In March, Robotic Process Automation (RPA) software provider UiPath was valued at USD 1 billion, a rare enough event for the company to be dubbed a ‘unicorn’. But the road to success has been far from straightforward. Having strayed from the path a number of times, it faced closure, before emerging as the leader of the global RPA market, proof that in UiPath’s case, success lies not so much in the recipe, but in the ingredients.
As the saying goes, everything looks clear in the rear view mirror. In this particular case, due to the speed with which UiPath has moved in the past two years, one mere glance is bound to give anyone motion sickness. On 6 March, UiPath, which is headquartered in New York but has kept its software development in Bucharest, received a USD 153 million investment in the form of a Series B funding, pushing its valuation above USD 1.1 billion. The move came after a year of record growth, during which UiPath was named leader of the RPA market by Forrester, scoring highest when assessed for its technology. 2017 also saw the firm’s enterprise customer base grow from fewer than 100 customers to more than 700, pushing the company’s annual recurring revenue up by a staggering 690 percent.
To sustain the growth, last year the start-up embarked on a massive expansion of its global presence, doubling its workforce to over 500 professionals and opening offices in ten countries. Among them, the Japanese chapter, UiPath K.K., the first office opened in the country by a leading RPA software provider, had a major role in the company’s advancement.
But, having emerged from Bucharest as leader of a market that is only now taking shape at a global level, as a seller of enterprise software, Romania’s first unicorn is part of an extremely rare subspecies. Especially considering that it started developing its core product independently of a market it had very little knowledge of, and only five years ago considered shutting down the business.
Daniel Dines, CEO & Founder, UiPath at UiPath Conference, London.
An exception to nearly every rule
Romania’s first USD 1 billion tech start-up had its origins in a software outsourcing company founded by UiPath’s CEO Daniel Dines and Marius Tirca, its CTO, in 2005. Located in a flat in Delea Veche, DeskOver built automation libraries and software development kits for companies such as IBM, Google and Microsoft, which embedded them in their own products. But it wasn’t until 2012 that the team, which numbered 10 people, realized the market fit with RPA and started putting its resources into building a platform for training and orchestrating software robots. While that may seem like a natural progression, for the start-up and its product, today’s most widely adopted RPA platform in the world, that time could have spelled a dead end.
“During that period, we failed multiple times. Uipath is a series of all possible mistakes that one entrepreneur can make,” says Daniel Dines in a candid interview in Bucharest, after making the global announcement that UiPath was a newly minted unicorn. To his right, in an airy office with a charming view in the heart of the city, sits a little rainbow-haired unicorn he had just been gifted. “The first mistake,” Dines recalls, “was to build a start-up while also doing consulting work and outsourcing. We had to bootstrap the company by doing consulting work. It’s distracting, really. You’re much better raising money by going to accelerators. But in our time it wasn’t possible,” he acknowledges, a hint that, perhaps, his confession should be taken with a grain of salt. “I didn’t even know that that was the idea of building a start-up: to raise money from investors, validate the ideas, build a go-to-market product and then a strategy.”
Secondly, “the motivation wasn’t right in the beginning,” says Dines, in what sounds more like explanation than self-criticism. “My motivation was, I think, to build the minimum wealth. To have a decent life, in a way – Romania was never an easy country in which to have that. And especially to be an entrepreneur. And going through the tough years, in the early 90s in Romania, to me was an experience that touched my entire life. So I was always a bit concerned about building some wealth, to live a decent life,” he recalls. “But that’s really a mistake,” he adds, stressing the perils of taking on the risk of becoming an entrepreneur in search of a stable income. “You don’t have to be an entrepreneur to build a decent life. It’s not worth it. So the right motivation for an entrepreneur is that something deep inside of you, the desire to do something. Because being an entrepreneur is extremely risky and while doing it you risk ruining your career.”
“What changed my perspective was looking at new start-ups coming out of Silicon Valley. TechCrunch started talking about new start-ups, and then there was Y Combinator [an American seed accelerator, started in March 2005] and then Paul Graham, one of my virtual mentors whose thinking really influenced me deeply. And I saw that you could actually build a company out of love for technology. For the sake of doing something for the greater good, of doing something better in this world. It changed my thinking completely. We gave up outsourcing completely and we said, ‘let’s build the best thing that we can and then we’ll see what happens.’ That was really a pivotal thing in our history,” he says.
But they still had room to make more mistakes. “We launched our product too late. That’s because we polished it too much, instead of bringing it to market much faster, getting feedback and going where the market wanted and not where we wanted to take it. And second, we killed it too late. So we didn’t fail fast, we failed late. We launched it late and failed late. Two big mistakes. I think for two to three years we were going in the wrong direction” he adds, as compelling as this can sound from the mouth of the co-founder of one of the world’s newest unicorns.
UiPath Bucharest offices on Caderea Bastiliei
The breakthrough came in 2013, and it was nothing short of an “astral moment,” as Dines put it in the post-announcement press conference that introduced him to the Romanian public. Before that, with no clients willing to pay for their technology, they had considered closing their business. And with some justification, as they were breaking the basic rules of entrepreneurship: know your market well and build a product that the market needs. Instead, as software developer Adrian Dorache, part of UiPath’s original team, puts it, “At that time, we were building an engine and selling that engine to other garages. We had a good product and were always busy with it, but we didn’t yet know what we could do with it. Until somebody came and told us ‘you can use it to build an airplane.’”
Software Developer Adrian Dorache
The first client discovered them, not the other way round. The Indian chapter of a large BPO company was doing a pilot project to find the best provider of RPA technology to meet its business needs. UiPath, still named DeskOver at that time, competed against other RPA providers and came out on top. But the biggest take away from the experience was a keen understanding of the market their product was operating for. “We understood there was a huge market out there of people who just do repetitive processes all day long, for whom our technology, which emulates what people do, is perfect. From that moment on, things changed dramatically for us. We started to grow,” Dines explains.
That year DeskOver launched the first UiPath Desktop Automation product line based on Microsoft Workflow Designer that specifically targeted the RPA market. “In 2014 and 2015 it seemed to me that we had giant competitors, but without looking at them, we started to grow the team and things later exploded. There comes a moment when you need to get a little crazy,” Dines says.
Growing on the right path
In 2015 DeskOver became UiPath, and concluded its first partnerships with several global BPO and consulting firms. Moreover, the company opened its US office, UiPath Inc, and expanded the team from the core of 10 to over 100. In August, UiPath closed an initial seed round led by Earlybird, with Credo Ventures and Seedcamp as backers. Announced the previous year, the round required 14 months of negotiations and brought the start-up a USD 1.6 million investment. In September, it was included in Seedcamp Week in London.
It was as early as 2015 that UiPath appeared on the radar of EY Romania, with which it later developed a strategic partnership that turned global. “We got into Romania through our partner EY. EY Romania has built an implementation team based on UiPath technology and it is very successful worldwide within the entire EY group,” Dines says.
Aurelia Costache, EY Romania
Aurelia Costache, advisory services leader at EY Romania and head of the RPA Center of Excellence in Bucharest, which is currently acting as a global hub for UiPath expertise, takes up the story, noting, “EY Romania became aware of UiPath’s technology in 2015 and, since then, we have been developing our partnership to jointly bring our clients the value-added of an end-to-end solution. With the benefit of proximity, we were able to work together in implementing the first RPA projects in Romania, leveraging on the trust relationships that EY had built with its clients. Being a globally integrated firm, we were able to support our offices in other countries with the UiPath expertise, facilitating UiPath’s access to EY’s global clients as well.”
By April 2016, the company had released its Front Office and Back Office Server suites and made available its Studio Community Edition, reaching 10,000 active members in six months. By the end of the year, it had opened new offices in London, New York and Bengaluru (Bangalore), India, and had added more than 250 enterprise customers to its portfolio.
2017 brought UiPath industry recognition and marked the year of the company’s global expansion. In February, it was recognized as an RPA industry leader in the Forrester Wave Robotic Process Automation, Q1 2017, which compared 12 RPA vendors against criteria in the areas of current offering, strategy and market presence. When assessed solely by RPA technology criteria, it received the industry’s highest score. “The ranking counted a lot,” Dorache says. “It matters a lot what analysts say, because they communicate with the funds and for us that was good feedback. Besides making sales, it is also important that the product you bring is indeed very good. It mattered because we had started as a team of ten. And by the time this report came out, we were a company that delivered. And this is important, because big companies want to deal with big companies.”
The main catalyst of growth, a USD 30 million investment, was secured in April in one of the biggest Series A rounds of funding in Europe in 2017, led by Accel. Previous investors Earlybird Venture Capital, Credo Ventures and Seedcamp also joined. The lead investor for the deal on behalf of Accel was Buzau-born but London-based partner Luciana Lixandru, who joined UiPath’s board. “What I thought was very intriguing early on,” she told howtoweb.co about the firm she was introduced to by Dan Lupu, partner at Earlybird Venture Capital, “was that the company did not have any real feet on the ground in the US and yet they were getting a lot of attention from US customers, riding a very timely trend.” What attracted Accel to UiPath, she notes, was the team and its commitment to building a large company. “We’re early stage investors, so for us at the end of the day it’s all about the founder and the team. Even the most successful companies grow with ups and downs; it’s never a straight line to the top. If you have the right team and the right founder they can navigate these periods smoothly. When I go back to the drawing board, I focus most on the team and their ability and ambition to build a large company, and I would not underestimate the value of the second part.”
At that time, UiPath already counted about 200 large enterprises among its customers, including Lufthansa, Generali, Telenor and Dong Energy. About 30 percent were located in the US, with another 40 percent in Europe and 30 percent in Asia, and they spanned sectors such as banking and financial services, insurance, manufacturing, utilities, healthcare and government.
Boris Krumrey, Chief Robotics Officer, UiPath. UiPathForward Conference, London.
The investment, UiPath’s chief robotics officer (CRO) Boris Krumrey told BR in an exclusive interview in December of last year, was directed at hiring the best people, growing the sales, technical customer service organization and product development as well as expanding into key markets and an infrastructure that is globally expanding. “Right now, we are focusing on growing and strengthening our partnerships with our service integrators, service providers, consulting partners and technology partners. Especially with the integration of leading technology partners such as Oracle, Celonis and ABBYY, we have realized an expandable and business agile RPA platform that can actually realize a ‘digital workforce’, he outlined. In 2017 UiPath opened offices in Australia, France, Japan and Singapore, and had an employee base of over 400 people.
Last year, UiPath’s number of clients increased by 611 percent, and included Allianz, BMW Group, CenturyLink, Dairy Farm Group, Dentsu Inc., Huawei, Morningstar and Sumitomo Mitsui Financial Group. Turnover went up by 790 percent. According to Dines, the company’s growth is unique in the world, as it takes place in the enterprise software enterprise field. “Our investors say they have never seen this level of growth from enterprise software, rather than the consumer kind.”
2017 also saw the launch of UiPath Academy, which allows thousands of people worldwide to train with the UiPath RPA platform solution.
The year of the unicorn
Less than one year after receiving its first substantial investment, UiPath raised USD 153 million in a Series B funding, again led by Accel, with new investors CapitalG and Kleiner Perkins Caufield & Byers (KPCB) contributing, alongside early investors Earlybird, Credo Ventures and Seedcamp. The company’s USD 1.1 billion valuation put UiPath on the exclusive list of so-called unicorns. According to Accel representatives, the new financing will be used to accelerate the development of the company’s product roadmap, particularly around innovations that integrate machine learning and AI algorithms within customers’ digital business operations. Following the round, Accel partner Rich Wong joined the company’s board of directors.
According to Dines, securing the Series B investment took just two months and choosing its future partners was this time up to UiPath, which went for investors with a Google connection. Apart from being a substantial endorsement for UiPath’s technology, the addition of CapitalG, the late-stage growth venture capital fund financed by Google’s Alphabet Inc., paves the way for collaboration with Google’s technical advisors to continue advancing AI and ML capabilities. “We chose Google for its interest in AI,” Dines says. Headquartered in Silicon Valley, KPCB was an early investor in Google, alongside Amazon and AOL, among others.
Needless to say, in 2018 UiPath proved to early investors that it was more than just a winning horse. “Two and a half years ago, when we invested, the company consisted of 12 people huddled together in an apartment in Bucharest. There was still no product presentation and no company deck. Commercial model and pricing were still to be tested with clients,” recalls Dan Lupu, partner at Earlybird Venture Capital, the largest Venture Capital Fund for Emerging Europe, in a March 2018 blog post. “In hindsight, after two large funding rounds in quick succession, the decision to invest in UiPath back at the seed stage now seems obvious… Tell that to the long list of smart investors that turned down our offer to become part of the syndicate and co-invest with us.”
Marius Ghenea, 3TS Capital
That privileged category includes Marius Ghenea, partner at 3TS Capital, one of the region’s most important investment funds, who dubbed UiPath “the one that got away.” He tells BR, “Of course I wish I had invested in the start-up, and furthermore, I was in discussions with Daniel, the co-founder, and the other VCs for the first round, but did not finalize the investment at that time. But one cannot make every investment.” Ghenea adds, “Besides, UiPath had very good and smart investors. I respect very much the activity of the VCs involved there, and the results are visible. Then again, in retrospect it is always a lot easier to determine which investments a VC should have made, when one sees the results.” Moreover, the valuation “is excellent news for the company and its founders and shareholders and great news for the Romanian tech ecosystem, as something like that has almost never happened in the region,” he adds, except for, “LogMeIn from Hungary, a few years back, a company with the initial investment provided by 3TS Capital.”
From Romanian start-up to global player
The growth of the company, both in size and in value, was explosive. No longer a Romanian start-up, UiPath morphed into a global firm that thrives on international talent, Dines is very keen to stress. Speaking from his office on Bucharest’s Caderea Bastiliei Street, where the company occupies three floors, Dines reflects on the effect of the growth on the company and its people. “In June 2017, we had only one person in our finance team and no one in the legal team. Now we have about 12 lawyers worldwide and almost 40 people in the finance team, that fast was our growth.”
Lead Software Developer Lavinia-Andreea Cojocaru
The repeated metamorphoses of the company were witnessed by its core team, all of whom are still on board. “We have a few generations,” Dines outlines. “The first generation, around 15 people; then the second generation; and the next, about 100.” Part of the “Delea Veche generation”, lead software developer Lavinia-Andreea Cojocaru, who still remembers the time when neighbors would come knocking on their door to bring treats to the young people working till late, was in the middle of it all. “Things changed very much. When there were ten of us, we would communicate with each other and that was that. But when the team grew, we had to transfer the knowledge to new employees, help them and answer a lot of questions. Moreover, it was a matter of learning to trust other people. They did things better than us, but it required some adjusting.”
According to Dines, it is down to the core team as well as his co-founders and himself to promote a culture built, in his own words, around the concept of “humility”. “It’s the natural evolution of a human being, to reach humility. Ego is the worst enemy in one’s life. And to us humility came a bit from the realization that we were not the best software engineers in the world. We don’t have the best ideas in the world. And what can make us successful is really the desire to do something better. To become better. And only people who think within the humility framework can improve. Because otherwise you think you are good enough. And humility helps you overcome this type of barrier,” he says.
Running towards the rainbow
To many analysts, 2017 was the year that RPA truly emerged as a new enterprise software category, similar in scope, size and impact to ERPs, databases and security software, which supports markets worth billions where big tech companies thrive. According to UiPath CRO Boris Krumrey, in 2017 Uipath grew alongside the market. “2017 was the year RPA proved itself in terms of ROI and business outcomes, with enterprises actually surpassing the prevision potential of RPA adoption and Enterprise RPA becoming a household name for global companies,” he notes. “We proved to customers and implementation partners that not only is our product superior, easier and faster to scale up, but that implementation is smooth with the support of our strong and dedicated specialists. UiPath was quick to respond to particular customer needs, so we went the extra mile in terms of both the product, and the delivery teams.”
Although overall the RPA market is still considered an emerging one, it is expected to grow to USD 8.75 billion by 2024. According to UiPath’s CEO, being a newcomer in a nascent market brings more advantages than challenges, because you are allowed to establish your presence in the market. “An incumbent in an enterprise is very difficult to replace,” says Dines, whose company expects to double its 700-strong customer base in 2018. For new start-ups now, that are trying to copy our technology… even if they succeed in building a slightly better technology than us, it’s going to be very difficult to replace us in the enterprises where we have very good relationships and we will have more time to build better and better technology. It’s a race. Being new in the market allows you to be ahead in the race and it is very difficult to catch the market leader.”
UiPath Offices, Bucharest
“A well-established market is very difficult to disrupt,” he stressed. “So, it will be a long time before someone disrupts you, and from the point of view of technology they will not be able to disrupt your position on a market you are already so well established in.” And investors agree. As Accel’s Lixandru told howtoweb.co last year, UiPath might very well become a decacorn. “I think we can expect to have a multi-billion dollar company out of Bucharest.” However, for Dines, listing on the NASDAQ, something he expects the company to achieve in two to three years’ time, is a much more coveted goal.
What does RPA do?
UiPath is a robotic process automation vendor providing a complete software platform helping organizations automate business processes. The ‘robotic’ term can be misleading, as it has nothing to do with robots. Instead, it is a software tool that digitises highly repetitive work processes. Hence, the company’s mission is to eradicate tedious, repetitive tasks and let software robots do the grunt work.
UiPath enables businesses and organizations to develop an agile digital workforce by providing a state-of-the-art platform for software robots orchestration. Their products automate across all internal or web-based applications/databases and have unmatched solutions for Citrix, SAP and BPO automation.
Being magical creatures, unicorns are very rare. According to TechCrunch, there are currently 279 private VC-backed start-ups valued at over USD 1 billion. Last year, only 60 new start-ups were added to the unicorn club, fewer than the 66 that had joined the year before and way behind the record-setting 2015, which brought 99 newcomers.
Also, they are highly unpredictable. Traditionally having taken a major liking to the financial- and innovation-driven climate of Silicon Valley, of late they have found in China the second friendliest place to develop. But although in 2017 the majority of newcomers still emerged from the US and China, which contributed 29 and 24 unicorns respectively, thanks to the rise of cloud computing and easier access to international funding, new unicorns have started popping up in more exotic locations across the globe. Zooming in on Europe, the continent currently boasts 31 unicorns, with the UK contributing last year with four and Switzerland with one.
Moreover, their preference for markets is also largely a guessing game, although, as trends go, in recent years start-ups in sectors such as ridesharing, bike-sharing and co-working have consistently attracted strong funding. And not least, the USD 1 billion valuation itself carries with it a magic formula. Being fully known to investors only, its algorithm takes into account alongside intuitive factors such as the size of the market, for instance, growth predictions based on calculations that mostly elude outsiders.
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