UiPath IPO set to boost local startup power

Mihai Cristea 23/07/2020 | 14:04

UiPath, the automation startup with Romanian roots, may go public in 2021 in a move that would enhance the image of local entrepreneurs as generators of innovative companies that can quickly rise to valuations above USD 1 billion, reaching unicorn status.

A successful Initial Public Offering (IPO) by UiPath would create a new generation of tech millionaires who could invest some of their wealth in the Romanian entrepreneurial ecosystem.

By Ovidiu Posirca

 

A software robot for every person: this is the future envisioned by UiPath, whose Robotic Process Automation (RPA) platform is already being used by 6,300 customers worldwide. The company is working with half the Fortune 20 companies in the US, as well as with government agencies such as NASA, the European Medicine Agency, and several municipalities across Europe, according to company data. Now, the startup wants to reap the benefits of going public on an international stock exchange. The technology developed by UiPath is also used by corporate behemoths such as Google, Amazon, and Orange.

“There are many advantages of being a public company, including easier access to capital, more acquisition opportunities, and new means to attract and retain talent. As a public company, we would certainly plan to utilise these benefits,” Daniel Dines, the CEO and founder of UiPath, told BR.

Dines says that UiPath’s listing strategy has always been linked to its profitability. The startup could go in the black this year and head for the IPO in 2021, the executive suggested. “That said, we are not putting pressure on ourselves to accelerate plans to go public. We do not feel like we are in a position where we have to hurry,” says Dines.

The next big question for the startup valued at USD 7 billion is selecting the best stock exchange, where it could generate the most value for the business. The CEO has hinted previously that the NASDAQ could fit the bill. “When deciding on the stock exchange we will list on, we’ll give precedence to those where a large part of our business is located, as well as our headquarters,” Dines told BR.

Local entrepreneurs questioned by Business Review suggested that UiPath was very likely to carry out its IPO in the US instead of the European Union or Asia, because that’s the market that generates a lot of its business and has covered most of its funding needs so far.

“That is a simple one, really: it will obviously be the NASDAQ, as UiPath is already so connected with the US tech environment and the appropriate investors for such a company are there already,” says Marius Ghenea, managing partner at Catalyst Romania.

Most of the tech giants are listed on the NASDAQ, so it would be a surprise if UiPath picked another stock exchange, added Bogdan Litescu, the founder and CEO of startup Plant an App. Meanwhile, Mihai Rotaru, the founder of Neobility, suggested that the NYSE or even Asian markets could be an option.

 

Opportunities for the Romanian startup industry

The founders and the core team of employees with stock options who have been on board from the start could get rich once UiPath goes public. The startup currently employs around 3,000 people.

“Some of these millionaires will continue their journey with UiPath as managers, but they might invest in other Romanian tech startups, ‘recycling’ the money in the same Romanian startup ecosystem that they are a part of, while others might decide to cash out and start their own entrepreneurial ventures, which would be excellent, because we are talking about people with experience, money, and with a startup mentality,” Ghenea tells BR. UiPath is already providing the community edition of its platform for small business and offers free access to RPA training via its own academy. Dines says that more than 750,000 people around the world use UiPath Community to learn RPA best practices while 100,000 use UiPath Academy to learn core RPA skills.

A successful IPO could feed more confidence to entrepreneurs that are just starting a company or looking at ways to scale it faster. “We believe that a successful IPO would send a positive message to B2B enterprise software startups – in Romania and beyond. Our hope is that it would send the message that if you take a great idea,  turn it into a best-in-its class product, and surround yourself with the best talent you can find, investors will see your potential and customers will trust you with their business,” says Dines.

The CEO of UiPath adds that the IPO could reaffirm the idea that automation is here to stay as a technology. This could also bring more attention from international investors who could direct their funds to this region, adds Litescu of Plant an App.

If UiPath decides to carry out the IPO next year, it would join a plethora of other unicorn startups in the US, including Airbnb and Palantir. One of the risks entrepreneurs have to take into account is the ongoing medical crisis generated by the coronavirus. The pandemic is still wreaking havoc across the world and the emergence of a treatment is unlikely in the short term. The US stock exchange has already been battered by the effects of the crisis and a resurgence of the coronavirus might spook investors. It’s not clear to what extent the uncertainty surrounding the medical situation is going to impact the listing share prices for these firms.

“The current medical crisis has impacted different industries in different ways – some are heavily affected while others are growing. The tech industry is the biggest beneficiary overall,” says Rotaru of Neobility. The leaders of these companies also need to assess the diverse and somewhat contradictory impact of this crisis on their specific segment. This means that all future IPOs in the US and elsewhere will need to take that into account, Ghenea concluded.

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