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Automation Anywhere’s $250m funding: another nosebleed valuation?

Blog: MWD Advisors

Yesterday RPA specialist vendor Automation Anywhere announced it’s raised $250m from a number of venture capital firms including NEA (also led investment in Appian pre-IPO and invested in Salesforce, Workday and others) and Goldman Sachs Growth Equity. What’s going on?

The funding round values Automation Anywhere at about $1.8bn – that’s somewhere between 50x and 60x revenue by my rough estimate. This of course is off the back of a $153m funding round for UiPath earlier in 2018, which also saw that company’s valuation top $1bn. What’s more, since its flotation on London’s AIM stock market, UK-headquartered Blue Prism has seen its valuation climb to over $1bn, too. RPA is riding high.

This is obviously a huge deal for Automation Anywhere and its customers, but it also signals an investment bandwagon around business automation that just keeps on rolling. I hear a lot of people saying that RPA is a bubble that’s going to pop soon and leave a lot of investors (and customers) disappointed, but I also think there’s more to this beyond the obvious.

To quote a recent FT article, following UiPath’s big investment round: “…in its current form, the market may never be big enough to justify the nosebleed valuations.”

If you just think of UiPath, Automation Anywhere and Blue Prism as ‘pure RPA’ vendors – vendors selling automation technology that mimics humans’ interactions with applications’ user interfaces – then it’s hard to see these valuations as making sense.

However I’m firmly of the opinion that today’s RPA technology is more than this – it’s a new vector for low-code integration and application platform technology that’s aimed squarely at operations teams in businesses (rather than at IT teams and CIOs). There are signs that this is already unfolding: as I’ve mentioned in our podcast, take a l0ok at Automation Anywhere’s Bot Store, which acts like an app store for pre-built components for the company’s RPA bots. The application and process related content has nothing to do with legacy application integration through UIs; it looks very very similar indeed to the connector and content libraries from vendors like Dell Boomi, SnapLogic and others.

In addition, RPA is a technology that is increasingly able to drive business insights through instrumentation (something I’ll be talking about on this upcoming webinar). In this sense, it’s a substitute for ‘traditional’ BPM platforms – providing operational intelligence across administrative work.

It’s easy for IT folks and vendors from adjacent markets (integration platforms, process application platforms, low-code app development platforms) to look down their noses at the ‘kludginess’ of the core RPA concept and the fact that the technology is far from new, but as I keep saying, that’s not the point – the point is that this is automation technology that makes sense to a community that other technology approaches haven’t historically managed to win over. RPA vendors, if they’re smart, can capitalise on this to do much, much more than UI-based automation.

The post Automation Anywhere’s $250m funding: another nosebleed valuation? appeared first on MWD Advisors.

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