What is the most successful European startup since Spotify

The pandemic will eventually fade but its effects will endure. Since the workers were confined to their homes, many of the processes that they had once commissioned in the office had to be automated. This has given impetus to what is known as “robotic process automation” (APR), a tautological label for software that does just this. Having tried the APR, executives want more. This helps explain how UiPath, an obscure Romanian software firm, managed to raise $ 1.3 billion on April 20 in an initial launch of shares on the New York Stock Exchange. This valued the company at around $ 30 billion, beating what Spotify, the Swedish music streaming service, got when it went public in 2018.

All corporate computer technology is about automation. But often the different systems of a company do not dialogue with each other. Invoice or software information that does not have an export function has to be copied by hand. Advances in artificial intelligence, specifically computer vision algorithms that can scan documents and retrieve data from computer screens, have allowed UiPath and its competitors like Automation Anywhere and Blue Prism to eliminate that tedious task.

Narrowly defined, the APR market is small, with sales of no more than $ 3 billion last year, estimates Saikat Ray of Gartner, a market research firm. So UiPath and its rivals have built “automation platforms” that include programs to identify tasks and others to perform them.

By automating more and more processes such tools create their own demand. With this broader view, sometimes referred to as “hyper-automation”, APR could generate $ 30 billion a year in the next three to five years, Ray says. Consulting firm Bain estimates that the figure could reach US $ 65,000 million.

Whether the market is narrowly or broadly defined, UiPath is estimated to be nearly a third. Like Spotify’s Daniel Ek, Daniel Dines, who founded UiPath in 2005 and relaunched it in 2012 as a selling APR firm, knew that to be successful he had to think beyond his small local market and even Europe. Before the pandemic, UiPath invested heavily in global distribution. Covid-19 came at the right time. Revenues nearly doubled to $ 600 million, bringing the firm closer to profitability.

Maintaining leadership will not be easy. The corporate IT giants, including Microsoft (where Dines made its first weapons) and SAP, are getting involved in process automation. They have deep relationships with many firms, they can offer entrepreneur software packages and sell cheap APR tools or just give them away. UiPath has no protection against this offense, says Zane Chrane of Bernstein, a broker. The 20% jump in its share value at launch simply brought it up to the valuation level in a private fund round in February, which is modest by recent standards for tech company initial stock launches. Still Chrane believes the market is large enough to house many vendors. Many customers may prefer specialized UiPath products over APR included in a non-state-of-the-art package.

The Romanian firm has already been successful in one respect: It offers yet another proof that Silicon Valley is losing its monopoly on brilliant startups, says Rich Wong of Accel, a venture capital firm (and who is on the board of UiPath). In addition to pushing companies to embrace automation, Covid-19 prompted venture capitalists to embrace proposal meetings through Zoom, and smart ideas beyond the variations their Tesla cars contain. A decade ago, three-quarters of the initial venture investment deals measured by value were in the United States. Last year the same participation took place but outside the US.

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