They harvest few themes claps and groans as fast as the explosion of codeless software.
While investors seem uniformly optimistic about toolkits that streamline and automate processes that once required a decent amount of technical knowledge, not everyone seems to think of product class as a new phenomenon.
On the one hand, basic tools like Microsoft Excel have provided non-technical users with a path toward completing complex tasks. (There is a historical precedent for the perspective.) On the other hand, a recent outbreak of low-code / no-code startups reaching high ratings is too notable to ignore, spanning apps like Notion, Airtable, and Coda.
The team was interested in delving into what defines the latest iteration of no-code and which industries could be the next target for entrepreneurs in the space. For an answer on what drives investor enthusiasm behind the no-code, we reached out to a handful of investors who have explored the space:
As usual, we will extract some of the key trends and themes that we identified from the group’s collected responses, after which we will share their responses in detail, lightly edited for clarity and formatting.
Trends, themes
Our participating investors agreed that low-code / no-code applications have not reached their full potential, but there was some disagreement on how universal their appeal will be to various industries. “Every trend is overrated in some way. Low-code / no-code applications are very promising in some areas, but not all, “Raviraj Jain of Lightspeed told us.
Meanwhile, Gradient’s Darian Shirazi said “each and every industry” could benefit from an increase in no-code or low-code toolkits. We can see it either way, frankly.
CapitalG’s Laela Sturdy says the breadth of appeal comes down to finding which industries face the greatest technical talent supply constraints.
“There just isn’t enough IT talent to meet the demand, and issues like security and maintenance take up most of the IT department’s time. If business users want to build new systems, they have to wait months, or in most cases years, to see their needs met, ”he wrote. “The absence of code changes the equation because it allows business users to take change into their own hands and achieve the goals themselves.”
Mayfield’s Rajeev Batra agreed and said it would be great “to see that not twenty million developers [building] really cool software, but two hundred and three hundred million people making really cool and interesting software. ”If that turns out to be the case, the sheer monthly assets in the low-code and no-code spaces would imply a huge revenue base for the category Of start.
That makes a bet on platforms in space somewhat obvious.
And those bets are being made. On the subject of valuations and developer interest, our assembled interviewees were largely optimistic about startup prices (competitive) and VC demand (strong) when it comes to code-free fundraising in the present.
Sturdy added that the number of early stage companies in the category “are being funded at an accelerating rate,” noting that his company is “eagerly watching this young cohort of no-code start-ups and intends to invest in the trend for years to come. ” So we are not going to run out of food for more rounds of Series A and B in space.
Taken as a whole, whether we like it or not, the low-code, no-code startup trend looks strong from both a market fit perspective and from an investor interest perspective. Now for the rest of the notes.
Laela Sturdy, General Partner, CapitalG
We have seen some skepticism in the market that the low-code / no-code trend has gained its current popularity or product category. Do you agree that the product trend is overrated or misclassified?
I don’t think it is exaggerated, but I think it is often misunderstood. No code / base code has been around for a long time. Many of us have been using Microsoft Excel as a low-code tool for decades, but the market has recently caught fire due to an increase in applicable use cases and a ton of innovation in the capabilities of these new low-code / no-code capabilities. . platforms, specifically around their ease of use, the level and type of abstractions they can perform, and their extensibility / connectivity to other parts of a company’s technology stack. On the demand side, the need for digital transformation is at an all-time high and cannot be met with established technology platforms, especially given the shortage of technical workers. Low-code / no-code tools have stepped in to fill this gap by allowing knowledge workers, who are 10 times more populated than technical workers, to configure software without having to code. This has the potential to save a lot of time and money and enable end-to-end digital experiences within companies more quickly.
What other opportunities does the proliferation of low-code / no-code programs open up when it comes to technical and non-technical people working more closely?
This is where things get exciting. If you look at today’s large companies, IT departments and business units are perpetually out of alignment because IT teams have limited resources and cannot address core business needs quickly enough. There simply isn’t enough IT talent to keep up with the demand, and issues like security and maintenance take up most of the IT department’s time. If business users want to create new systems, they must wait months or, in most cases, years to see their needs met. The absence of code changes the equation because it allows business users to take change into their own hands and achieve the goals themselves. The rapid state of digital transformation, which has only been accelerated by the pandemic, requires more business logic to be coded into automations and applications. No code makes this transition possible for many companies.
