UPDATED 10:55 EDT / FEBRUARY 17 2021

APPS

Low-code platform maker OutSystems reels in $150M for a nearly $10B valuation

OutSystems Inc., the maker of a low-code software development platform, said today it has raised a $150 million late-stage funding round from an assortment of investors, giving it a total valuation of $9.5 billion and more than $570 million in total financing.

The Series E funding and the heady valuation testify to the surging interest in platforms that enable business users to develop their own software, shortcutting the long lead times that are characteristic of enterprise application development organizations.

OutSystems, which will celebrate its 20th anniversary in less than two weeks, has raised $510 million in just the last three years. The company delivered its first product via application service providers, which were precursors to today’s cloud infrastructure providers, in 2002. “The product has always been built on a cloud architecture,” Chief Executive Paulo Rosado (pictured) said today in an interview with SiliconANGLE.

Interest in low-code development tools has been catalyzed by the COVID-19 pandemic, which has forced businesses to find new ways of bring software to market while also accommodating the accompanying surge in online commerce. However, the factors driving the growth of the category over the past several years have been more related to skill shortages and the need for organizations to deliver more of their services digitally, Rosado said.

Every company is a software company

“Every company, even very small ones, needs to become software developers and produce software that’s unique,” he said. “That used to be constrained to an elite. What changed is that every type of new initiative that happens inside organizations is supported by some kind of digital asset.”

Gartner Inc. forecasts the worldwide market for low-code development tools to grow nearly 23% this year, to $13.8 billion, and another 23% next year to $17 billion. The class of business users that Gartner calls “citizen developers” used to fly below the radar, but today CIOs are openly embracing the trend as a way of relieving pressure on overworked development teams.

The U.S. Bureau of Labor Statistics forecasts that employment of software developers and software quality assurance analysts will grow at more than five times the rate of all other jobs through the end of this decade. By some estimates the shortage of developers in the U. S. alone will exceed 1 million this year.

OutSystems has befriended chief information officers in part by positioning itself as their ally in addressing the skills shortage. “CIOs are typically our primary partner,” Rosado said. “We really understand the challenges they have. They have a huge issue with labor and talent and huge pressure from the business to deliver fast while the business is constantly shifting, so there’s also a change management issue.”

Custom matters

Although software-as-a-service is an attractive alternative to packaged applications, it doesn’t set a company apart from its competition, Rosado said. “SaaS is a commodity; the providers only create features they know will be adopted by hundreds or thousands of customers,” he said. “A lot of the initiatives we see customers building are unique to the company.”

OutSystems’ platform combines visual, model-driven development with cloudlike services for artificial intelligence, DevOps agile techniques and security. The company said it surpassed $100 million in revenue in 2018 and now has customers in 87 countries, more than 1,300 employees worldwide and 350 partnerships. It was one of five companies ranked as a “leader” in its market in the most recent Gartner Magic Quadrant.

The company said the funding will be used to expand investments in its product as well as sales and marketing. Rosado wouldn’t comment on plans for an initial public offering, but noted that with a 20-year history, “we’re very patient because the market is massive and a lot of companies are in pain. We have a crisp vision of where this thing can go and we want to make sure we’re firing on all cylinders in terms of getting to that next level of innovation.”

Investors in the latest round include Abdiel Capital Management LLC, Tiger Global Management LLC, Goldman Sachs Group Inc., KKR & Co. LP, Guidepost Growth Equity and Armilar Venture Partners.

Rosado also spoke with SiliconANGLE Media’s video studio theCUBE late last year at the company’s NextStep virtual conference about how it aims to help developers, the company’s concerns about security and scalability, and how to build an architecture that remains modern over a long period of time:

Photo: SiliconANGLE

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