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UiPath Gains Unicorn Status with Series B Funding; To Expand into AI

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This morning, UiPath announced that the company will be receiving $153m in Series B funding from a consortium including the company’s existing investors, with two new names involved – Kleiner Perkins and Capital G, the late-stage growth venture capital fund financed by Alphabet Inc.

The latter is of note as this arm of Google focuses on profit-centric investment rather than acquiring to serve Google’s overall strategic goals. Its notable investments to date have included Gusto (then ZenPayroll) in 2015, Airbnb and Snap in 2016, and Lyft in 2017.  As a result of these investments, Laela Sturdy of Capital G and John Doerr of Kleiner Perkins will be joining UiPath’s strategic advisory board.

This latest round of financing is meaningful on several fronts:

It places UiPath into unicorn territory

This round of funding places UiPath’s market valuation in the vicinity of $1.1bn, implying that the company has grown from seed funding to unicorn status in just 36 months. By contrast, fellow RPA unicorn Blue Prism was founded in 2001 and only recently crossed into unicorn status with a market value of $1.02bn.

…which requires more resources to support rapid growth

While this is both impressive supernormal growth on its own, and a rate that suggests that UiPath has taken considerable share in the past twelve months, it carries with it its own slate of challenges, as referenced in the profile of UiPath that NelsonHall published earlier this year. The company’s  level of growth needs infrastructural backfill in multiple areas, from R&D to sales and marketing. This is a company that is adding 2.5 customers a day on its existing funding levels and operating cashflow. What might UiPath’s organic growth trajectory look like with significantly deeper sales, marketing, deployment, and R&D capabilities? We are about to find out.

It positions the company to acquire in the AI space

The company now boasts a combined war chest of ~$200m in cash, more than enough for a tactical bolt-on or two in the areas of cognitive automation and AI. UiPath already has evolved partnerships with Celonis and Enate, so the company is likely to look outside of those firms’ service footprints for acquisitions. Specifically, UiPath is looking for capabilities in the areas of natural language processing, machine learning, and identity recognition. There will be no shortage of good candidates for UiPath to choose from in these areas, but betting correctly and acquiring for maximum value will be critical in positioning UiPath for success.

It ties the company closer to Google

The CapitalG investment certainly suggests a closer relationship between UiPath and Google, which might have already manifested in UiPath’s decision to utilize Google Cloud for its cloud machine learning initiative. Given Blue Prism’s alignment with IBM, the major RPA providers are beginning to find their technology partners for long-term competition in the segment.

Google will be able to provide UiPath with a host of competitive advantages in terms of technology licensure, partner ecosystem development, and market presence. It would be interesting to see where UiPath might be in a year’s time with a closer relationship with Google’s TensorFlow team, for example, or with its Generative Adversarial Networks working groups.

It likely launches the next wave of innovation in the segment

Armed with a substantive war chest of cash with which to build and acquire new capabilities, UiPath’s actions during 2018 are not likely to go unanswered by other segment leaders. As a result, UiPath’s next moves will likely signal the beginning of the next stage of evolution in the RPA sector – one we expect to bring out the best in technological innovation among those leaders. We see UiPath as a leader in that evolutionary process.

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