No code may be all the rage in the venture ecosystem today, but CapitalG has been investing in no code companies for years. Leading the charge has been general partner Laela Sturdy, who led CapitalG’s investment in UiPath’s Series B, Series C (co-led with Sequoia) and Series D, and Unqork’s Series B (lead investor)and Series C.

TechCrunch writers Lucas Matney and Alex Wilhelm spoke to CapitalG general partner Laela Sturdy to find out why she and the rest of the CapitalG team are so excited about the rise of no code and low code platforms within the enterprise and why that enthusiasm led her to lead early investments in UiPath and Unqork. Much of the interview is behind a paywall, so we’re reposting their discussion below. However, the article is excellent, and we recommend reading it in full here.

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TechCrunch: We’ve seen some skepticism in the market that the low-code/no-code trend has earned its current hype, or product category. Do you agree that the product trend is overhyped, or misclassified?

Laela: I don’t think it’s over-hyped, but I believe it’s often misunderstood. No code/low 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 caught fire recently due to an increase in applicable use cases and a ton of innovation in the capabilities of these new low-code/no-code platforms, specifically around their ease of use, the level and type of abstractions they can perform and their extensibility/connectivity into other parts of a company’s tech stack. On the demand side, the need for digital transformation is at an all-time high and cannot be met with incumbent tech platforms, especially given the shortage of technical workers. Low-code/no-code tools have stepped in to fill this void by enabling knowledge workers — who are 10x more populous than technical workers — to configure software without having to code. This has the potential to save significant time and money and to enable end-to-end digital experiences inside of enterprises faster.

TechCrunch: What other opportunities does the proliferation of low-code/no-code programs open up when it comes to technical and non-technical folks working more closely together?

Laela: This is where things get exciting. If you look at large businesses today, IT departments and business units are perpetually out of alignment because IT teams are resource constrained and unable to address core business needs quickly enough. There just isn’t enough IT talent out there to meet 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 have to wait months or in most cases years to see their needs met. No-code changes the equation because it empowers business users to take change into their own hands and to accomplish goals themselves. The rapid state of digital transformation — which has only been expedited by the pandemic — requires more business logic to be encoded into automations and applications. No code is making this transition possible for many enterprises.

Where they are working best, no code platforms completely change the working relationship between IT and the business units by allowing them to co-develop requirements and collaboratively build products and applications together. Enterprise-grade no code platforms also allow IT to retain oversight around the things they care about (such as security and access controls) while simultaneously giving business users the agility to directly modify software and update business logic to fit their needs. This is hugely important because IT departments have historically resisted so-called shadow IT initiatives because of concerns around governance and security.

TechCrunch: Many low-code/no-code products today seem focused on helping non-technical teams do more. In time, will low-code/no-code products also target traditional developers as methods to accelerate their work?

Laela: No-code and low-code sit on the same continuum; what makes both possible is the abstraction of technical complexity. Different use cases can support various levels of clever abstraction while optimizing for functionality and speed. As such, some tools will be better suited for making technical end users more efficient by only focusing on value-added pieces of tasks while hiding repetitive elements, and some will be better suited for non-technical users by fully abstracting away the technical elements of the workflow.

Retool is a great example of a low-code tool targeted at technical users. They make it incredibly easy to compose a UI in drag-and-drop while still building the rest of the experience with a developer in mind (JavaScript injection, databases, etc.). Many other tools target certain types of technical or business users versus general knowledge workers. For example, Tonkean targets operations specialists within business units, enabling them to organize and automate human-in-the-loop workflows with a drag-and-drop interface. Webflow targets web designers and developers offering them abstractions, sophistication and ease-of-use not available in previous generations of web development software.

TechCrunch: Among startups you are talking to lately that fit into the low-code/no-code bucket, is their low-code/no-code product element at the core of the project, or something that operates more as an extension to the product?

Laela: It varies quite a bit depending on the use case. We are definitely seeing the emergence of broader automation platforms where no-code/low-code is just one element of the platform that enables an end-to-end digital workflow. UiPath is a good example of this, as many of the most complicated enterprise use cases require RPA, no-code/low-code functionality, AI capabilities, complex integrations, human-in-the-loop capabilities, etc., and that can all be done in one automation platform within UiPath. On the other hand, for many enterprise-grade application development use cases where companies are choosing between custom software development (aka writing code themselves) or using a no-code platform to develop the application, then the no-code product is at the core. Unqork is a good example of this, as they have built customer onboarding apps for banks, food delivery apps for municipalities and policy issuance apps for insurance companies — all enterprise-grade and business-critical apps — completely within the Unqork no-code platform.

TechCrunch: A lot of these low-code apps, particularly in the collaboration world, look and feel philosophically similar. Is low-code/no-code going to be particularly susceptible to consolidation and winner-take-all competition?

Laela: You’re right: Many low-code apps do look very similar from the outside. We think that the winners will focus on specific functional or vertical approaches early on as a way to differentiate. We believe there is more platform differentiation at the higher end of the market serving large enterprises where security features and platform sophistication is required to get buy-in from IT departments. It is a bit murkier in the low ACV end of the market where there are many collaboration platforms and products claiming low-code/no-code capabilities, but it is harder to differentiate, and these companies will rely on mass marketing channels or organic growth to expand. The other good news for low-code/no-code platforms is that they are inherently sticky given the multiple integration points and internalized business logic.

I don’t think that a monolithic no-code company will “win” the market. That’s part of what makes this so interesting to investors — that there’s opportunity for multiple winners. That said, I won’t be surprised if we see legacy players looking to buy no-code startups and try to accelerate consolidation.

TechCrunch: What industries or market areas feel particularly ripe for low-code/no-code software solutions?

Laela: We view the most attractive markets as those with an imbalance of supply and demand of technical resources. The biggest opportunities tend to lie in targeting large enterprises in legacy industries such as financial services, where there is a critical need to improve digital capabilities to avoid disruption, but oftentimes a dearth of sufficient internal technical talent available to build needed new products. Other areas where we see opportunity because they’ve traditionally required intensive IT resources include internal tools, business intelligence and middleware.

TechCrunch: Does customer demand for low-code/no-code services match the market enthusiasm we’ve seen for them?

Laela: For the most part, yes. But you need to keep in mind that enterprises aren’t trying to buy a shiny new no-code tool; they’re trying to buy a solution to a pressing business problem, such as automating overly manual business processes, digitally onboarding customers, managing internal tools or maintaining web content. If the optimal solution involves a no-code tool, so be it, but they’re not approaching the sales cycle as a hunt for no-code tools.

Over the past few months, there’s been a huge acceleration in market enthusiasm. While modernization has long hovered over many businesses as something they know they needed to but weren’t in a rush to tackle, COVID has made it an urgent necessity. Switching from legacy approaches to a no-code approach is like transforming a toddler into a marathon runner; the improvements to their ability to move quickly and with stability and agility are dramatic.

TechCrunch: Low-code/no-code is not a business model. All the same, do companies that have elements of the product type have similar economics/metrics to traditional SaaS businesses?

Laela: Absolutely — these businesses look like the end markets they’re trying to replace and tend to be priced similarly to SaaS-based businesses. They also tend to be very sticky and have great expansion properties as enterprises use them for additional use cases. One caveat is that we see many platforms priced based on subscriptions, as well as others that are more transaction-driven and priced on usage.

TechCrunch: How has VC competition for access to interesting/enticing low-code/no-code rounds changed in the last 18 months? More competitive? Less? How has this impacted pricing?

Laela: Whenever you see the emergence of clear secular trends driving long-term adoption, you’re going to see a lot of investor interest. That typically does drive valuations up. The exciting thing for founders is that since this is still such a new and largely wide open market opportunity, most of the activity is in the early-stage fundings. Those early-stage companies are being funded at an accelerating pace. We are excitedly watching this young cohort of emerging no-code companies and intend to invest in the trend for years to come.