In the age of digital transformation, enterprise IT organizations are expected to rapidly adapt legacy architecture for new technologies to deliver high quality end-user experiences, all while maintaining enterprise security and keeping their infrastructure lean. A moment of silence for every CIO who has had this conversation with a tech-illiterate CEO.
To achieve this vision with custom code is costly, time-consuming, and damn near impossible without attracting and retaining the right talent. And talent is expensive and hard to come by. This is where low/no-code comes in; these tools accelerate development by reducing the expertise required so that enterprises can deliver with their existing manpower.
In this first of a series of articles, I will be helping Charge Ventures build an investment thesis to explore opportunities in the B2B low/no-code space. A little about me — I am a full-time MBA student and VC Fellow at Columbia Business School and will be working with Charge Ventures this year. Prior to B-school, I was a Senior Product Manager at Appian, a low-code application platform (more on this below). So while I have experience with low/no-code, I am new to venture capital. By building this investment thesis publicly, I want to create a resource for others like me who are trying to break into VC.
Methodology
Over the next few months, I will be using the following framework to create my thesis:
- Step 1: Research the broader market
- Step 2: Define the relevant dimensions for that market
- Step 3: Plot opportunities on a heat map based on those dimensions
- Step 4: Identify & deep-dive into 1–2 areas of highest interest
- Step 5: Establish criteria for investing in the chosen sub-segments
You’re lucky I didn’t structure this as a listicle — “5 easy steps to build any investment thesis, investors hate her!” But these steps are guidelines for the process and will require both flexibility and repetition for the best results. We will iterate through these steps as needed to refine our inquiry in B2B low/no-code and distill it down into an actionable plan: to invest (or not invest) in a particular sub-sector.
But there is a Step 0 before all of this, which is to define the boundaries of your topic. Go too broad and it will be difficult and time-consuming to find concrete points of opportunity; too narrow and you may miss something. For this study, we will only focus on B2B low/no-code; we will not be looking at B2C or non-enterprise low/no-code tools (think Squarespace or Shopify). We will also evaluate low-code and no-code tools relatively rather than absolutely.
Low-code vs. No-code
In theory, low-code is defined as tools aimed for developers while no-code tools are for the business user. In practice, the line between the two is blurry. During my own tenure at Appian, which identifies itself as a low-code platform, I designed features that skewed towards no-code.
The struggle for product managers at any low/no-code company is to balance ease-of-use with power. If you lean too far towards simplicity, you may end up with a pure no-code tool that can’t actually do much. And if it is power that you seek, you risk going down a slippery slope of complexity.
For this analysis, I will be evaluating low/no-code tools by two factors. First, how does the company define itself? If it is staunchly low-code, then some complexity is accepted and expected in exchange for more robust capabilities. Conversely, if it is striving for no-code, then K.I.S.S. is the mantra. And second, how far can you get with it before you hit the event horizon of needing custom code? Using this criteria, we will be able to compare these tools fairly and accurately.
Step 1: Research the broader market
The wider low/no-code sector is booming. While market estimates vary, especially depending on how low/no-code is defined, even one of the more conservative figures puts it at $21 billion by 2022 [1]. But the most promising (or alarming) statistics are that 72% of IT leaders say existing project backlogs are preventing work on strategic initiatives and that the average enterprise is supporting a whopping 1200 cloud-based applications [2]. This represents a huge opportunity for low/no-code technology to simplify architecture, either by replacing legacy systems or by retrofitting the plumbing to unify disparate systems and data.
The major players in this space are Low-Code Application Platforms (LCAPs), like Appian, Salesforce (yes, it’s more than just CRM), and Outsystems. Gartner predicts that “by 2023, over 50% of medium to large enterprises will have adopted an LCAP as one of their strategic application platforms” [3]. LCAPs are comprehensive solutions to build mission-critical applications, with all the bells and whistles of integrations, security, deployment and monitoring.
Apart from LCAPs, most low/no-code providers are services targeted for a particular function, like workflow automation or reporting. For example, one area where low/no-code technology has a strong showing is business intelligence. Microsoft’s Power BI and the now Salesforce-owned Tableau are established names with robust capabilities. But the learning curve for those tools is steep, I’d put them into Quadrant II of my very scientific Exhibit A above (Harder, Do More). That’s where companies like Domo and Looker (acquired by Google in 2019 for a cool $2.6B) have differentiated themselves, by lowering the barrier to entry and delivering speed with flexibility. And that’s why I’ll be keeping my eye on Index’s beta.
Coming Up Next
We are only just scratching the surface of what low/no-code has in store. In the next article, we will deep-dive into some of the pros and cons of targeted low/no-code services. We will also categorize these tools based on the use cases they address and begin to build out a heat map for opportunities in this sector. Stay tuned!
This post was written by Indraja Karnik, MBA Candidate & VC Fellow at Columbia Business School, and edited by Brett Martin, investor at Charge.vc. If you are working in or thinking about the B2B low/no-code space, we’d love to connect. Get in touch with the team@charge.vc !
Bibliography
[1] Rymer, John, et al. “Why You Need To Know About Low-Code, Even If You’re Not Responsible For Software Delivery.” Forrester, 21 Sept. 2018, https://go.forrester.com/blogs/why-you-need-to-know-about-low-code-even-if-youre-not-responsible-for-software-delivery/.
[2] Nichols, Alex, and Jesse Wedler. “‘No Code’ Will Define the next Generation of Software.” TechCrunch, TechCrunch, 7 July 2020, https://techcrunch.com/2020/07/07/no-code-will-define-the-next-generation-of-software/.
[3] Vincent, Paul, et al. “Magic Quadrant for Enterprise Low-Code Application Platforms.” Gartner, 30 Sept. 2020, https://www.gartner.com/en/documents/3991199.
