Robotics process automation startup UiPath raising $400M at more than $7B valuation

UiPath, a robotics process automation platform targeting IT businesses, is raising more than $400 million in Series D funding from venture capital investors at a valuation north of $7 billion, sources have confirmed to TechCrunch following a report from Business Insider.

We’ve reached out to the company for comment.

UiPath, founded in 2005, has raised $409 million to date, meaning the new round of capital will double the total capital invested in the startup, as well as its valuation. Its $225 million Series C, raised just six months ago, valued the business at $3 billion, according to PitchBook. UiPath is backed by top-tier investors CapitalG and Sequoia Capital, which co-led its Series C, as well as Accel, Credo Ventures and Earlybird Venture Capital, among others.

The latest funding round is being led by a public institutional investor.

UiPath develops automated software workflows meant to facilitate the tedious, everyday tasks within business operations. RPA is probably a misnomer. It’s not necessarily a robot in the way we think of it today. It’s more like a highly sophisticated macro recorder or workflow automation tool, letting a computer handle a series of highly repeatable activities in a common workflow, like accounts payable.

For example, the process could start by scanning a check, then use OCR to read the payer and the amount, add that information to an Excel spreadsheet and send an email to a human to confirm it has been done. Humans still have a role, especially in processing exceptions, but it provides a way to bring a level of automation to legacy systems, which might not otherwise benefit from more modern tooling.

The company began raising private capital in 2015 and has since experienced rapid growth of its valuation and annual recurring revenue (ARR). UiPath garnered a $1.1 billion valuation with its Series B in March 2018, more than doubled it with its Series C and is again seeing a 2x increase in value with this latest round. This is a result of its swelling ARR.

The company says it went from $1 million to $100 million in annual recurring revenue in less than two years. With its Series C, it counted 1,800 enterprise customers and was adding six new customers a day. Sources tell TechCrunch that UiPath did 180 million in ARR last year and is on track to do $450 million in ARR in 2019.

Persistent deficits and higher spending raising Canada’s economic ‘vulnerability’: Fitch

The Liberal government’s preference for continued deficits and increasing program spending “could increase the vulnerability of public finances to a faster economic slowdown or sudden shock,” according to Fitch Ratings.

Canada has the second largest gross government debt of ‘AAA’ rated countries after the United States, which is ‘incompatible’ with its gold-plated rating, according to the ratings agency.

While the credit agency concedes that increased spending and projected deficits in Canada’s latest budget remain consistent with a falling federal debt burden, the forecast assumes the economy will avoid a recession.

“Modest fiscal loosening and sustained deficits will increase the economy’s exposure to a downturn,” the ratings agency said in its post-budget analysis.

While the expanded federal deficits remain relatively modest at less than one per cent of GDP and are sufficiently low to keep debt-to-GDP ratio drifting lower over the medium term, the country’s gross general government debt, combining federal and provincial fiscal accounts, is higher than other similarly rated sovereigns, and the ratings agency notes that debt levels are “incompatible with (Canada’s) ‘AAA’ status.”

Fitch had issued a similar warning in 2017.

A raft of new spending items in the federal budget aims to stimulate an economy that’s lost momentum, with some analysts suggesting a recession may be around the corner. Canada’s GDP fell by 0.1 per cent in November and December, but the economy managed a marginal 0.4 per cent growth in the fourth quarter.

Earlier this month, the Organisation for Economic Co-operation and Development said it is now forecasting 1.5 per cent growth this year for Canada, compared to its previous call for GDP growth of 2.2 per cent.

On Wednesday, Finance Minister Bill Morneau disputed the notion that recession might rear its head.

“We’re expecting … that we will have a return to growth at expected levels in the second quarter (of 2019) and our long-term forecasts are positive,” Morneau said.

However, investors are becoming more cautious and more convinced that the next interest-rate move from the country’s previously hawkish central bank will be more dovish.

Local yields have fallen in recent weeks amid weakening economic data, a more downbeat assessment from the Bank of Canada and a global rally in bonds. Wednesday’s dovish shift by the U.S. Federal Reserve and the market’s more gloomy view on prospects for the U.S. buoyed sovereign bonds and supported the view that policy makers in Ottawa will need to cut rates.

With “the bulk of the curve being below the overnight rate, it really says that the BoC will be reluctantly led to cutting rates,” Ryan Goulding, a fixed-income manager at Vancouver-based Leith Wheeler Investment Counsel Ltd., which manages around $19 billion, told Bloomberg. But it may not happen until “after a long, disappointing wait” for capital spending to pick up, he said.

The annual deficit projections in Tuesday’s budget, which is set to reach as high as $19.8 billion, will be racked up as the government makes several large, one-time investments for 2018-19, including $2.2-billion worth of new infrastructure funding and $1 billion towards improving energy efficiency.

The budget also pledges up to $3.9 billion for supply managed dairy, egg and poultry farmers affected by recent trade deals with the Asia-Pacific and Europe. Other big-ticket items include a $300 million zero-emissions car incentive, and a $1.25 billion houses-for-votes program that provides interest-free loans to first-time home buyers through the Canada Mortgage and Housing Corp.

The election year budget was offered under a backdrop of disappointing growth over the last several months, according to CIBC Capital Market analysts Avery Shenfeld and Andrew Grantham.

“This was less a rain of largesse and more of a sprinkling of measures, aimed at winning-over targeted groups.”

There was an enhancement of the fiscal track since the fall statement, CIBC analysts wrote in a note to clients on Tuesday.

“With revenues running further ahead of plan, and spending undershooting,” they said.

Instead of aiming at a lower track for deficits than had been laid out last year, CIBC said the government used the extra room generated by the enhancements to announce a dissemination of new spending and tax benefits, “thereby giving the economy a modest dose of stimulus while leaving the deficit track little changed from the fall statement.”

• Email: jasnell@postmedia.com

With files from The Canadian Press and Bloomberg

Slowdown or not, China’s luxury goods still seeing high-end growth

Despite well-documented concerns over an economic slowdown in China, the country’s luxury goods market is still seeing opulent growth according to a new study. Behind secular and demographic tailwinds, the luxury sector is set to continue its torrid expansion in the face of volatility as it’s quickly becoming a defensive economic crown jewel.

Using proprietary analysis, company data, primary source interviews, and third-party research, Bain & Company dug into the ongoing expansion of China’s high-end market in a report titled “What’s Powering China’s Market for Luxury Goods?

In recent years, China has become one of the largest markets for luxury good companies globally. And while many have raised concern around a drop-off in luxury demand, findings in the report point to the contrary, with Bain forecasting material growth throughout 2019 and beyond. The analysis provides a compelling breakdown of how the sector has seen and will see continued development, as well as a fascinating examination of what strategies separate winners and losers in the space.

The report is worth a quick read, as it manages to provide several insightful and differentiated data points with relative brevity, but here are the most interesting highlights in our view:

Nigerian fintech startup OneFi acquires payment company Amplify

Lagos based online lending startup OneFi is buying Nigerian payment solutions company Amplify for an undisclosed amount.

OneFi will take over Amplify’s IP, team, and client network of over 1000 merchants to which Amplify provides payment processing services, OneFi CEO Chijioke Dozie told TechCrunch.

The move comes as fintech has become one of Africa’s most active investment sectors and startup acquisitions—which have been rare—are picking up across the continent.

The purchase of Amplify caps off a busy period for OneFi. Over the last seven months the Nigerian venture secured a $5 million lending facility from Lendable, announced a payment partnership with Visa, and became one of first (known) African startups to receive a global credit rating. OneFi is also dropping the name of its signature product, Paylater, and will simply go by OneFi (for now).

Collectively, these moves represent a pivot for OneFi away from operating primarily as a digital lender, toward becoming an online consumer finance platform.

“We’re not a bank but we’re offering more banking services…Customers are now coming to us not just for loans but for cheaper funds transfer, more convenient bill payment, and to know their credit scores,” said Dozie.

OneFi will add payment options for clients on social media apps including WhatsApp this quarter—something in which Amplify already holds a specialization and client base. Through its Visa partnership, OneFi will also offer clients virtual Visa wallets on mobile phones and start providing QR code payment options at supermarkets, on public transit, and across other POS points in Nigeria.

Founded in 2016 by Segun Adeyemi and Maxwell Obi, Amplify secured its first seed investment the same year from Pan-African incubator MEST Africa. The startup went on to scale as a payments gateway company for merchants and has partnered with banks, who offer its white label mTransfers social payment product.

Amplify has differentiated itself from Nigerian competitors Paystack and Flutterwave, by committing to payments on social media platforms, according to OneFi CEO Dozie. “We liked that and thought payments on social was something we wanted to offer to our customers,” he said.

With the acquisition, Amplify co-founder Maxwell Obi and the Amplify team will stay on under OneFi. Co-founder Segun Adeyemi won’t, however, and told TechCrunch he’s taking a break and will “likely start another company.”

OneFi’s purchase of Amplify adds to the tally of exits and acquisitions in African tech, which are less common than in other regional startup scenes. TechCrunch has covered several of recent, including Nigerian data-analytics company Terragon’s buy of Asian mobile ad firm Bizsense and Kenyan connectivity startup BRCK’s recent purchase of ISP Everylayer and its Nairobi subsidiary Surf.

These acquisition events, including OneFi’s purchase, bump up performance metrics around African tech startups. Though amounts aren’t undisclosed, the Amplify buy creates exits for MEST, Amplify’s founders, and its other investors. “I believe all the stakeholders, including MEST, are comfortable with the deal. Exits aren’t that commonplace in Africa, so this one feels like a standout moment for all involved,”

With the Amplify acquisition and pivot to broad-based online banking services in Nigeria, OneFi sets itself up to maneuver competitively across Africa’s massive fintech space—which has become infinitely more complex (and crowded) since the rise of Kenya’s M-Pesa mobile money product.

By a number of estimates, the continent’s 1.2 billion people include the largest share of the world’s unbanked and underbanked population. An improving smartphone and mobile-connectivity profile for Africa (see GSMA) turns that problem into an opportunity for mobile based financial solutions. Hundreds of startups are descending on this space, looking to offer scaleable solutions for the continent’s financial needs. By stats offered by Briter Bridges and a 2018 WeeTracker survey, fintech now receives the bulk of VC capital to African startups,

OneFi is looking to expand in Africa’s fintech markets and is considering Senegal, Côte d’Ivoire, DRC, Ghana and Egypt and Europe for Diaspora markets, Dozie said.

The startup is currently fundraising and looks to close a round by the second half of 2019. OnfeFi’s transparency with performance and financials through its credit rating is supporting that, according to Dozie.

There’s been sparse official or audited financial information to review from African startups—with the exception of e-commerce unicorn Jumia, whose numbers were previewed when lead investor Rocket Internet went public and in Jumia’s recent S-1, IPO filing (covered here).

OneFi gained a BB Stable rating from Global Credit Rating Co. and showed positive operating income before taxes of $5.1 million in 2017, according to GCR’s report. Though the startup is still a private company, OneFi looks to issue a 2018 financial report in the second half of 2019, according to Dozie.

‘Desperate governments do dumb things’: The Liberals’ very political budget

Columnists Chris Selley and Andrew Coyne discuss the federal budget amidst the fallout from the SNC Lavalin scandal and before the national election

Fed sees no 2019 rate hikes, plans September end to asset drawdown

Federal Reserve officials scaled back their projected interest-rate increases this year to zero and said they would end the drawdown of the central bank’s bond holdings in September after holding policy steady on Wednesday.

The median rate projection of Fed officials compared with two hikes in the December forecasts, which spooked investors at the time. In its statement following a two-day meeting in Washington, the Federal Open Market Committee repeated January language that it will be “patient” amid “global economic and financial developments and muted inflation pressures.”

The Fed’s signal that it will keep interest rates on hold for the full year reflects concerns that economic growth is slowing, lower energy prices are weighing on inflation and risks from abroad are dimming the outlook. The projections go further than the one-hike forecast analysts had expected in a Bloomberg survey.

In a separate statement Wednesday, the Fed said it would start slowing the shrinking of its balance sheet in May and halt the drawdown altogether at the end of September. After that, the Fed will likely hold the size of the portfolio “roughly constant for a time,” which will allow reserve balances to gradually decline.

Beginning in October, the Fed will roll its maturing holdings of mortgage-backed securities into Treasuries, using a cap of US$20 billion per month. The initial investment in new Treasury maturities will “roughly match the maturity composition of Treasury securities outstanding,” the Fed said. The central bank is still deliberating the longer-run composition of its portfolio and said “limited sales of agency MBS might be warranted in the longer run.”

The 10-0 decision held the target range of the federal funds rate steady at 2.25 per cent to 2.5 per cent. Powell is scheduled to begin a press conference at 2:30 p.m.

While the central bank is very close to its twin goals of low and stable inflation and full employment, Chairman Jerome Powell and his colleagues must contend with risks from abroad, including slowing growth in Europe and China and possible spillovers from Britain’s exit from the European Union.

Those headwinds contributed to sharp financial-market volatility late last year. U.S. stocks recorded their steepest December losses since the Great Depression as President Donald Trump publicly hammered Powell to stop raising rates and investors saw the Fed’s projected hikes as a policy mistake.

Stocks have rebounded since the Fed made a dovish pivot in January, replacing a reference to further gradual rate increases with a pledge for patience. Wednesday marked policy makers’ first opportunity since December to lay out in quarterly forecasts the extent to which their projections for hikes have changed.

Economic growth “has slowed from its solid rate in the fourth quarter,” the FOMC said in its statement. “Job gains have been solid, on average, in recent months” despite “little changed” payrolls in February. “Overall inflation has declined,” though excluding food and energy it “remains near 2 per cent,” the central bank said.

Policymakers also lowered economic-growth projections for this year and next, giving a 2.1 per cent median estimate for 2019, a full percentage point below last year’s pace.

The less upbeat assessment in the statement compared with January’s language saying growth was solid, consumer spending was strong and business investment had moderated.

The projections showed 11 of 17 officials saw no hikes this year, while four expected one rate increase and two people projected two hikes. Policymakers expect to lift rates once in 2020, to 2.6 per cent by the end of that year, and hold them steady in 2021.

That compares with a December projection for a 3.1 per cent rate in 2020 and 2021, with borrowing costs converging to 2.75 per cent in the longer run, according to the median path. That long-run estimate was unchanged in Wednesday’s forecasts.

The Fed formally adopted its 2 per cent inflation goal in 2012, and price gains have mostly come in on the low side since then.

Policymakers slightly lowered their expectations for inflation relative to their last set of economic projections. After 1.8 per cent headline inflation in 2019, they see price gains of 2 per cent on both the main and core indexes for the next two years, eliminating the overshoot they had previously projected.

Officials see unemployment at 3.7 per cent by year-end, higher than their previous estimate of 3.5 per cent. At the same time, they lowered their long-run jobless rate projection to 4.3 per cent, suggesting the labour market is running less hot than they previously thought.

Bloomberg.com

‘They would be incorrect’: Bill Morneau shoots down speculation that Canada is on cusp of recession

Canada is not currently in a recession, nor is it heading for one, Finance Minister Bill Morneau said on Wednesday, quickly dispelling a notion that experts and economists alike have begun to contemplate.

“They would be incorrect,” Morneau said in his first remarks since releasing the 2019 federal budget on Tuesday. “That would be technically wrong and certainly not in line with our expectations.”

Economic growth in Canada was almost non-existent in the fourth quarter of 2019, due to a collapse of oil prices and a continued decline in housing and business investment.

Morneau said that the government had already projected two quarters of weak growth — the fourth quarter of 2018 and the first quarter of 2019 — before the economy once again picks up steam.

“We’re expecting…that we will have a return to growth at expected levels in the second quarter (of 2019) and our long-term forecasts are positive,” Morneau said in Toronto at a breakfast event for members of the Canadian Club Toronto, the Empire Club of Canada and the Toronto Region Board of Trade.

Earlier this week, Fidelity Investments portfolio manager David Wolf, a former adviser at the Bank of Canada, suggested Canada may already be in a recession, even if the economic numbers do not match the technical definition of two consecutive quarters of economic decline. GDP shrank by 0.1 per cent in November and December. Due to a stronger-than-expected October, Canada eked out 0.4 per cent growth in the fourth quarter.

Gluskin Sheff chief economist David Rosenberg has also said that recession is “unavoidable” this year and that if Canada isn’t already in one, it’s one rung away on the ladder.

One of the driving factors leading economists to begin to hypothesize about a recession is the sharp decline in Canada’s housing market and increasing household debt.

The Liberal government addressed concerns about housing affordability in this week’s Federal Budget by introducing a mortgage incentive for first-time home buyers earning under $120,000 per year. For buyers who meet the criteria, the government will finance five per cent of mortgages on existing homes and 10 per cent on those that have been newly-constructed.

More to come …

What’s in the federal budget for business — and what isn’t

KPMG’s Carmela Pallotto and FP columnist Kevin Carmichael explain what corporate Canada would have liked to see in the budget and what it got