Romania was once a benighted corner of communism, a country of power cuts, queues and near-empty shops stocked only with “jars of pickled indescribables”, to quote a colleague who was there at the time.
That makes it all the more striking that this week UiPath, a Bucharest-born, venture capital-backed software company that promises to make global capitalist corporations hum more efficiently, raised further funding in New York at a nosebleed $35bn valuation.
Rather than being an outlier, UiPath may yet be a trailblazer for a new wave of software companies that can emerge from anywhere and sell to anyone. It is now taken as read that the world has entered an era of deglobalisation as national tensions rise and global supply chains fragment. But in parts of the digital world, at least, the exact opposite is true: we are seeing the rapid acceleration of e-globalisation.
Thanks to the ubiquity of cheap computing, the diffusion of software engineering skills and the spread of venture capital, companies like UiPath may become increasingly common. Great software is no longer just being written in San Francisco, Seattle, Shenzhen and Bangalore but in Lagos, Dhaka, Lima and Istanbul. Software companies have the ability to go global overnight and face far fewer obstacles in the digital world.
The Covid-19 pandemic, which has upturned so many aspects of business, is only likely to accelerate the trend as the world moves further online. This week, in a briefing with journalists, Microsoft noted that a lot of technology spending was being dragged forward as a result of the coronavirus crisis. Previously, the company had been anticipating that global technology spending would double over the course of this decade to 10 per cent of gross domestic product by 2030. It now expects that target to be hit by 2025.
It used to be the case that many of the world’s most ambitious software developers would flock to the west coast of the US if they wanted to make it. But, as Nat Friedman, chief executive of the code-sharing website GitHub, puts it, they are now moving to the cloud, where they can access powerful computing services from anywhere in the world.
As the head of an online community of more than 56m software engineers, Mr Friedman has a good vantage point to see where the best talent is emerging. In the US, he says the developer community shrank by 10 per cent in the Bay Area around San Francisco last year, while expanding quickly in Houston and Miami. But GitHub’s strongest areas of growth have come elsewhere, in countries including Nigeria, Bangladesh, Turkey, Egypt and Colombia. “The cloud has created a global opportunity,” he says.
UiPath is a good example of how a software company offering a unique service can attract international venture capital and reach global scale. The company’s strength is in robotic process automation software that helps companies and governments automate routine processes, such as filling appointment slots in hospitals, running credit checks or processing insurance claims. Daniel Dines, UiPath’s co-founder known as the “bot billionaire”, summarises the company’s business as “automation as an application”.
At least initially, such software companies can sell their services online. As a customer you often do not even know where they are based, says Reshma Sohoni, managing partner of Seedcamp, one of the earliest venture capital investors in the Romanian company. “You can build software businesses from anywhere. Our companies are joyfully flabbergasted that they can sell remotely,” she says. “UiPath was trailblazing in that it went global very fast.”
UiPath has moved its corporate headquarters to New York to be closer to its biggest customers, but it has kept its research and development centre in Romania. For the moment, it is a market leader in the fastest-growing segment of the enterprise software sector, according to Gartner, the technology research company. But as it becomes bigger, the competition will only stiffen.
UiPath is on track to launch a public listing in New York later this year that may enable it to vault into the top league of global software companies. Alternatively, the company may be bought by a US giant, just as Microsoft swallowed Skype and Salesforce acquired Slack. Or robotic process automation itself may be absorbed into these US companies’ broader product suites and the technology disappear as a standalone service.
Building a global software company is one kind of challenge. Remaining one is quite another.