How investors in $10 billion UiPath spotted an emerging European software decacorn

  • Enterprise software startup UiPath is Europe’s latest decacorn, hitting a valuation of $10 billion after a Series E fundraise in July.
  • UiPath offers something called robotic process automation, which essentially aims to automate repetitive computer tasks.
  • We spoke to two European backers of UiPath, who took a gamble that the startup’s focus on an emerging area of enterprise software would pay off.
  • “When I first met Daniel I was struck by his conviction,” Reshma Sohoni, partner at Seedcamp, said. “He was talking about RPA which was a product that was hard to imagine at the time but his belief and self confidence were already there.”
  • Visit Business Insider’s homepage for more stories. 

UiPath — Romania’s first unicorn startup, Europe’s latest decacorn, and one of the fastest growing software companies in the world — started in a flat in Bucharest in 2005. 

The company last month in July became Europe’s latest decacorn (a company with a valuation of $10 billion) company, after a $225 million Series E round.

Founded out of Romania and now based in New York, the startup raised its first institutional funding in 2016, and has gone on to pioneer software automation in just four years.

Business Insider spoke to two key European investors in the buzzy software startup, Seedcamp partner Reshma Sohoni who invested in 2016, and Accel partner Philippe Botteri who led the company’s $30 million Series A in 2017, to understand how to spot a potential decacorn. 

Pivoting into the emerging process automation market

In 2005, CEO Daniel Dines and CTO Marius Tirca founded DeskOver, an automation library startup that would eventually pivot to become UiPath.

In 2012, the pair began to look into robotic process automation, a productivity tool that allows a user to configure one or more scripts (which some vendors refer to as “bots”) to activate specific keystrokes in an automated fashion. The goal is to automate repetitive computer tasks, freeing up time for human workers.

Automation is big business now, but the technology was in its early stages at that time. UiPath spent years developing its tech before winning a competition to find the best robotic process automation tech by Indian consulting firm BPO in 2015.

The company took the bold move of founding a US office and soon caught the attention of VC investors including Earlybird, Credo Ventures and Seedcamp, which funded a $1.6 million seed round in the company. 

“When I first met Daniel I was struck by his conviction,” Reshma Sohoni, partner at Seedcamp, told Business Insider in an interview. “He was talking about RPA which was a product that was hard to imagine at the time but his belief and self confidence were already there.”

In 2019, robotic process automation market grew 62.9% to $1.4 billion and held its position as the fastest-growing segment in the enterprise software market for a second year, according to research firm Gartner

Reshma Sohoni

Seedcamp

The company soon opened offices in other locations within Europe and Asia, taking board members by surprise with ambitious growth plans.

Even at that stage, there was some uncertainty about the sector more generally.

“The company was moving from a services and consulting model to a software model with 80/90% gross margins,” Sohoni added. “Our research showed that the curve was ticking upwards but automation in some cases still meant data farms in India with people copy and pasting from one screen to another.” 

Investors gambled on the founders as much as the technology

In early February 2017, a team from global VC fund Accel visited Romania for two days to meet with Daniel Dines and the UiPath team.

Accel would go on to lead a $30 million Series A round in the company which was, according to investor Philippe Botteri, “a unique process.”

“We have invested in major companies like Spotify and the thing that always strikes you is the founder, we had that with Daniel,” Botteri told Business Insider. “Daniel is a one-of-a-kind founder, he had a global vision for the company from the get-go, he’s very product-orientated, and driven.”

Accel also felt UiPath had strong potential after conducting its due diligence process.

UiPath had recently signed a large contract with a Fortune 500 company with a three- or four-month sales cycle — literally how long it takes to land a deal from start to finish. Accel normally found European startups took 12-18 months to land such deals.

The fact the company already had operations in the US helped while UiPath’s tech also caught Accel’s eye. The other partner from Accel was Romania-born Luciana Lixandru, now a partner at Sequoia Capital. 

UiPath has now raised $1.2 billion in venture funding in four short years, according to Crunchbase, and in that time has gone on to become a market leader in the automation space, according to research firm Gartner with around $400 million annual recurring revenue. Another high-valued European leader in the space is the UK’s Blue Prism, which has a market cap of £1.15 billion ($1.5 billion).

Magic Quadrant Gartner
Gartner’s RPA Magic Quadrant
Gartner

Spotting a unicorn

UiPath is a probable “home run” for its venture capital backers — the bet that will likely yield outsize returns and negate other failed startups in the portfolio.

How do you spot one?

“When it comes to spotting potential unicorns, be it TransferWise, Revolut, or a decacorn like UiPath the question we ask is ‘What are the things that have to go right in order for this to impactful and/or disruptive?'” Sohoni said. “Daniel had the right validation points and confidence as a founder but also wanted to continue to invest in R&D and product.”

Botteri simply quotes his fund’s thesis, based on French scientist Louis Pasteur’s quote: “In the fields of observation chance favors only the prepared mind.”

He added: “We knew automation was an interesting market and UiPath was at the intersection of secular trends, including data, AI productivity, and automation.”

It hasn’t been a totally smooth journey to decacorn status.

The company laid off about 400 people in October 2019, only a few months after raising $568 million at a $7 billion valuation and lost its CFO in the process, a series of events that puzzled industry watchers.

However, the company is bowling forward with reported plans for an IPO in 2021. Employees are positive about the company’s culture, with Dines being ranked by female employees as among the best of current tech CEOs.

Forrester analyst Craig Le Clair estimates that in three to four years, the RPA software market could be worth $4 billion, while RPA services would be worth $12 billion.

“Daniel famously said ‘I want one robot for every person,'” Botteri added. “If you are always driving to do more, you can do things people thought were impossible.”

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