The news broke at the end of April: Accel and other 3 previous investors were putting $30m in Bucharest-based UiPath, in what was one of the biggest Series A in Europe in 2017. The lead investor for the deal on behalf of Accel, Luciana Lixandru, had recently been promoted to partner.
Originally from Buzau, with an undergrad degree from Georgetown Unversity, Luciana started her career with Morgan-Stanely in New York before moving to London. Initially with Summit Partners, she became an associate and then a partner at Accel, one of the most notable venture capital companies in the world. With Accel, Luciana has been involved with companies like Deliveroo, Algolia and now UiPath.
At How to Web we’ve been early fans of UiPath, a company founded in 2012. In 2014 UiPath announced an seed round led by Earlybird, with Seedcamp and Credo Ventures as backers. A few months after the last investment round we wanted to find out more from their new board member and key investor.
Q1: How did you come across UiPath and what was your first evaluation of the company?
I first heard about them from their seed investor, Dan Lupu from Earlybird. I was just catching up with him and trying to learn a bit about the Romanian ecosystem, hoping to learn that the ecosystem has matured. Little did I know that I would find such an interesting investment opportunity coming out of Romania.
What I thought was very intriguing early on 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. Then I had a call with the CEO and them met him in person.
I thought he was great – he spent 5 years at Microsoft and moved back to Bucharest in order to start a company. A really authentic and ambitious CEO, and it’s great to met this sort of talent coming out of everywhere. I think it’s a beauty of the world we live to be able to build this type of businesses out of cities other than Silicon Valley or London.
Learning more about the market, I found out that robotic process automation has become a top-of-mind problem for big corporates in the last 18-24 months. So I thought — ok, so he’s not only a world class CEO but he’s also addressing a problem that is really top-of-mind, and where customers are willing to spend dollars, lots of dollars.
Q2: RPA (Robotic Process Automation) sounds very exotic. What is the basic need behind RPA? Which are UiPath’s product strengths?
The “robotic” term is highly misleading, because it has nothing to do to with robots; it’s a software tool, which digitises highly repetitive processes. If you think of large organisations, most of them have hundreds and hundreds of employees that perform very repetitive tasks, and if they don’t have these employees internaly, they outsouce these repetitive tasks to business process outsourcing companies.
These repetitive tasks are found across departments, like claims handling for an insurrance company, or canceling a lost credit card from a bank, or HR on-boarding and off-boarding for basically any company.
The UiPath product has the most modern architecture in this space, as they are competing with products that have been in the market for a very long time. It’s really scalable, implementation is faster than competition and it’s quite easy to use as well.
Q3: How big is this market, why is it changing and/or growing? How did you evaluate the potential of the company before investing?
We did invest a lot of capital and that’s because we think this is one of the category-defining companies coming out of Europe. We’re very bullish on this opportunity.
Whenever we make any investment, whether is large or small, we spend a lot of time doing our homework: understand the market, understand the product, understand the team. This case was no different, we spent a lot of time with the team understanding their ambitions and plans. We spent a lot of time talking to customers, which is one of the key elements of our due diligence, and I don’t think I came across so many positive references on a product, so that was encouraging as well.
The reality is that RPA is a nascent market, not very big right now, but growing exponentially. It’s one of the topics which is top-of-mind for corporates and has been like this for the past couple of years. One market you can compare it to is the BPM software market. The difference is that BPM projects are very heavy, the implementation is typically long and it’s hard to measure if they actually pay back their investment.
However, I look at the market size by evaluating how much all the companies out there would want to spend on RPA, and I can tell you they are willing to spend millions for RPA per large company per year.
I think the opportunity is very large, and that UiPath can build a very large business. Arming them with the right amount of capital was really important in order to build a global company.
Q4: What was the most exciting thing about UiPath? How much is it about the people vs. the economic opportunity when you evaluate such a deal?
We’re early stage investors, so for us at the end of the day it’s all about the founder and all about 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.
Q5: According to the press release of the funding, the company has grown 6x in 2016. How optimistic should we be about their growth in the next years?
I think we should expect to have a multi-billion dollar company out of Bucharest. I don’t know if that will happen in the next year, building companies always takes a long time so I don’t want to put a timeline on it. But the business is growing very very fast and I think it has the potential to become a very large company.
And very large by Accel standards is typically very very large.