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As UiPath closes above its final private valuation, CFO Ashim Gupta discusses his company’s path to market
After an upward revision, UiPath priced its IPO last night at $56 per share, a few dollars above its raised target range. The above-range price meant that the unicorn put more capital into its books through its public offering.
For a company in a market as competitive as robotic process automation (RPA), the funds are welcome. In fact, RPA has been top of mind for startups and established companies alike over the last year or so. In that time frame, enterprise stalwarts like SAP, Microsoft, IBM and ServiceNow have been buying smaller RPA startups and building their own, all in an effort to muscle into an increasingly lucrative market.
In June 2019, Gartner reported that RPA was the fastest-growing area in enterprise software, and while the growth has slowed down since, the sector is still attracting attention. UIPath, which Gartner found was the market leader, has been riding that wave, and today’s capital influx should help the company maintain its market position.
It’s worth noting that when the company had its last private funding round in February, it brought home $750 million at an impressive valuation of $35 billion. But as TechCrunch noted over the course of its pivot to the public markets, that round valued the company above its final IPO price. As a result, this week’s $56-per-share public offer wound up being something of a modest down-round IPO to UiPath’s final private valuation.
Then, a broader set of public traders got hold of its stock and bid its shares higher. The former unicorn’s shares closed their first day’s trading at precisely $69, above the per-share price at which the company closed its final private round.
So despite a somewhat circuitous route, UiPath closed its first day as a public company worth more than it was in its Series F round — when it sold 12,043,202 shares sold at $62.27576 apiece, per SEC filings. More simply, UiPath closed today worth more per-share than it was in February.
How you might value the company, whether you prefer a simple or fully-diluted share count, is somewhat immaterial at this juncture. UiPath had a good day.
While it’s hard to know what the company might do with the proceeds, chances are it will continue to try to expand its platform beyond pure RPA, which could become market-limited over time as companies look at other, more modern approaches to automation. By adding additional automation capabilities — organically or via acquisitions — the company can begin covering broader parts of its market.
TechCrunch spoke with UiPath CFO Ashim Gupta today, curious about the company’s choice of a traditional IPO, its general avoidance of adjusted metrics in its SEC filings, and the IPO market’s current temperature. The final question was on our minds, as some companies have pulled their public listings in the wake of a market described as “challenging”.
Why did UiPath not direct list after its huge February raise?
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Laiye, China’s answer to UiPath, closes $50 million Series C+
Robotic process automation has become buzzy in the last few months. New York-based UiPath is on course to launch an initial public offering after gaining an astounding valuation of $35 billion in February. Over in China, homegrown RPA startup Laiye is making waves as well.
Laiye, which develops software to mimic mundane workplace tasks like keyboard strokes and mouse clicks, announced it has raised $50 million in a Series C+ round. The proceeds came about a year after the Beijing-based company pulled in the first tranche of its Series C round.
Laiye, six years old and led by Baidu veterans, has raised over $130 million to date according to public information.
Leading investors in the Series C+ round were Ping An Global Voyager Fund, an early-stage strategic investment vehicle of Chinese financial conglomerate Ping An, and Shanghai Artificial Intelligence Industry Equity Investment Fund, a government-backed fund. Other participants included Lightspeed China Partners, Lightspeed Venture Partners, Sequoia China and Wu Capital.
RPA tools are attracting companies looking for ways to automate workflows during COVID-19, which has disrupted office collaboration. But the enterprise tech was already gaining traction prior to the pandemic. As my colleague Ron Miller wrote this month on the heels of UiPath’s S1 filing:
“The category was gaining in popularity by that point because it addressed automation in a legacy context. That meant companies with deep legacy technology — practically everyone not born in the cloud — could automate across older platforms without ripping and replacing, an expensive and risky undertaking that most CEOs would rather not take.”
In one case, Laiye’s RPA software helped the social security workers in the city of Lanzhou speed up their account reconciliation process by 75%; in the past, they would have to type in pensioners’ information and check manually whether the details were correct.
In another instance, Laiye’s chatbot helped automate the national population census in several southern Chinese cities, freeing census takers from visiting households door-to-door.
Laiye said its RPA enterprise business achieved positive cash flow and its chatbot business turned profitability in the fourth quarter of 2020. Its free-to-use edition has amassed over 400,000 developers, and the company also runs a bot marketplace connecting freelance developers to small-time businesses with automation needs.
Laiye is expanding its services globally and boasts that its footprint now spans Asia, the United States and Europe.
“Laiye aims to foster the world’s largest developer community for software robots and built the world’s largest bot marketplace in the next three years, and we plan to certify at least one million software robot developers by 2025,” said Wang Guanchun, chair and CEO of Laiye.
“We believe that digital workforce and intelligent automation will reach all walks of life as long as more human workers can be up-skilled with knowledge in RPA and AI”.
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UiPath raises IPO range, still targets lower valuation than final private round
Robotic process automation unicorn UiPath is set to go public this week, concentrating our focus on its value.
The well-known company was last valued on the private markets at $35 billion in February when it closed a $750 million round. Living up to that price as a public company, however, at least when it comes to its formal IPO price, is proving to be challenging.
In a sense, that’s not too surprising given that the red-hot IPO market cooled as Q1 2021 came to a close. UiPath raised its last private round when the markets were most interested in public offerings and is now going public in a slightly altered climate.
In numerical terms, UiPath raised its IPO range from $43 to $50 per share, to $52 to $54 per share. That’s a 21% jump in the value of the lower end of its range, and an 8% gain to the value of the upper end of its per-share IPO price interval.
UiPath is also selling more shares than before, which should make its total valuation slightly larger at the top end than a mere 8% gain. So let’s go through the math one more time. Afterward, we’ll stack its new simple, fully diluted IPO valuations against its final private price, ask ourselves if our musings on the company’s recent profitability bore out, and close by asking where the company might finally price, and if we expect it to do so above its new price range.
UiPath at $54
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Equity Monday: Clubhouse, UiPath and the crypto flash crash
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.
First, our news roundup from last week was probably the most fun I’ve had in a few months, so make sure to catch up on that if you haven’t. That said, here’s a rundown of what we got into on the show this morning:
- The new Clubhouse round has us thinking about what is a good venture-style bet, and what isn’t. At least you can’t fault the Clubhouse crew for not having conviction.
- UiPath raised its IPO range, as expected.
- There’s an Apple event this week, which caused us to wonder why more startups aren’t competing with the giant.
- Cryptos have recovered from the flash crash, which had us thinking.
- Druva raised $147 million as TechCrunch will report later today, and Razorpay raised even more capital at a newly refreshed valuation.
- Finally, DoNotPay had some news, but its corporate ethos proved even more interesting.
The week is here, everyone! It’s Monday! We can do this!
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!
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Extra Crunch roundup: UiPath’s IPO filing, predicting revenue, how to pivot properly, much more
This is not a boast, but a warning: I could write a how-to article on almost any topic.
Give me enough time to do some research, and I can put together a reliable step-by-step for building a custom gaming PC, installing a hot water heater or interpreting public health data. But since I’ve never actually done those things, I would encourage you to ignore any advice I have to offer.
Trusted advice comes from experience. That’s why Ron Miller interviewed three entrepreneurs who have each built multiple companies to uncover some essential truths about achieving product-market fit:
- Pouyan Salehi, CEO and co-founder, Scratchpad
- Rami Essaid, CEO and founder, Finmark
- Melonee Wise, CEO and co-founder, Fetch Robotics
The basic tenets presented in Ron’s story will resonate with anyone who’s launched a startup.
Alex Wilhelm was particularly prolific this morning: For The Exchange, he studied UiPath’s 2020 quarterly results to get a clearer picture of its first S-1/A filing. Is the “somewhat slack news regarding UiPath’s potential IPO valuation” a harbinger of things to come?
Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.
In a follow-up, he recapped news from the public debuts of Coinbase, UiPath, Zenvia, AppLovin and Grab, all of which “adds up to a somewhat muddled picture of the current IPO market.” It feels like we’re in a turbulent window, but it’s also possible that we’re in the calm after the storm, he suggests.
Final note: I asked TechCrunch graphic designer/illustrator Bryce Durbin to create an image to accompany this primer on raising a Series A round. He didn’t just exceed my expectations — it’s my favorite TechCrunch illustration ever. Thanks, Bryce!
I hope you got something out of reading Extra Crunch this week. Have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Building the right team for a billion-dollar startup
Image Credits: Bryce Durbin/TechCrunch
From building out Facebook’s first office in Austin to putting together most of Quora’s team, Bain Capital Ventures managing director Sarah Smith has done a bit of everything when it comes to hiring.
At TechCrunch Early Stage, she spoke about how to ensure the critical early hires are the right ones to grow a business. As an investor, Smith has a broad view into the problems companies face as they search for the right candidates to spur organizational success.
She touched on a number of issues, such as who to hire and when, when to fire and how to ensure diversity from the earliest days.
So you want to raise a Series A
Image Credits: Bryce Durbin/TechCrunch
During a seed-funding round, a founder needs to convince a venture capital investor on a vision. But during a Series A fundraise, napkin-stage ideas don’t make the cut — a founder needs product progress, numbers and revenue (or at least a plan to eventually generate some).
In many ways, the stakes are higher for a Series A — and Bucky Moore, a partner at Kleiner Perkins, joined TechCrunch Early Stage last week to give founders tactical advice on the process of raising one.
Moore spoke about storytelling over semantics, pricing and where his firm sees itself “raising the bar” for startups.
With the right tools, predicting startup revenue is possible
For a long time, “revenue” seemed to be a taboo word in the startup world. Fortunately, things have changed with the rise of SaaS and alternative funding sources such as revenue-based investing VCs.
Still, revenue modeling remains a challenge for founders. How do you predict earnings when you’re still figuring it out?
How we dodged risks and raised millions for our open-source machine learning startup
Image Credits: erhui1979 / Getty Images
If you have a great idea within the open-core framework, expect your risks to be much lower than with a traditional business structure.
Clearly communicate this fact to venture capitalists for the best chance at securing the seed funding your organization needs.
But it takes more: Boasting a strong community around an emerging open-source product essentially serves as an “introduction letter” to venture capitalists. It highlights the founders’ ability to successfully execute their vision, as well as the mission to bring their product to a commercial reality.
Additionally, the iterative nature of open-source projects leads to fostering a sense of teamwork between the founders, their team and investors and stakeholders.
Founder and investor Melissa Bradley outlines how to nail your virtual pitch meeting
Image Credits: Ureeka
Melissa Bradley is the co-founder of a startup called Ureeka, an investor at 1863 Ventures and a professor at Georgetown’s business school. So it’s not an understatement to say that she understands the fundraising process from every angle.
She both invested and fundraised for her own startup during this last year, where the landscape has shifted drastically. At TechCrunch Early Stage, she led a session on how to nail your virtual pitch meeting.
Bradley covered how to allocate your time during the meeting, how to prepare, how to close out the meetings with a clear list of action items and what to avoid.
Scale CEO Alex Wang and Accel’s Dan Levine explain why sometimes unconventional VC deals are best
Image Credits: Eric Millette / Scale AI
Scale CEO and co-founder Alex Wang credits its success since founding — which includes raising over $277 million and achieving breakeven status in terms of revenue — to early support from investors, including Accel’s Dan Levine.
Accel haș participated in four of Scale’s financing rounds, and Levine wrote one of the company’s very first checks. So on this past week’s episode of Extra Crunch Live, we spoke with Levine and Wang about how that first deal came together, and what their working relationship has been like in the years since.
Ride-hailing’s profitability promise is in its final countdown
Image Credits: Nigel Sussman (opens in a new window)
Let’s parse Uber’s latest, vet its profit promise, consider its rivals and their performance, then ask ourselves if the great ride-hailing and food-delivery booms will ever make back the money they cost to scale.
UiPath’s first IPO pricing could be a warning to late-stage investors
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For UiPath, its initial IPO price interval is a disappointment, though the company could see an upward revision in its valuation before it does sell shares and begins to trade.
But more to the point, the company’s private-market valuation bump followed by a quick public-market correction stands out as a counter-example to something that we’ve seen so frequently in recent months.
Is UiPath’s first IPO price interval another indicator that the IPO market is cooling?
How to choose and deploy industry-specific AI models
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As artificial intelligence becomes more advanced, previously cutting-edge — but generic — AI models are becoming commonplace, such as Google Cloud’s Vision AI or Amazon Rekognition.
While effective in some use cases, these solutions do not suit industry-specific needs right out of the box. Organizations that seek the most accurate results from their AI projects will simply have to turn to industry-specific models.
Any team looking to expand its AI capabilities should first apply its data and use cases to a generic model and assess the results.
Let’s dive into each of these approaches and how businesses can decide which one works for their distinct circumstances.
Atomico’s talent partners share 6 tips for early-stage people ops success
Image Credits: Atomico
In the earliest stages of building a startup, it can be hard to justify focusing on anything other than creating a great product or service and meeting the needs of customers or users.
However, there are still a number of surefire measures that any early-stage company can and should put in place to achieve “people ops” success as they begin scaling, according to venture capital firm Atomico‘s talent partners, Caro Chayot and Dan Hynes.
Long story short: You need to recruit for what you need, but you also need to think about what is coming down the line.
5 questions about Grab’s epic SPAC investor deck
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Southeast Asian superapp Grab is going public via a SPAC.
Grab, which provides ride-hailing, payments and food delivery, will trade under the ticker symbol “GRAB” on the Nasdaq exchange when the combination is complete.
Let’s walk through several key points from Grab’s SPAC investor deck, including growth, segment profitability, aggregate costs and COVID-19, among other factors.
Expect an even hotter AI venture capital market in the wake of the Microsoft-Nuance deal
Image Credits: Nigel Sussman (opens in a new window)
Microsoft’s huge purchase of health tech AI company Nuance led the technology news cycle this week. The $19.7 billion transaction is Microsoft’s second-largest to date, only beaten by its purchase of LinkedIn some years ago.
For the AI space, the sale is a coup. Nuance was already a public company, but to see Microsoft offer a firm premium over its public-market value demonstrates the value that AI technology can have to wealthy companies. For startups working in the AI space, the Nuance deal is good news; the value of AI revenue was repriced by the acquisition’s announcement — and for the better.
In light of the megadeal, The Exchange dug into the AI venture capital market. What’s happening on the startup side of the coin in the artificial intelligence and machine learning (AI/ML) space?
What’s fueling hydrogen tech?
Image Credits: Bryce Durbin
When the word “hydrogen” is uttered today, the average non-insider’s mind likely gravitates toward transportation — cars, buses, maybe trains or 18-wheelers, all powered by the gas.
But hydrogen is, and does, a lot of things, and a better understanding of its other roles — and challenges within those roles — is necessary to its success in transportation.
Hydrogen is now capturing the attention of governments and private sector players, fueled by new tech, global green energy legislation and post-pandemic “green recovery” schemes.
5 product lessons to learn before you write a line of code
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Before a startup can achieve product-market fit, founders must first listen to their customers, build what they require and fashion a business plan that makes the whole enterprise worthwhile.
The numbers will tell the true story, but when it happens, you’ll feel it in your bones because sales will be good, customers will be happy and revenue will be growing.
Reaching that tipping point can be a slog, especially for first-time founders. To uncover some basic truths about building products, we spoke to three entrepreneurs who have each built more than one company.
Inside the US’ epic first-quarter venture capital results
Image Credits: Nigel Sussman (opens in a new window)
In broad strokes, the United States had a crushing venture capital start to the new year, pandemic be damned.
That is especially true when we consider 2020’s full-year figures. Last year, venture capitalists deployed some $166 billion into U.S.-based startups across 12,546 rounds. In contrast, if the first quarter’s pace was maintained during the rest of 2021, the United States would see around 16,000 rounds worth around $280 billion.
Of course, we cannot see the future, so those projections are merely shared to underscore how active the first quarter proved to be.
Dear Sophie: How can I get an H-1B without the lottery?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
For the past few years, our company has put very promising candidates into the annual H-1B lottery. None of them have been selected — and none of them meet the requirements for other work visas like an O-1A.
We lost out again in this year’s H-1B lottery. Are there any other ways we can obtain H-1Bs for our team members?
— Soldiering on in Sunnyvale
Alexa von Tobel outlines how founders should manage personal finances
Image Credits: Alexa von Tobel
Few people are more knowledgeable on the topic of how founders should manage their finances than Alexa von Tobel.
She is a certified financial planner, started her own company in the midst of the recession (which happened to be a wildly successful personal finance startup that sold for hundreds of millions of dollars) and is now a VC who invests and advises founders.
At Early Stage 2021, she gave a presentation on how founders should think about managing their own wealth. Startup founders can often put all their money into their venture and end up paying more attention to the finances of their company than their own bank account.
Von Tobel outlined the various steps you can take to stay out of debt, build credit and accumulate wealth through investments to ensure you have financial peace of mind as you take on the most stressful venture of your life: Starting a company.
How to pivot your startup, save cash and maintain trust with investors and customers
Image Credits: Olive
A few years ago, founder Sean Lane thought he’d achieved product-market fit.
Speaking to attendees at TechCrunch’s Early Stage virtual event, Lane said Queue, a secure digital check-in tablet for hospital waiting rooms that reduced wait times by uniting and correcting electronic medical records, was “selling like hotcakes.” But once Lane realized it would only ever address one piece of a much bigger market opportunity, he sold off the product, laid off two-thirds of the people affiliated with it and redirected the employees who were left.
Lane explained that what he really wanted to build is what his company — since renamed Olive — has now become, a robotic process automation (RPA) company that takes on hospital workers’ most tedious tasks so nurses and physicians can spend more time with patients.
Building customer-first relationships in a privacy-first world is critical
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In business today, many believe that consumer privacy and business results are mutually exclusive — to excel in one area is to lack in the other. Consumer privacy is seen by many in the technology industry as an area to be managed.
But the truth is that the companies that champion privacy will be better-positioned to win in all areas. This is especially true as the digital industry continues to undergo tectonic shifts in privacy — both in government regulation and browser updates.
For startups choosing a platform, a decision looms: Build or buy?
Image Credits: Chris Jongkind (opens in a new window)/ Getty Images
Founders shouldn’t be worried about starting companies that rely on other platforms.
Platforms exist to help startups get to users and customers faster and should be used as a means to an end, but everyone must get their piece.
Coinbase’s direct listing alters the landscape for fintech and crypto startups
Image Credits: Nigel Sussman (opens in a new window)
Coinbase’s direct listing was a massive finance, startup and cryptocurrency event, and the transaction’s effects will be felt for some time in the public market, but also among the startups and capital that comprise the private market.
In the buildup to Coinbase’s flotation — and we’d argue especially after it released its blockbuster Q1 2021 results — there was a general expectation that the unicorn’s direct listing would provide a halo effect for other startups in the space.
The widely held perspective raised two questions: Will the success of Coinbase’s direct listing bolster private investment in crypto-focused startups, and will that success help other areas of financially focused startup work garner more investor attention?
Billion-dollar B2B: Cloud-first enterprise tech behemoths have massive potential
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The “billion-dollar B2B” paradigm refers to the forces shaping a new class of cloud-first, enterprise-tech behemoths with the potential to reach $1 billion in ARR — and achieve market capitalizations in excess of $50 billion or even $100 billion.
One of the biggest factors driving billion-dollar B2Bs is a simple but important shift in how organizations buy enterprise technology today.
How startups can ensure CCPA and GDPR compliance in 2021
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Data is the most valuable asset for any business in 2021. If your business is online and collecting customer personal information, your business is dealing in data, which means data privacy compliance regulations will apply to everyone — no matter the company’s size.
Small startups might not think the world’s strictest data privacy laws — the California Consumer Privacy Act (CCPA) and Europe’s General Data Protection Regulation (GDPR) — apply to them, but it’s important to enact best data management practices before a legal situation arises.
Should Dell have pursued a more aggressive debt-reduction move with VMware?
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When Dell announced it was spinning out VMware, the move itself wasn’t surprising; there had been public speculation for some time.
But Dell could have gone a number of ways in this deal, despite its choice to spin VMware out as a separate company with a constituent dividend instead of an outright sale.
It seems Dell hopes to have its cake and eat it too with this deal: It generates a large slug of cash to use for personal debt relief while securing a five-year commercial deal that should keep the two companies closely aligned.
What we all missed in UiPath’s latest IPO filing
Image Credits: Nigel Sussman (opens in a new window)
Robotic process automation platform UiPath filed its first S-1/A this week, setting an initial price range for its shares. The numbers were impressive, if slightly disappointing because what UiPath indicated in terms of its potential IPO value was a lower valuation than it earned during its final private fundraising.
Here at The Exchange, we wondered if the somewhat slack news regarding UiPath’s potential IPO valuation was a warning to late-stage investors.
But in good news for UiPath shareholders, most everyone — ourselves included! — who discussed the company’s price range didn’t dig into the fact that the company first disclosed quarterly results to the same S-1/A filing that included its IPO valuation interval. And those numbers are very interesting, so much so that The Exchange is now generally expecting UiPath to target a higher price interval before it debuts.
But let’s dig into the company’s quarterly results to get a clearer picture of UiPath.
The IPO market is sending us mixed messages
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If you only stayed up to date with the Coinbase direct listing this week, you’re forgiven. It was, after all, one heck of a flotation.
But underneath the cryptocurrency exchange’s public debut, other IPO news that matters did happen this week. And the news adds up to a somewhat muddled picture of the current IPO market.
To cap off the week, let’s run through IPO news from UiPath, Coinbase, Grab, AppLovin and Zenvia. The aggregate dataset should help you form your own perspective about where today’s IPO markets really are in terms of warmth for the often unprofitable unicorns of the world.
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RPA market surges as investors, vendors capitalize on pandemic-driven tech shift
When UIPath filed its S-1 last week, it was a watershed moment for the robotic process automation (RPA) market. The company, which first appeared on our radar for a $30 million Series A in 2017, has so far raised an astonishing $2 billion while still private. In February, it was valued at $35 billion when it raised $750 million in its latest round.
RPA and process automation came to the fore during the pandemic as companies took steps to digitally transform. When employees couldn’t be in the same office together, it became crucial to cobble together more automated workflows that required fewer people in the loop.
RPA has enabled executives to provide a level of workflow automation that essentially buys them time to update systems to more modern approaches while reducing the large number of mundane manual tasks that are part of every industry’s workflow.
When UIPath raised money in 2017, RPA was not well known in enterprise software circles even though it had already been around for several years. The category was gaining in popularity by that point because it addressed automation in a legacy context. That meant companies with deep legacy technology — practically everyone not born in the cloud — could automate across older platforms without ripping and replacing, an expensive and risky undertaking that most CEOs would rather not take.
RPA has enabled executives to provide a level of workflow automation, a taste of the modern. It essentially buys them time to update systems to more modern approaches while reducing the large number of mundane manual tasks that are part of just about every industry’s workflow.
While some people point to RPA as job-elimination software, it also provides a way to liberate people from some of the most mind-numbing and mundane chores in the organization. The argument goes that this frees up employees for higher level tasks.
As an example, RPA could take advantage of older workflow technologies like OCR (optical character recognition) to read a number from a form, enter the data in a spreadsheet, generate an invoice, send it for printing and mailing, and generate a Slack message to the accounting department that the task has been completed.
We’re going to take a deep dive into RPA and the larger process automation space — explore the market size and dynamics, look at the key players and the biggest investors, and finally, try to chart out where this market might go in the future.
Meet the vendors
UIPath is clearly an RPA star with a significant market share lead of 27.1%, according to IDC. Automation Anywhere is in second place with 19.4%, and Blue Prism is third with 10.3%, based on data from IDC’s July 2020 report, the last time the firm reported on the market.
Two other players with significant market share worth mentioning are WorkFusion with 6.8%, and NTT with 5%.
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UIPath’s meteoric rise from unknown startup to $35B RPA juggernaut
When TechCrunch covered UIPath’s Series A in 2017, it was a small startup out of Romania working in a little known area of enterprise software called robotic process automation (RPA).
Then the company took off with increasingly large multibillion dollar valuations. It progressed through its investment rounds, culminating with a $750 million round on an eye-popping $35 billion valuation last month.
This morning, the company took the next step on its rapid-fire evolutionary path when it filed its S-1 to go public. To illustrate just how fast the company’s rise has been, take a look at its funding history:
Image Credits: Bryce Durbin/TechCrunch
RPA is much better understood these days with larger enterprise software companies like SAP, Microsoft, IBM and ServiceNow getting involved. With RPA, companies can automate a mundane process like processing an insurance claim, moving work automatically, while bringing in humans only when absolutely necessary. For example, instead of having a person enter a number in a spreadsheet from an email, that can happen automatically.
In June 2019, Gartner reported that RPA was the fastest-growing area in enterprise software, growing at over 60% per year, and attracting investors and larger enterprise software vendors to the space. While RPA’s growth has slowed as it matures, a September 2020 Gartner report found it expanding at a more modest 19.5% with total revenue expected to reach $2 billion in 2021. Gartner found that stand-alone RPA vendors UIPath, Blue Prism and Automation Anywhere are the market leaders.
Although the market feels rather small given the size of the company’s valuation, it’s still a nascent space. In its S-1 filing this morning, the company painted a rosy picture, projecting a $60 billion addressable market. While TAM estimates tend to trend large, UIPath points out that the number encompasses far more than pure RPA into what they call “Intelligent Process Automation.” That could include not only RPA, but also process discovery, workflow, no-code development and other forms of automation.
Indeed, as we wrote earlier today on the soaring process automation market, the company is probably going to need to expand into these other areas to really grow, especially now that it’s competing with much bigger companies for enterprise automation dollars.
While UIPath is in the midst of its quiet period, it came up for air this week to announce that it had bought Cloud Elements, a company that gives it access to API integration, an important component of automation in the enterprise. Daniel Dines, the company co-founder and CEO said the acquisition was about building a larger platform of automation tools.
“The acquisition of Cloud Elements is just one example of how we are building a flexible and scalable enterprise-ready platform that helps customers become fully automated enterprises,” he said in a statement.
While there is a lot of CEO speak in that statement, there is also an element of truth in that the company is looking at the larger automation story. It can use some of the cash from its prodigious fundraising to begin expanding on its original vision with smaller acquisitions that can fill in missing pieces in the product road map.
The company will need to do that and more to compete in a rapidly moving market, where many vendors are fighting for different parts of the business. As it continues its journey to becoming a public company, it will need to continue finding new ways to increase revenue by tapping into different parts of the wider automation stack.
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No code, workflow and RPA line up for their automation moment
We’ve seen a lot of trend lines moving throughout 2020 and into 2021 around automation, workflow, robotic process automation (RPA) and the movement to low-code and no-code application building. While all of these technologies can work on their own, they are deeply connected and we are starting to see some movement toward bringing them together.
While the definition of process automation is open to interpretation, and could include things like industrial automation, Statista estimates that the process automation market could be worth $74 billion in 2021. Those are numbers that are going to get the attention of both investors and enterprise software executives.
Just this week, Berlin-based Camunda announced a $98 million Series B to help act as a layer to orchestrate the flow of data between RPA bots, microservices and human employees. Meanwhile, UIPath, the pure-play RPA startup that’s going to IPO any minute now, acquired Cloud Elements, giving it a way to move beyond RPA into API automation.
Not enough proof for you? How about ServiceNow announcing this week that it is buying Indian startup Intellibot to give it — you guessed it — RPA capabilities. That acquisition is part of a broader strategy by the company to move into full-scale workflow and automation, which it discussed just a couple of weeks ago.
Meanwhile, at the end of last year, SAP bought a different Berlin process automation startup, Signavio, for $1.2 billion after announcing new automated workflow tools and an RPA tool at the beginning of December. Microsoft is in on it too, having acquired process automation startup Softmotive last May, which it then combined with its own automation tool PowerAutomate.
What we have here is a frothy mix of startups and large companies racing to provide a comprehensive spectrum of workflow automation tools to empower companies to spin up workflows quickly and move work involving both human and machine labor through an organization.
The result is hot startups getting prodigious funding, while other startups are exiting via acquisition to these larger companies looking to buy instead of build to gain a quick foothold in this market.
Cathy Tornbohm, Distinguished Research vice president at Gartner, says part of the reason for the rapidly growing interest is that these companies have stayed on the sidelines up until now, but they see an opportunity and are using their checkbooks to play catch-up.
“IBM, SAP, Pega, Appian, Microsoft, ServiceNow all bought into the RPA market because for years they didn’t focus on how data got into their systems when operating between organizations or without a human. [Instead] they focused more on what happens inside the client’s organization. The drive to be digitally more efficient necessitates optimizing data ingestion and data flows,” Tornbohm told me.
For all the bluster from the big vendors, they do not control the pure-play RPA market. In fact, Gartner found that the top three players in this space are UIPath, Automation Anywhere and Blue Prism.
But Tornbohm says that, even as the traditional enterprise vendors try to push their way into the space, these pure-play companies are not sitting still. They are expanding beyond their RPA roots into the broader automation space, which could explain why UIPath came up from its pre-IPO quiet period to make the Cloud Elements announcement this week.
Dharmesh Thakker, managing partner at Battery Ventures, agrees with Tornbohm, saying that the shift to the cloud, accelerated by COVID-19, has led to an expansion of what RPA vendors are doing.
“RPA has traditionally focused on automation-UI flow and user steps, but we believe a full automation suite requires that ability to automate processes across the stack. For larger companies, we see their interest in the category as a way to take action on data within their systems. And for standalone RPA vendors, we see this as validation of the category and an invitation to expand their offerings to other pillars of automation,” Thakker said.
The activity we have seen across the automation and workflow space over the last year could be just the beginning of what Thakker and Tornbohm are describing, as companies of all sizes fight to become the automation stack of choice in the coming years.
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A lake house architect, a Miami VC and a homeowner walk into a wine bar
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. The good news is that we managed to fit it all into a single episode this week. The bad news is that that means the show is pretty long. Sorry about that!
So, what took us so much time to get through? All of this:
- Robinhood raised $3.4 billion after its trading hiccups, and we also chatted over what we know about the company’s Q4 2020 numbers. In short, the company is growing nicely.
- RPA is big and UiPath is cashing in on the trend, raising $750 million at a $35 billion valuation. That’s a lot of cash for very little dilution.
- Databricks raised $1 billion at a $28 billion valuation, after reaching $425 million in ARR. The company’s growth is hot, but its valuation may be even hotter.
- Bumble is going public, so we chatted about its results, and how founder- and venture-friendly the dating market may be in the future.
- In a big exit for the Boston startup ecosystem, alcohol delivery platform Drizly has sold to Uber for $1.1 billion.
- Sticking to the alcohol beat, Danny talked us through the Vivino news, describing himself as a wine sophisticate with a distaste for sommeliers, which is just about the most Danny thing he has ever said. But the company really is neat.
- Divvy homes raised a $110 million Series C to make it easier to buy a home, after financing five times as many homes in 2020 as it did in pre-pandemic times.
- And then there were some neat early-stage rounds to chat about: Balance raising $5.5 million to bring B2B payments to the modern world, Alloy Automation raising $4 million for e-commerce automation and Beam raising $9.5 million to build a new browser.
- Make sure to read Natasha’s profile of the new Expectul CEO here.
- And, we closed on some Miami news.
And somehow we still have another entire day before the week is up! So much for 2021 calming down after 2020’s storms.
Equity drops every Monday at 7:00 a.m. PST and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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UiPath files confidential IPO paperwork with SEC
UiPath, the robotic process automation startup that has been growing like gangbusters, filed confidential paperwork with the SEC today ahead of a potential IPO.
“UiPath, Inc. today announced that it has submitted a draft registration statement on a confidential basis to the U.S. Securities and Exchange Commission (the “SEC”) for a proposed public offering of its Class A common stock. The number of shares of Class A common stock to be sold and the price range for the proposed offering have not yet been determined. UiPath intends to commence the public offering following completion of the SEC review process, subject to market and other conditions,” the company said in a statement.
The company has raised more than $1.2 billion from investors like Accel, CapitalG, Sequoia and others. Its biggest raise was $568 million led by Coatue on an impressive $7 billion valuation in April 2019. It raised another $225 million led by Alkeon Capital last July when its valuation soared to $10.2 billion.
At the time of the July raise, CEO and co-founder Daniel Dines did not shy away from the idea of an IPO, telling me:
We’re evaluating the market conditions and I wouldn’t say this to be vague, but we haven’t chosen a day that says on this day we’re going public. We’re really in the mindset that says we should be prepared when the market is ready, and I wouldn’t be surprised if that’s in the next 12-18 months.
This definitely falls within that window. RPA helps companies take highly repetitive manual tasks and automate them. So for example, it could pull a number from an invoice, fill in a number in a spreadsheet and send an email to accounts payable, all without a human touching it.
It is a technology that has great appeal right now because it enables companies to take advantage of automation without ripping and replacing their legacy systems. While the company has raised a ton of money, and seen its valuation take off, it will be interesting to see if it will get the same positive reception as companies like Airbnb, C3.ai and Snowflake.
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