UiPath’s $225M Round: What Does This Mean For RPA (Robotic Process Automation)?

This week UiPath announced a Series E round for $225 million at a $10.2 billion valuation. The lead on the deal was Alkeon and the other investors included Accel, Coatue, Dragoneer, IVP, Madrona Venture Group, Sequoia Capital, Tencent, Tiger Global, Wellington, and T. Rowe Price Associates.

UiPath is the leader in the RPA (Robotic Process Automation) space, with ARR (Annual Recurring Revenues) of more than $400 million. RPA technology allows for automation of tedious and repetitive corporate processes. The segment is also the fastest growing in the enterprise software market. 

“Their growth story is pretty simple, but often gets lost in Silicon Valley as we all strive for the shiny new object,” said Pankaj Chowdhry, who is the CEO of FortressIQ. “They provide a great product that helps their customers get more out of their existing legacy investments.”

The irony is that the core technology for RPA is based on something fairly simple: screen scraping. This makes it possible to replicate a user’s input patterns with applications.

Yet companies like UiPath have innovated RPA systems, such as with machine learning, computer vision, process mining, intelligent OCR (Optical Character Recognition) and NLP (Natural Language Processing). The result is that the bots are getting smarter. 

Note that the COVID-19 pandemic has also accelerated growth–at least for the larger players. “Companies today need to ensure they have the right structure and right processes in place to withstand whatever comes their way,” said Vijay Khanna, who is the Chief Corporate Development Officer at UiPath. “With that, they are increasingly turning to automation to accelerate their digital transformation efforts and ensure they can operate as productively and flexibly as possible moving forward.”

The RPA industry has been the subject of various criticisms. For example, the technology is often perceived as being mostly a Band Aid that cannot scale and requires too much training to create useful bots.

“RPA disruption needs to be consumerized to provide self-service for users,” said Muddu Sudhakar, who is the CEO and co-founder of Aisera.

The competitive environment is getting more intense as well. Keep in mind that Microsoft is investing heavily in its own RPA platform.  And there is buzz that Amazon and Google will make a play for the opportunity. 

“The funding for UiPath is consistent with our view of a technology at the proverbial inflection point,” said Adib Ghubril, who is the research director at Info-Tech Research Group. “IBM has actively sought to strengthen its position in this market since the beginning of the year. Indeed, many believed that Automation Anywhere or UiPath would be the target. The fact that IBM opted for a much smaller player–WDG Automation–suggests that the big three–Automation Anywhere, BluePrism, and UiPath–are liking their odds of going-it-alone, at least for now.”

The UiPath round also highlights that the RPA market is massive and still in the early stages. “The adoption of RPA keeps growing as enterprises realize the benefits automation brings to operational efficiency, cost reduction, and employee and customer experience–making RPA one of the highest priorities for tech investments,” said Barry Cooper, who is the Enterprise Group President at NICE. “With the existing economic reality causing some enterprises to cut down on their workforce and look for cost efficiencies, RPA helps to maintain business continuity by complementing and assisting the existing workforce to do more with less. Robotic software can either take over some of the manual tasks to free up employee’s time for other important areas, or assist the human workforce, side by side, with attended bots.”

But with the large RPA firms bolstering their balance sheets with large amounts of venture capital, does this mean that there are fewer opportunities for startups? Is there a crowding out effect?

Well, not necessarily.

“There is opportunity for small operators to provide unique and price competitive products to disrupt the digital world,” said Vadim Tabakman, who is the Director of Technical Evangelism at Nintex. “With the world focusing on how machine learning and artificial intelligence can help—there are interesting opportunities that small operators can investigate that larger ones will have a harder time to implement and modify their existing tools.”