When Gary Hoberman founded Unqork in 2017 after standing down as CIO of giant insurer MetLife, he had a frustrating time trying to get venture capitalists to back his vision for a startup focused on producing software code. None of the 300 or so pitches he gave led VCs to open their checkbooks. “The number one piece of feedback I got was that I was too old,” recalls Hoberman, who was 45 at the time. Investors also told the former CIO he was seriously underestimating the challenge of selling software to large companies.
Fast forward to 2020 and Hoberman has confounded the skeptics by building a software startup that’s just achieved unicorn status: Unqork announced today it has raised a $207 million C round at a valuation of $2 billion. This latest round, which was led by funds and accounts managed by BlackRock, brings the total amount the company has raised to $365 million.
For Hoberman, who ended up bootstrapping his New York-based startup’s initial development work, the fundraise is vindication of his conviction that there’s a better way to build and maintain software applications than using armies of in-house developers to churn out line after line of made-to-measure code.
Digital building blocks
Unqork’s cloud-based platform lets customers choose from a library of pre-built components rather than developing code themselves. Using a simple visual interface, users can drag-and-drop different components into a framework to create entire applications. This building block approach means there’s far less need to develop custom code. A growing number of startups are already offering so-called “no-code” platforms that let workers who aren’t technically proficient create basic applications for things such as managing employee rosters and expense claims.
With the average large company using in-house teams and consultants to build and maintain thousands of applications every year, there’s plenty of room for growth. Unqork’s founder says that the goal isn’t to eliminate in-house developers, but to free them from handling unnecessary coding tasks. When he became CIO at MetLife after spending many years in various roles at Citigroup, Hoberman changed the title of the insurer’s developers to “engineers” to get them to think more strategically. “I hate the word ‘developer’ because it means someone who is hired to write code as opposed to an engineer who’s hired to solve a problem,” he says.
Given its founder’s prior career, it’s no surprise that Unqork has a strong core of financial services clients, including new ones such as Pacific Life and Aon. Around half of its business now comes from asset management and capital markets businesses, and it has begun making inroads into sectors such as healthcare and government. Hoberman declines to reveal the scale of Unqork’s revenues but says it has tripled them in each of the past two years and that it is on track to do so again in 2020.
Liberty Mutual, one of Unqork’s earliest customers, began by employing the platform to fix a problematic application used by its business in Colombia. It has since rolled it out to help with more than 20 different areas in the U.S. and elsewhere. James McGlennon, Liberty Mutual’s CIO, says Unqork has proven “a minimum of three times faster and three times less expensive” than using more traditional methods to develop and maintain applications. Maimonides Medical Center in Brooklyn, another Unqork customer, has also been able to develop applications faster using the platform. The center’s COO, Michael Antoniades, says its IT team is now using Unqork to help create a new, fully integrated portal of services for its patients.
Competition through code
No-code isn’t quite as simple as it sounds, though. Liberty Mutual’s McGlennon says he still needs system architects to ensure that applications built using Unqork mesh well with other parts of the insurer’s IT setup. As Unqork expands its API offerings it should smooth out integration issues, but the company could encounter a bigger challenge. Now that digital transformation has turned software into a competitive weapon for every business, CIOs may want their most important code tailor-made rather than built using components that are available to competitors as well.
The most likely scenario is that businesses will end up using a mix of traditional approaches and no-code/low-code platforms for their key projects. (Low-code platforms use a similar modular approach to no-code ones but require more specialized coding knowledge on the part of users.) Jason Wong, an analyst at research firm Gartner, predicts that by 2023 over half of medium and large enterprises will be using at least one of these new platforms to develop strategic applications, which would be more than double the number doing so today.
Unqork faces competition from other standalone platforms such as Quick Base as well as from big cloud companies such as Microsoft and Salesforce, who see a new growth opportunity in the emerging no-code/low code market. But its backers in the new funding round, which include new investors such as Eldridge and Hewlett Packard Enterprise, as well as existing ones such as Goldman Sachs and Alphabet’s growth fund CapitalG, are confident Unqork can scoop up more of the $500 billion a year that research firm Forrester says companies are spending on in-house development and on applications built by contractors and consultants. “I look at how much money is being spent [on application development] just in financial services alone and if Unqork just gets a small portion it will be worthwhile,” says Michele Trogni, a former CIO of Swiss investment bank UBS who is now an operating partner at Eldridge.
Hoberman intends to use the new money Unqork has just raised to expand even faster. The company, which recently hired its first CFO, has already more than doubled headcount this year, from 165 people to more than 350, and now intends to step up its hiring of sales staff and software engineers. It also plans to use some of the investors’ cash to expand its relationships with leading services firms such as Deloitte and KPMG, which should help it to uncork even more opportunities.