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The Seed Project

The Rise of Low-Code/No-Code

Low-Code/No-Code Definition:

Low-Code and No-Code platforms transform the traditional software development process from a complex coding exercise into a visual experience requiring little to no coding expertise. Applications for this technology range from building personal websites and landing pages to creating complex business data analytics platforms for Fortune 500 companies. Low-Code/No-Code tools democratize software development making it easy for anyone to design, build, and publish a wide variety of websites and applications.

Key Data Points:

  • Market Size 2020e: $13.B

  • 5-Year CAGRe: 28.1%

  • VC Investment L12M: >$500M

  • Largest Exit L12M: $560M

 

 

Introduction:

 The continuous and accelerating progress of computing technology defined by Moore’s Law now feels intuitive as we watch our mobile devices get smaller and more powerful each year, and this progress is even more obvious when take a slightly longer view of history. Some people, still in the workforce today, can remember the earliest business computers, which weighed up to 30,000 pounds and cost over $7 million when adjusted for inflation. These cutting-edge machines of the 50s and 60s, once the pinnacle of human technological achievement, are now infinitely outmatched by the ubiquitous, seven ounce devices in our pockets.

 However, an often overlooked component of this progress is the profound advancement in the technology’s usability. Not only are computers getting more powerful and versatile, they’re also getting easier to understand and operate. Operating those early, 1.5 ton behemoths required extensively trained computer experts for even the simplest of tasks, and the misuse of these machines could have potentially dire consequences. According to one early computer’s user manual (ENIAC), a mistake in operating the machine could result in the technician being “burned by flying pieces of molten fuse wire”.  Compare this user experience to that of the 1984 Macintosh. Its graphical user interface or GUI (think mouse, windows, icons, and desktop) was so simple that a child could operate it without serious difficulty or threat of burning projectiles.

 This progress in usability has always coincided with the progress of computer technology, but new Low-Code and No-Code tools are now enabling that progress to extend into the realm of software development. Low-Code and No-Code technologies are democratizing capabilities that, until recently, belonged only to talented programmers and developers. These tools use pre-assembled building blocks to transform software development from a complex coding exercise into a simplified, visual process. As a result, non-coders can now develop websites, build fully functioning apps, and perform complex data analytics. Small business owners with little to no coding abilities can build their own digital storefronts on Shopify in minutes, and larger Fortune 500 enterprises can create complex and customized data analytics tools in weeks instead of years using solutions from companies like Appian.

Key Players:

Appian: The company offers low-code app building, multi-experience capabilities, business process orchestration, automated decisioning, AI/ML, and robotic process automation (RPA).

  • Last Raise: Raised $123 million (IPO)
  • Valuation: $8.3 billion
  • Key Investors: New enterprise Associates, Saints Capital

Mendix: The company delivers no-code and low-code development tools based on a model-driven, cloud-native platform architecture.

  • Last Raise: $730 million (Acquired by Siemens)
  • Valuation: Acquired
  • Key Investors: Siemens, HenQ, Prime Ventures, Battery Ventures

Outsytems: The company focuses on enterprise application development for agile and continuous customer delivery. The provider is also enhancing its DevOps and data management capabilities by adding builders for workflow and user experience to facilitate development.

  • Last Raise: $360 million (PE)
  • Valuation: $1 billion
  • Key Investors: General Atlantic, Armilar Venture Partners, Guidepost Growth Equity

ShopifyShopify offers an e-commerce platform primarily to small and midsize businesses. The company operates two segments: the subscription solutions segment allows Shopify merchants to conduct e-commerce on a variety of platforms, including the company’s website and physical stores, and the Merchant solutions segment offers add-on products for the platform that facilitate e-commerce and include Shopify Payments, Shopify Shipping, and Shopify Capital.

  • Last Raise: $151 million (IPO)
  • Valuation: $112 billion
  • Key Investors: Insight Partners, Bessemer Venture Partners, FirstMark Capital

Wix: The company is a cloud-based development platform provider for millions of registered users worldwide. The company is engaged in web development and management that provides an easy-to-use powerful cloud-based platform.

  • Last Raise: $127 million (IPO)
  • Valuation: $13.7 billion
  • Key Investors: Benchmark, Bessemer Venture Partners, Insight Partners

Adoption:

The key driver in the rise of Low-code/No-code technology, beyond inevitable technological progress, has been the scarcity of computer scientists. As more and more businesses move online and as complex data management and analytics become the norm, the demand for business applications has skyrocketed. Matt Calkins, the CEO of Appian, points out here that while “the demand for apps is exponential… the growth of developer talent is linear”. As a result, Low-Code/No-Code tools are essential in order to keep pace with the demand for digital infrastructure.

 The ballooning costs of traditional, ground-up development in the midst of a dearth of programming talent have already led to significant adoption of Low-Code/No-Code tools. According to TechCrunch, engineering and IT teams are currently spending an estimated 30% of their resources building and maintaining internal tools and 72% of IT leaders now say project backlogs prevent them from working on strategic projects. These costs are significant and continue to climb higher. Forrester Research estimates that enterprise expenditure on custom software doubled from $250 billion in 2015 to $500 billion in 2020. Taking some of the heavy lifting off dedicated IT teams is crucial in order to save businesses time and capital.

 Forrester Research estimates that 84% of enterprises have started using Low-Code/No-Code technology, and Gartner research predicts that Low-Code/No-Code will represent 65% of all app development by 2024.

 Low-Code Vs. No-Code

Low-Code and No-Code are often used interchangeably, but despite some overlap, the terms have very different implications and use cases. No-Code refers to tools that require absolutely no coding. These tools operate by using pre-coded building blocks to create a visual, “drag and drop” process to create an app or website. Some common examples of No-Code platforms are WordPress and Squarespace to build landing pages and websites, Shopify and WooCommerce to build ecommerce sites, and Caspio and Quixy to create business data applications.

 Low-Code applications, on the other hand, greatly simplify app development using pre-coded building blocks but still require some coding. These solutions are often used for more complex business activities at larger enterprises like integrating AI/Machine learning capabilities with a business’ workflow or creating complex customer facing applications. Appian and Outsystems, for example, help fortune 500 companies build customized applications to improve data analytics and build connectivity to internal and external applications.

 Investment in Low-code/No-Code:

 According to Markets and Markets estimates, the global Low-Code platform market size has already reached over $13 billion in 2020 and is expected to grow at an explosive 28% CAGR to over $45 billion by 2025. As a result, Investment into the No-Code/Low-Code space has been growing dramatically over the past several years. According to Pitchbook data, companies in the space have raised over $500 million in the last 12 months, including Airtable’s $185 million raise in September. We’ve also seen some significant acquisitions over the last few years including Siemens’ $730 million acquisition of Mendix in 2018 and Temenos’ $560 million acquisition of Kony in September 2019.

 In recent TechCrunch articles here and here, the authors make note of several of major acquisitions and funding rounds, which I’ll list below:

Major No-Code/Low-Code deals:

Looking Ahead:

Low-Code and No-Code platforms are clearly here to stay, and we should see extraordinary growth in the coming years as the demand for business applications continues to rise. We will also likely see a real expansion in use cases for No-code/Low-Code platforms as new startups take aim and a larger number of business verticals. 

However, these platforms will not eliminate the need for programmers and coders any time soon. No-code/Low-code platforms still only account for a very small portion of current app development and Low-Code solutions still require varying degrees of coding expertise. In the near term, the best we can hope for is that these platforms will help balance the severely uneven supply and demand situation for computer science talent and help democratize app development, extending these capabilities to a much wider set of individuals and businesses.

 

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