ElectroNeek Raises A $20 Million Series A To Drive Mass RPA Industry Adoption
Organizations are increasingly relying on RPA techniques to eliminate day-to-day tasks and enable employees to complete higher-value tasks. With UiPath’s successful initial public offering (IPO), the future of the Robotic Process Automation market looks promising and promising. Investors are investing even more money in start-ups in this industry. ElectroNeek, one of the leading RPA startups, recently got 20M Series A round, Yellowrockets.vc, Sergey Dashkov, Softline Ventures and other angels.
ElectroNeek co-founders (left to right): Dmitry Karpov, Alexey Astafiev, Sergey Yudovskiy and … [+]
Paul O. Colliton, Alina Smirnova; Style: Anastasia Dus
Friedrich Daso: How has ElectroNeek refined its definition of product-market-fit since the inception of your seed round to ensure that the company really landed on a repeatable, scalable process that creates the conditions for future massive growth?
Sergey Yudovskiy, Alexey Astafiev, Dmitry Karpov and Mikhail Rozhin: ElectroNeek has always wanted to provide a product for those who develop and deploy many bots to extend this automation technology outside of the corporate marketplace. Since the founding, it has been recognized that RPA is still a complex technology. Only 10-15% of organizations can successfully develop a competency (people, technology, governance) to implement RPA on a large scale internally. Then ElectroNeek changed its market focus from end users of automation to managed service providers who develop bots on a large scale for their customers.
Unlike other companies with a large but limited number of processes to automate, MSPs work with many customers. The number of RPA bots that you can develop and use profitably for customers is unlimited. It’s roughly infinite and just depends on the entrepreneurship of RPA. We have moved from reducing costs to end users to empowering entrepreneurial MSPs to make money.
We have achieved a strong product-market fit as MSPs benefit even more from the ElectroNeek model, which allows them to deploy RPA bots in the client infrastructure without charging them for RPA software (bot licenses). This allows for easy, unlimited scalability and makes it affordable for businesses of all sizes.
Daso: What changes have you seen in the RPA industry that have changed the way you collect feedback and evaluate new potential customer segments?
Yudovskiy, Astafiev, Karpov and Rozhin: The number of RPA developers is growing very quickly (80,000 on Sales Navigator in November 2020, 110,000 in February 2021). Second, the strong growth in developer numbers is occurring in organizations with fewer than 1,000 employees and MSPs of all sizes. Third, RPA developers are leaving large corporations (consultancies and corporations) to start their own MSPs or join existing MSPs to build RPA practices / businesses. Now let’s focus on how to make someone’s managed services business more successful (bigger, more profitable) rather than finding the processes that offer the greatest potential for cost savings. As we evaluate new opportunities, we think about how certain actions help MSPs increase their sales, because the more sales they generate, the more developers they employ and the more software products like IDEs they need from us.
Daso: What was the main difference between selling to Managed Service Providers (MSPs) and directly to IT teams in SMBs and large corporations?
Yudovskiy, Astafiev, Karpov and Rozhin: Selling Business Opportunities (to MSPs) vs. Selling Cost Cuts (IT Teams) – these are different, but both require selling a vision for building bots on a large scale (you will have a lot of customers – MSPs will do you a lot of processes find to automate – IT teams). MSPs place even higher demands on the reliability and stability of RPA bots that were created with your software because they are involved in the customer relationship business. The quality of the software will affect these relationships positively or negatively.
Yudovskiy, Astafiev, Karpov and Rozhin: In general, MSP customers want to buy solutions rather than buying software and services that use that software to build solutions. As a result, MSPs without ElectroNeek struggle to sell RPA development services because they have to get customers to buy the software first. It makes RPA projects more expensive for their customers, reduces the amount of money MSP can take home from a particular project, shifts the risk to the end users (if the solution doesn’t work, they are left with software licenses). With ElectroNeek, an MSP offers a risk-free value proposition with a higher ROI for the end user (since they have to invest less in automation). MSPs can take home any funds clients have allocated for their projects. It enables MSPs to scale RPA businesses much faster and serve customers that other top RPA platforms are not affordable.
Yudovskiy, Astafiev, Karpov and Rozhin: We changed the approach to product testing by asking what specific platform capabilities an MSP would like to test (this usually depends on the type of customers they have / software they are implementing in their existing customer base) and a Get a tailored yet shorter experience. Instead of automating a PoC process, they test the automation of certain activities within certain software / web-based SaaS, which shortens the sales cycle.
We find many similarities between MSPs and internal RPA CoEs (Centers of Excellence – IT teams that have a strong desire to automate training and resources on a large scale), essentially they are internal MSPs that span multiple departments in a large company like an MSP serving some customers.
Daso: You mentioned that one size doesn’t fit everyone when you’re building in this particular B2B area. How do you stay flexible with customers with different requirements without being watered down by losing your core advantage in one or a few use cases?
Yudovskiy, Astafiev, Karpov and Rozhin: Standardization and segmentation. We have decided that flexibility can be sacrificed in order to effectively scale the business, while recognizing that some customer segments (e.g. large MSPs working with enterprise customers) require a different approach and support services than small MSPs . Therefore, we have introduced customer levels (‘partner levels’) and standardized services for each level (e.g. time that our Customer Success Team invests in the respective account or where our co-marketing efforts are going).
Daso: RPA is a tremendously growing industry as workflows become more complex and time consuming for companies of all sizes. What new needs of RPA customers will grow with a view to the future and dominate the current, popular use cases?
Yudovskiy, Astafiev, Karpov and Rozhin: As more no-code / low-code tools penetrate the market and their adoption increases, automation costs (including developer time) will decrease. We’ll see how RPA expands to microprocesses and temporary processes (like on-time data migration or creating a unique one-time report). Now the dominant industry is concentrating on highly repeatable processes, because only their automation is justified from a ROI point of view. One of the effects of ElectroNeek on the industry is that our customers are less interested in evaluating every process for automation, weighing software costs, and just looking at their developers’ ability to invest time in automation.