RPA Firm Cyclone Announces Close of Nearly $10 Million Series A Funding Round

源码资本·June 13, 2019·2·1

Among domestic RPA startups, Cyclone currently sits in the top tier by revenue, funding raised, and valuation.

Several domestic RPA companies have recently completed or are about to close funding rounds, with 2019 revenue on track to more than triple 2018 figures. Whether or not they've pulled the trigger, virtually every top-tier investment firm has at least taken a look at the RPA space. Cyclone stands out as one of the most favored RPA companies in China's capital markets, having recently closed a nearly $10 million Series A led by DCM and Source Code Capital.

RPA stands for Robotic Process Automation. Simply put, it's intelligent software that follows pre-programmed rules to simulate human actions across software interfaces — clicking, copying, entering data — handling large volumes of fixed-rule, repetitive work to free up human labor, boost efficiency, and reduce errors.

Xingchen Zhang of Source Code Capital commented: "Cyclone has the strongest product capabilities and team in the RPA space, and they're deeply committed to continuously uncovering customer needs and delivering products that exceed expectations. We will continue to support Cyclone in becoming a leading AI+RPA company domestically and even internationally."

Unlike previous approaches that relied on APIs, system integration, or custom development, RPA's key advantage is that it doesn't require time-consuming efforts to obtain software APIs or specialized API-based development. Instead, it designs automation flows directly through UI element manipulation or image-based AI operations, enabling rapid, low-cost deployment that adapts to customers' need for agility in today's fast-changing business environment.

In 2015, foreign companies operating in China began importing overseas RPA products. In the second half of 2017, foreign accounting and consulting firms pushed a wave of RPA adoption, primarily targeting tax and finance robots, giving banking clients their first real exposure to the concept. After market education and product iteration throughout 2018, 2019 saw significant improvements in both customer acceptance and product maturity — the market backdrop that enabled RPA's rapid growth this year.

The other source of "heat" is the capital markets. In May, US RPA startup UiPath announced a $568 million funding round at a $7 billion valuation. In a 2019 enterprise services and broader venture environment starved of "hot sectors" and quality deals, UiPath's rapid growth became a powerful catalyst for capital flowing into RPA.

Targeting Finance and Large Enterprises, Cyclone Projects 7x+ Revenue Growth in 2019

RPA's current widespread use cases in China's market center on fixed-rule, highly repetitive work: tax and accounting processing, expense reimbursement, loan approval, shipping document handling, data entry, calculations, and logical rule-based judgments. Cyclone has already built rich scenario deployments across tax and finance, human resources, supply chain, manufacturing, operations, and audit functions.

In terms of industry and customer profile, Cyclone focuses on the financial sector, along with other large and medium-sized state-owned enterprises, central SOEs, and listed companies. Finance accounts for a particularly significant share, spanning banks, insurers, and securities firms. This is because financial institutions operate under regulatory requirements that create high process homogeneity, possess mature IT infrastructure, and offer abundant demand and application scenarios where RPA can quickly generate returns. For the broad base of central and state-owned enterprises as well as private clients, Cyclone provides AI-powered disruptive methods to assist their digital transformation from traditional IT strategies, helping them nimbly achieve operational and business development goals.

RPA product architecture typically consists of three layers: robots, a designer tool, and a management platform. The designer is an automation flow design tool; robots execute the flows designed in the designer by simulating human actions; the management platform serves as an overall operations and maintenance tool, responsible for scheduling and managing multiple robots, analytics, and operations.

The RPA project implementation process includes "process mapping, implementation, testing, and customer acceptance," with project cycles ranging from one week to several months depending on process complexity and scale.

On the business model front, Cyclone charges annual licensing fees based on robot and designer quantities, with the management platform billed separately on an annual basis. For first-time purchases, there is also a consulting and implementation fee.

Cyclone CEO Yugao Gao stated that since launching in August 2018, Cyclone has already achieved revenue in the tens of millions of RMB, with 2019 projected to bring 6-7x revenue growth. The company has established strong partnerships with numerous well-known domestic and international IT and consulting firms to jointly develop the China market. While deeply rooted in its home market, Cyclone also places heavy emphasis on internationalization and has already begun commercial promotion in Japan, Hong Kong, Singapore, and Southeast Asian markets.

Cyclone Founder & CEO Yugao Gao

Key Battlegrounds in the RPA Race: Rapid Capture of Large Enterprise Clients, Product Stability and Reliability, Fast AI Integration

Overall, the RPA track remains in its early stages, with a relatively clear competitive landscape.

Foreign RPA companies developed earlier, with leading players including UiPath, Blue Prism, and Automation Anywhere.

US unicorn UiPath completed a $568 million Series D in May 2019 at a $7 billion valuation, and announced its China entry at the end of 2018 with offices in Shanghai and Shenzhen. UK-based Blue Prism is publicly traded with a market cap around £1.4 billion. US unicorn Automation Anywhere closed a SoftBank-led Series A+ round in November 2018 at a $2.6 billion valuation.

Among domestic RPA startups, Cyclone currently sits in the first tier across revenue, funding raised, valuation, and investor backing.

It's foreseeable that the number of domestic RPA companies will grow rapidly, and foreign RPA players will aggressively expand in China. Gao believes RPA competition will unfold in multiple stages. In this first stage, two factors are most critical: rapid market capture, and stable, robust, reliable products. Currently RPA can only automate about 60% of customer business processes; the gap from 60% to 98% represents RPA's future.

RPA's core customers are large enterprises. Once successfully adopted, these clients steadily increase their robot deployments and expand use cases. The more scenarios deployed, the deeper RPA companies' understanding of customer business processes becomes, and the higher the switching costs. Over time, building out a customer CoE (Center of Excellence) requires continuous accumulation and methodological support. So this is fundamentally a long-term service business built on ongoing renewals and value expansion.

How to rapidly capture these major accounts? Gao believes the optimal path is through core company capabilities combined with key partners. Partners include foreign consulting firms operating in China (the Big Four, etc.), IT companies, domestic consultancies, large domestic IT system integrators, and regional IT firms. By leveraging the company's resources on the customer and product side, combined with partners' rich large-enterprise client relationships and their strengths in consulting and implementation services — particularly their deep familiarity with customer business processes — Cyclone can achieve win-win outcomes.

On this front, Cyclone enjoys substantial advantages over other startups. CEO Yugao Gao previously served as General Manager of Innovation Solutions Delivery & Business Development for HP Enterprise Services Greater China, General Manager of HP Enterprise Data Services & Business Development Greater China, and Manufacturing Industry Director for HP Asia Pacific and Japan. COO Wenyuan Cheng previously served as Director of Software Services for IBM Global Technology Services China, and CTO of Innovation Business for IBM Technical Support Services. Both men, along with the core team, have long careers in IT consulting for government, SOEs, banks, and industries across the board, accumulating extensive large-account service experience and partner resources. Both men, along with the core team, have long careers in IT consulting for government, SOEs, banks, and industries across the board, accumulating extensive large-account service experience and partner resources.

Beyond market capture, product stability and reliability is the other critical factor. While building an RPA product isn't technically difficult per se, complex enterprise application environments throw up countless unexpected issues — surprise error pop-ups, software behavior during network instability, and so on. Resolving these requires continuous grinding and iteration against real customer scenarios, building a know-how moat.

Looking toward RPA's future, Cyclone's vision is solving end-to-end business process automation above the 90% threshold. Enterprise business processes flow from data, to judgment and prediction, to final execution — with traditional processes requiring human involvement at many steps. Going forward, RPA will penetrate each critical factor, operating intelligently to automate every link. In the future enterprise, humans and RPA will blend seamlessly — employees, Cyclone, managers, and decision-makers will operate largely without boundaries — helping modern enterprises achieve end-to-end business process automation, optimize operational efficiency, and maximize commercial value.

Gao revealed that Cyclone's CTO is a former R&D lead from a prominent AI company.

HFS Research data projects the global RPA market will exceed $4.3 billion by 2022. While not insignificant, $4.3 billion isn't exactly massive either — does this mean the RPA track has a low ceiling?

Gao believes RPA is currently in the fixed-rules automation phase. Phase two moves toward "intelligent RPA," integrating computer vision, natural language processing, and voice bot technologies to enable broader business automation.

Phase three is "cognitive RPA," built on knowledge graphs combined with human expert knowledge. After collecting and analyzing massive volumes of customer process data, it will be able to automatically learn customer processes, becoming analytical and judgment-capable RPA that breaks free of "fixed-rule" constraints and opens up vastly larger scenario possibilities. In the future enterprise, RPA will handle 90+% of work, while humans serve as managers and decision-makers creating greater value.