(Almost) Daily Musings

Evening all

I am gearing up to take my first e-scooter ride. Having picked the perfect weather mix of rain and wintery temperatures. In hindsight I have learned: I should always carry ski goggles with me. Alas, as I prepare to turn my ride home into Tokyo Drift 7, I am sharing my musings.

Cheers
Phil

Today’s Takes

WALL-E but make it VC

Deus Robotics, a Ukrainian startup that just bagged $3M @ a $20M valuation. In a world where I typically write about LMEs and M&A bonanza, this might not seem exciting. But it got me thinking about one of my favorite sectors:

Warehouse robotics—Thanks to e-commerce growth and the perennial quest for instant gratification, this sector is an Amazon Warehouse on Prime Day. Crowded and Sweaty. Lets dig into it.

Automation has shifted from a luxury to a necessity in supply chains. With e-commerce projected to account for ~25% of global retail by 2028, companies like Amazon (which bought Kiva Robotics for $775M to transform their warehouses) and Alibaba are treating fulfillment centers like Formula 1 pits—every second shaved off is a win.

The white space opportunity is immense, with warehouse automation and AR/RS (automated retrieval and storage) systems eyeing a $600B market. Within that, robotics is a standout with a 16% CAGR, making for strong tailwinds.

Tailwinds

• E-commerce keeps growing: Retail is marching steadily online.

• Demand for instant gratification: Same-day delivery isn’t optional anymore. Soon, even waiting 20 minutes for your new steamer might feel like an eternity.

• RaaS (Robotics-as-a-Service): Subscription models are lowering adoption barriers. Think SaaS, but for robots—pay per task, not massive upfront costs.

• AI as a Catalyst: By 2024, 70% of large-scale warehouses are expected to adopt AI for tasks like inventory management, demand forecasting, and route optimization. Labor cost savings could hit 30-40% in the next five years.

The Tech Behind the Boom

Not all robots are created equal — anyone that has seen iRobot would know. Alas for those that missed it and for Will Smith who obviously did not get the memo in the movie — the following differing main tech angles have emerged:

• Cubic Storage Systems (e.g., AutoStore): Maximize density for storage and order picking.

• AMRs (Autonomous Mobile Robots): These self-navigating robots (think Geek+ and Locus Robotics) work without human intervention. They’re powered by a supporting cast of sensors, cameras, and GPS tech.

• Mobile Sortation Robots: Ideal for handling e-commerce peaks through identifying and transporting goods to target destinations within the warehouse. Leaders include Plus One Robotics, Kindred, and Berkshire Grey.

• Drones: Apparently one should not dare paly football in doors. But fly a drone? Why not.. Companies like Verity are building the scene for airborne inventory scanning

The Players

A glance at the leaderboard

Ventures

• AutoStore: $677M raised and the king of cubic storage systems.

• Geek+ (China): $650M raised to dominate AMRs.

• GreyOrange: $590M raised for mobile sortation robots.

• Exotec (Europe): $445M in funding — leading the European logistics game.

• Berkshire Grey: $553M raised. Now leaning heavily into M&A.

Investors

• Plug and Play Tech Center: The volume player with 33 investments.

• SOSV and Source Code Capital: 12 bets each, focusing on early-stage startups.

• Corporate Giants: Toyota Ventures and Zebra Ventures are doubling down on logistics AI.

A look at the Funding Data

The funding faucet for robotics isn’t exactly blossoming. $601.8M in capital invested over the TTM (-33.6% YoY decline). Investors are recalibrating considering: the number of new companies entering the space has decreased substantially (-23% annually since 2015) as the market matures and competition tightens. Many players established during—when the robotics hype was building—are now perhaps coming to market again, which could indicate a positive shift in momentum as surviving startups prove their ability to execute.

Data snacks:

• Median deal size: Holding steady at $8M (+0.5% YoY), but the number of deals dropped to just 63 transactions (-8.7% YoY).
  Translation? Fewer but larger checks.

• At the seed stage, rounds are tighter. The median capital invested sits at $1.94M, with valuation/revenue multiples averaging 17.8x.
  Message? Investors remain bullish but cautious, pushing founders to demonstrate scalability and ROI potential earlier than ever.

Challenges: Where Are the Kinks?

The hurdles:

• Integration Pains: Retrofitting warehouses with robots isn’t as simple as plug-and-play.

• Cost Barriers: Robots, software, and maintenance can add up quickly.

• Human Resistance: Workers fear replacement. Cobots (collaborative robots) like those from 6 River Systems might bridge the gap.

• Regulatory Issues: Data privacy, safety standards, and compliance rules are headaches for autonomous operations.

Autostore: A Note

AutoStore is the MVP of warehouse automation. Its revenue soared from $182M at IPO to $613M today, with a pipeline valued at $6.9B. With 1,550 systems deployed globally and a 71% gross margin, this Norwegian company is a gold standard for cubic storage solutions.

What to Watch in The Coming Days

• Amazon earnings (Thursday): Expect e-commerce growth and some subtle flexes on their robotic investments.

• CES 2025 (Jan 10-13): Robotics and AI will be front and center — especially on NVIDIAs big plans for Robotics. AMR startups are bound to make waves.

Closing Thought: Robots are solving warehouses’ biggest challenges. Now, if only they could figure out how to deliver my Black Friday impulse buys on time.

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