This week, Unqork, a startup that helps other companies build business apps with a no-code platform, raised a $207 million Series C. The new capital valued the firm at around $2 billion.
Even given how much attention 2020 has brought to no-code startups and their low-code relatives, the investment stood out as outsized — and rapid. Previously, Unqork added $51 million to its Series B earlier this year, bringing that round to a total of around $131 million.
To see the company raise even more this quickly signaled that something was afoot.
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So we sent in a raft of questions to the company to better understand the demand that it is seeing in the market for its service. I want to better understand not only how Unqork managed to attract such a massive new check, but also what its notes tell us about the market for no-code services that help business build apps, a key portion of the no-code/low-code market.
What might be working for Unqork, in other words, could be working for other players in the space. And, if so, the whole no-code/low-code world could be enjoying an even sharper tailwind than we previously anticipated.
We’ll also bring in a few notes from Laela Sturdy, a general partner at Alphabet’s Capital G investing group. She led the company’s Series B and sits on its board. Luckily, we have a grip of her thoughts from our August no-code/low-code investor survey. Let’s get into it!
The round
Briefly, the round. Unqork raised $207 million at a roughly $2 billion price point — post-money, we presume — in a Series C led by BlackRock. Other money buckets took part, including funds from Hewlett Packard Enterprise, Schonfeld Strategic Advisors, Sunley House Capital Management, Eldridge and Fin Venture Capital, per the company. Prior investors, including the aforementioned Capital G, along with Broadridge Financial Solutions, Aquiline Technology Growth, Goldman Sachs and World Innovation Lab also took part.
That is a long list of names. But it takes a while to add up to nine figures of capital, so perhaps the party-round style Series C is not too surprising.
Regardless, the firm is now incredibly well-capitalized and we can move onto more interesting things. Namely, how the company managed to raise so very much money. The Exchange asked Unqork a few questions:
- First, what is driving the demand for more business apps, a topic we’ve explored before.
- Second, we wanted to know what impact COVID-19 has had on the business; has the pandemic provided a dramatic lift to Unqork’s business, and, if so, did that drive its growth forward and help it secure the Series C?
- And, finally, we asked about the company’s sales cadence; is Unqork seeing faster sales cycles? If so, it could indicate that the market is moving toward no-code business app creation, lowering the hurdles that startups working in the space have to clear to snag new customers.
Starting with question one, what is driving enough demand for business apps to keep Unqork growing well, make room in the market for Appian, which does similar work and driving customers to Tulip, which works on no-code apps for manufacturing in particular?
According to Gary Hoberman, CEO and founder of Unqork, demand depth is due to companies having an “infinite amount of ideas for how tech could advance their business and better serve their customers,” while “technology groups have failed to deliver them using custom code.”
So, the gap between the number of traditional developers that would be needed to meet the demand for custom business apps and the current number of in-market developers is a key driving factor for the growth in no-code, app-building services.
This is a message we have heard before, including this riff from Unqork investor Laela Sturdy:
On the demand side, the need for digital transformation is at an all-time high and cannot be met with incumbent tech platforms, especially given the shortage of technical workers. Low-code/no-code tools have stepped in to fill this void by enabling knowledge workers — who are 10x more populous than technical workers — to configure software without having to code.
Hoberman continued, saying that off-the-shelf solutions “fail to deliver on providing something unique and differentiated for companies,” which is fair enough, but he went on to add that “low-code solutions are still creating legacy code that has all the pitfalls of traditional methods.” Or, more simply, that low-code services will still leave a code trail that will eventually go stale, generating technical debt over time.
Hence no-code, and his company’s wager on the future of the business and software worlds. The CEO said that issues with “packaged” software and low-code are “driving the demand for no-code solutions generally, and enterprise demand for Unqork in particular.”
Turning to our second question, what impact has COVID-19 had on Unqork? Hoberman told TechCrunch that his company had boosted its revenue targets for the current year “before the pandemic and [has] not broken that course.” That raised guidance helps explain how the company managed to add another $51 million to its Series B; accelerating growth has a way of attracting external capital.
The CEO did note some positive COVID impacts, like working with governments during the pandemic, and helping companies with their digital transformations, a process that the current environment is generally thought to have boosted.
Hoberman did also say that “COVID has thrown hurdles at Unqork like every organization,” so the grass is not entirely green. Still, it appears that the market that Unqork wants to serve wasn’t dramatically whacked by COVID and instead became more fertile ground for expansion.
Another Sturdy quote fits well here. Here’s the investor:
Over the past few months, there’s been a huge acceleration in market enthusiasm. While modernization has long hovered over many businesses as something they know they needed to but weren’t in a rush to tackle, COVID has made it an urgent necessity.
Finally, TechCrunch asked the company if its average sales cycle time had tightened over the last year, perhaps implying that the market itself was toward where Unqork sees the future. Yes, said its CEO, adding that demand for his company’s platform is “accelerating” as it racks up experience with big companies. Even more, Hoberman said upsells are going well, with Unqork “seeing expansion in ARR from existing clients.”
A strong yes, then, from the company about its business climate.
All this ties back into our question about how the company managed to raise so much more money so quickly. Well, it’s sticking to raised growth expectations, the pandemic has made its service more attractive and it is seeing shortening sales cycles and upsells. That’s a pretty good mixture for a company with a history of rapid growth.
Growth
We’ve gone on a bit long, so let’s be brief. In its release concerning its Series C, Unqork said it was growing its ARR at “a triple-digit rate for the third year in a row.” So, The Exchange went scouring back through the company’s various releases and press coverage, looking for hard numbers to calculate from. Sadly, none exist that we could find and the company declined to share anything concrete.
Anyway. Unqork was founded in 2017, tripled its top line in 2018 and again in 2019. It is on track, per its own reporting, to do the same thing again in 2020. This puts it ahead of the famous T2D3 framework, in which SaaS startups triple for two years in a row and then double for another three to reach $100 million ARR ahead of an IPO.
Unqork could T3 before it even starts to D. (If you work at Unqork, and have any historical ARR numbers for the company, please get in touch.)
With a $2 billion valuation to grow into, here’s to hoping Unqork hits its numbers. That’s probably a big valuation to grow into for such a young company. Let’s see how far $207 million and whatever was left of its Series B gets the firm.