Playtime is Over in Industrial Robotics

Robotics without scale is just an expensive hobby or an extended graduate program...

Locus Robotics announced this week that it had raised a $150 million Series E round at a $1 billion valuation. This follows a $40 million Series D announced in June 2020. The latest round was lead by Tiger Global Management and BOND, and included previous investors Scale Venture Partners and Prologis Ventures, bringing its total funding to $249 million.

This news follows Seegrid’s $52 million raise in September, bringing its funding total to $150 million, and Otto Motors’ rolling Series C of $39 million in June and October, for a total of $91 million.

This is great news for these companies, their investors, customers, and robotics in general. It is also great news for many of their competitors.

Since the COVID-19 crisis started, everyone has been touting automation. Despite increased enterprise interest in automating operations, new sales have been relatively hard to come by. The delta between interest and orders can be attributed to long sales cycles, budget cuts and the gap between the operational benefits promised by robot manufacturers and the bottom-line benefits to corporate customers.

...'hardware is hard.' Scaling hardware start-ups is even harder.

As great as these high-profile financing numbers sound and look, 2020 was not an easy year for robot producers raising money. After several years of strong investor interest in robotics, 2020 ushered in a new reticence for investors, despite the growing customer interest in automation. COVID-19 did not stop VCs from investing record amounts in 2020 but it seemed they were more sensitive to the old adage - “hardware is hard.” Scaling hardware start-ups is even harder. Whatever the root cause, investors were jaded, and deals were hard to close.

Finally Getting Down to Business

After years of little more than “technology landscaping,” enterprise customers seem now ready to accept once-and-for-all that they must automate or die. Cutting costs is the time-worn and safe corporate response to crises. However, you can’t cut your way to long-term growth. Competitiveness is not a sprint, but rather a marathon, and requires companies to change the way they do their business – adjusting processes, making new investments in technology and people. Companies now have no choice but to bite the bullet and get serious about robotics and that is happy news for robot producers as is will finally mean more traction.

The Unifying Theme: Scale and Scaling

Robotics companies will need to scale quickly or go home. Robotics without scale is just an expensive hobby or an extended graduate program, not activities that investors like to fund. Almost all current and upcoming deals will tout scaling.

The future of autonomous cars is still being debated and defined, while mobile autonomy within industrial environments moves forward. The environment is controlled, while the risks are defined and allocated, making it much easier to quickly implement this kind of experimentation. Notwithstanding this two-speed approach to the adoption of autonomy, look for the technologies and companies in both autonomous cars and robotics to meld.

Prediction: The Race is On

Over the next 10 months, expect a spate of financing deals. The Locus, Seegrid and Otto financing rounds signal a rising tide which will lift some but not all robot developers. The leaders will mature into teenage hood while many others will drift into failure or be absorbed.