Personal blog of Yzmir Ramirez

When UIPath filed its S-1 last week, it was a watershed moment for the robotic process automation (RPA) market. The company, which first appeared on our radar for a $30 million Series A in 2017, has so far raised an astonishing $2 billion while still private. In February, it was valued at $35 billion when it raised $750 million in its latest round.

RPA and process automation came to the fore during the pandemic as companies took steps to digitally transform. When employees couldn’t be in the same office together, it became crucial to cobble together more automated workflows that required fewer people in the loop.

When UIPath raised money in 2017, RPA was not well known in enterprise software circles even though it had already been around for several years. The category was gaining in popularity by that point because it addressed automation in a legacy context. That meant companies with deep legacy technology — practically everyone not born in the cloud — could automate across older platforms without ripping and replacing, an expensive and risky undertaking that most CEOs would rather not take.

RPA has enabled executives to provide a level of workflow automation, a taste of the modern. It essentially buys them time to update systems to more modern approaches while reducing the large number of mundane manual tasks that are part of just about every industry’s workflow.

While some people point to RPA as job-elimination software, it also provides a way to liberate people from some of the most mind-numbing and mundane chores in the organization. The argument goes that this frees up employees for higher level tasks.

As an example, RPA could take advantage of older workflow technologies like OCR (optical character recognition) to read a number from a form, enter the data in a spreadsheet, generate an invoice, send it for printing and mailing, and generate a Slack message to the accounting department that the task has been completed.

We’re going to take a deep dive into RPA and the larger process automation space — explore the market size and dynamics, look at the key players and the biggest investors, and finally, try to chart out where this market might go in the future.

Meet the vendors

UIPath is clearly an RPA star with a significant market share lead of 27.1%, according to IDC. Automation Anywhere is in second place with 19.4%, and Blue Prism is third with 10.3%, based on data from IDC’s July 2020 report, the last time the firm reported on the market.

Two other players with significant market share worth mentioning are WorkFusion with 6.8%, and NTT with 5%.

No-code and low-code software have become increasingly popular ways for companies — especially those that don’t count technology as part of their DNA — to bring in more updated IT processes without the heavy lifting needed to build and integrate services from the ground up.

As a mark of that trend, today, a company that has taken this approach to speeding up customer experience is announcing some funding. EasySend, an Israeli startup which has built a no-code platform for insurance companies and other regulated businesses to build out forms and other interfaces to take in customer information and subsequently use AI systems to process it more efficiently, is announcing that it has raised $16 million.

The funding has actually come in two tranches, a $5 million seed round from Vertex Ventures and Menora Insurance that it never disclosed, and another $11 million round that closed more recently, led by Hanaco with participation from Intel Capital. The company is already generating revenue, and did so from the start, enough that it was actually bootstrapped for the first three years of its life.

Tal Daskal, EasySend’s CEO and co-founder, said that the funding being announced today will be used to help it expand into more verticals: up to now its primary target has been insurance companies, although organically it’s picked up customers from a number of other verticals, such as telecoms carriers, banks and more.

The plan will be now to hone in on specifically marketing to and building solutions for the financial services sector, as well as hiring and expanding in Asia, Europe and the US.

Longer term, he said, that another area EasySend might like to look at more in the future is robotic process automation (RPA). RPA, and companies that deal in it like UIPath, Automation Anywhere and Blue Prism, is today focused on the back office, and EasySend’s focus on the “front office” integrates with leaders in that area. But over time, it would make sense for EasySend to cover this in a more holistic way, he added.

Menora was a strategic backer: it’s one of the largest insurance providers in Israel, Daskal said, and it used EasySend to build out better ways for consumers to submit data for claims and apply for insurance.

Intel, he said, is also strategic although how is still being worked out: what’s notable to mention here is that Intel has been building out a huge autonomous driving business in Israel, anchored by MobileEye, and not only will insurance (and overall risk management) play a big part in how that business develops, but longer term you can see how there will be a need for a lot of seamless customer interactions (and form filling) between would-be car owners, operators, and passengers in order for services to operate more efficiently.

“Intel Capital chose to invest in EasySend because of its intelligent and impactful approach to accelerating digital transformation to improve customer experiences,” said Nick Washburn, senior managing director, Intel Capital, in a statement. “EasySend’s no-code platform utilizes AI to digitize thousands of forms quickly and easily, reducing development time from months to days, and transforming customer journeys that have been paper-based, inefficient and frustrating. In today’s world, this is more critical than ever before.”

The rise and persistence of Covid-19 globally has had a big, multi-faceted impact how we all do business, and two of those ways have fed directly into the growth of EasySend.

First, the move to remote working has given organizations a giant fillip to work on digital transformation, refreshing and replacing legacy systems with processes that work faster and rely on newer technologies.

Second, consumers have really reassessed their use of insurance services, specifically health and home policies, respectively to make sure they are better equipped in the event of a Covid-19-precipitated scare, and to make sure that they are adequately covered for how they now use their homes all hours of the day.

EasySend’s platform for building and running interfaces for customer experience fall directly into the kinds of apps and services that are being identified and updated, precisely at a time when its initial target customers, insurers, are seeing a surge in business. It’s that “perfect storm” of circumstances that the startup wouldn’t have wished on the world, but which has definitely helped it along.

While there are a lot of companies on the market today that help organizations automate and run their customer interaction processes, the Daskal said that EasySend’s focus on using AI to process information is what makes the startup more unique, as it can be used not just to run things, but to help improve how things work.

It’s not just about taking in character recognition and organizing data, it’s “understanding the business logic,” he said. “We have a lot of data and we can understand [for example] where customers left the process [when filling out forms]. We can give insights into how to increase the conversion rates.”

It’s that balance of providing tools to do business better today, as well as to focus on how to build more business for tomorrow, that has caught the eye of investors.

“Hanaco is firmly invested in building a digital future. By bridging the gap between manual processes and digitization, EasySend is making this not only possible, but also easy, affordable, and practical,” said Hanaco founding partner Alon Lifshitz, in a statement.

If you asked the average person on the street what Robotic Process Automation is, most probably wouldn’t have a clue. Yet new data from Gartner finds the RPA market grew over 63% last year, making it the fastest growing enterprise software category. It is worth noting, however, that the overall market value of $846.2 million remains rather modest compared to other multi-billion dollar enterprise software categories.

RPA helps companies automate a set of highly manual processes.The beauty of RPA, and why companies like it so much, is that it enables customers to bring a level of automation to legacy processes without having to rip and replace the legacy systems.

As Gartner points out, this plays well in companies with large amounts of legacy infrastructure like banks, insurance companies, telcos and utilities.”The ability to integrate legacy systems is the key driver for RPA projects. By using this technology, organizations can quickly accelerate their digital transformation initiatives, while unlocking the value associated with past technology investments,” Fabrizio Biscotti, research vice president at Gartner said in a statement.

The biggest winner in this rapidly growing market is UIPath, the startup that raised $568 million on a fat $7 billion valuation last year. One reason it’s attracted so much attention is its incredible growth trajectory. Consider that UIPath brought in $15.7 million in revenue in 2017 and increased that by a whopping 629.5% to $114.8 million last year. That kind of growth tends to get you noticed. It was good for 13.6% marketshare and first place, all the way up from fifth place in 2017, according to Gartner.

Another startup nearly as hot as UIPath is Automation Anywhere, which grabbed $300M from SoftBank at a $2.6B valuation last year. The two companies have raised a gaudy $1.5 billion between them with UIPath bringing in an even $1 billion and Automation Anywhere getting $550 million, according to Crunchbase.

Automation Anywhere revenue grew from $74 million to $108.4 million, a growth clip of 46.5%, good for second place and 12.8 percent marketshare. Automation Anywhere was supplanted in first place by UIPath last year.

Blue Prism, which went public in 2016, issued $130 million in stock last year to raise some more funds, probably to help keep up with UIPath and Automation Anywhere. Whatever the reason, it more than doubled its revenue from $34.6 million to $71 million, a healthy growth rate of 105 percent, good for third place with 8.4 percent marketshare.

For now, everyone it seems is winning as the market grows in leaps and bounds. In fact, the growth numbers down the line are impressive with NTT-ATT growing 456% and Kofax growing 256% year over year as two prime examples, but even with those growth numbers, the marketshare begins to fragment into much smaller bites.

While the market is still very much in a development phase, which could account for this level of growth and jockeying for market position, at some point that fragmentation at the bottom of the market might lead to consolidation as companies try to buy additional marketshare.

Robotic process automation — which lets organizations shift repetitive back-office tasks to machines to complete — has been a hot area of growth in the world of enterprise IT, and now one of the companies that’s making waves in the area has acquired a smaller startup to continue extending its capabilities.

Blue Prism, which helped coin the term RPA when it was founded back in 2001, has announced that it is buying Thoughtonomy, which has built a cloud-based AI engine that delivers RPA-based solutions on a SaaS framework. Blue Prism is publicly traded on the London Stock Exchange — where its market cap is around £1.3 billion ($1.6 billion), and in a statement to the market alongside its half-year earnings, it said it would be paying up to £80 million ($100 million) for the firm.

The deal is coming in a combination of cash and stock: £12.5 million payable on completion of the deal, £23 million in shares payable on completion of the deal, up to £20 million payable a year after the deal closes, up to £4.5 million in cash after 18 months, and a final £20 million on the second anniversary of the deal closing, in shares. Thoughtonomy had never raised outside funding, although that was not for lack of interest.

“We’ve had approaches on a daily basis since the intelligent automation market has exploded,” said Terry Walby, CEO and founder of Thoughtonomy, in an interview, “but getting the best outcome for the company and our customers is not just about taking money and headlines [touting] our valuation.”

The acquisition comes about six months after Blue Prism announced it would be raising around $130 million (£100 million) to continue growing at a time when RPA is getting a lot of attention in the market. Linda Dotts, the company’s SVP of global partner strategy and programs, today confirmed that it did raise that money, and that part of the proceeds of that are being used to make the Thoughtonomy acquisition. She also confirmed that it would be looking at other opportunities, a sign that we are likely going to see at least a little more consolidation in this space.

On the same day that it had announced that fundraise, Blue Prism also unveiled a new AI initiative, working with partners to execute on that. And indeed that is what it is getting with Thoughtonomy. The companies were already working together before this — Thoughtonomy’s other key partners are companies like Microsoft’s Azure and Google Cloud, used to deliver its services — and according to Walby, the idea is that his startup will be helping Blue Prism get its services to the next level of where RPA is going.

“We provide architectural support and add intelligence,” he said in an interview. “Our platform addresses activities that require understanding or interpretation, and so it expands the use cases for RPA beyond structured processes.”

That’s notable, given the position of Blue Prism within the RPA landscape. The company is one of the more legacy providers — one of the consequences of being an early mover — and while that gives it a clear advantage of showing it has staying power, in the world of software that can be a more challenging sell when younger companies are building tech from scratch on newer frameworks. (UiPath, which has made major inroads into RPA both in terms of its customer and partner growth, as well as in terms of its funding, is one example.)

And in a market that is still seeing growth (read: companies often operate at a loss to invest in that growth), its ups and downs are there for everyone to see and scrutinise. In its half-year earnings that it posted today, its negative EBITDA margin widened once more — sales, marketing and other business development efforts come at a cost, for one — although group revenues also nearly doubled to £41.6 million from £22.9 million in the same period a year earlier. Total customer numbers are up 91% over the same period a year ago, and with sales returns typically taking about 12 months to come through on the balance sheet, the longer-term picture is worth watching, too.

Just this morning, robotic process automation (RPA) firm Blue Prism announced enhancements to its platform. A little later, the company, which went public on the London Stock Exchange in 2016, announced it was raising £100 million (approximately $130 million) by issuing new stock. The announcement comes after reporting significant losses in its most recent fiscal year, which ended in October.

The company indicated it plans to sell the new shares on the public market, and that they will be made available to new and existing shareholders, including company managers and directors.

CEO Alastair Bathgate attempted to put the announcement in the best possible light. “The outcome of this placing, which builds on another year of significant progress for the company, highlights the meteoric growth opportunity with RPA and intelligent automation,” he said in a statement.

While the company’s revenue more than doubled last fiscal year, from £24.5 million (approximately $32 million) in 2017 to £55.2 million (approximately $72 million) in 2018, losses also increased dramatically, from £10.1 million (approximately $13 million) in 2017 to £26.0 million (approximately $34 million), according to reports.

The move, which requires shareholder approval, will be used to push the company’s plans, outlined in a TechCrunch article earlier this morning, to begin enhancing the platform with help from partners, a move the company hopes will propel it into the future.

Today’s announcement included a new AI engine, an updated marketplace where companies can share Blue Prism extensions and a new lab, where the company plans to work on AI innovation in-house.

Bathgate isn’t wrong about the market opportunity. Investors have been pouring big bucks into this market for the last couple of years. As we noted, in this morning’s article, “UIPath, a NYC RPA company has raised almost $450 million. Its most recent round in September was for $225 million on a $3 billion valuation. Automation Anywhere, a San Jose RPA startup, has raised $550 million including an enormous $300 million investment from SoftBank in November on a valuation of $2.6 billion.”

Blue Prism helped coin the term robotic process automation (RPA) when the company was founded back in 2001 to help companies understand the notion of automating mundane business processes. Today, it’s releasing updates to that platform, including an updated marketplace for exchanging connectors to extend the main product, and, in some cases, adding a layer of intelligence.

The product at its core has allowed non-technical users to automate a business process by simply dragging components into an interface. All of the process coding has been automated on the back end. You could have a process that scans a check, enters a figure in a spreadsheet and sends an automated message to another employee (or digital process) when it’s done.

Dave Moss, company co-founder and CTO, sees a world in which companies are looking to digitization to stave off growing competition. Big insurance companies, financial services and other workflow-intensive organizations need to look beyond the automation capabilities his company has given them, and that is going to require an intelligence layer.

Today, the company wants to extend its core capability by offering more advanced tools in the Blue Prism Digital Exchange marketplace. The Exchange gives partners and customers the ability to create and share tools to enhance Blue Prism. To encourage those entities to add AI capabilities, the company also announced a new AI engine for building connectors to advanced AI tools from Amazon, Google, IBM and other AI platforms.

But the company doesn’t want to simply leave it to partners to provide the innovation. It wants that happening in-house as well, and to that end it has created Blue Prism Labs, where it will work with these same technologies looking for ways to inject its RPA products with artificial intelligence. This could lead to more sophisticated automated workflows down the road, such as using image recognition technology to add metadata about a photo automatically.

While Blue Prism has been a public company since 2016, the market has attracted a slew of startups, which have in turn been attracting big bucks from investors on gaudy valuations. UIPath, a NYC RPA company, has raised almost $450 million. Its most recent round in September was for $225 million on a $3 billion valuation. Automation Anywhere, a San Jose RPA startup, has raised $550 million, including an enormous $300 million investment from SoftBank in November on a valuation of $2.6 billion.