“We’ve seen thousands of teams over the past two decades helping enterprises with their modernization efforts, focusing on what was productizable before the current generative AI wave. The AI toolkit that has emerged over the past two years has now opened up a new, even more painful part of the legacy stack for modernization in a venture-scalable way. We couldn’t be more excited to team up with such a perfectly assembled founder team—György, Gergely, and Miki—to tackle this incredible opportunity,” said Márk Pálfalvi, Principal at PortfoLion.

Paving the way for enterprise innovation

With paying customers already on board and multiple pilots underway, Kodesage will use the funding to enhance its platform and scale its go-to-market efforts. The company’s goal is clear: to empower enterprises to bring their most challenging legacy systems to the next level and unlock new growth opportunities. For now, Kodesage is building tools to assist human beings in navigating such systems. However, these tools are designed with the future in mind, laying the groundwork to eventually empower code agents to autonomously navigate and optimize codebases.