13 VCs talk about the state of robotics investing in 2023

Robotics is a fascinating topic. It can be frustrating, too. When I started covering the space nearly 15 years ago, there was a sense that something big was looming just over the horizon. But roboticists are a pragmatic bunch, offering projects for adoption more than a decade into the future.

There were times in the intervening years when it felt like those goal posts were being pushed back. This stuff is extremely hard to get right, and it’s even harder to make systems robust and repeatable at scale.

But the beginning of the pandemic offered what truly felt like a tangible shift. As everyone not deemed an essential worker was told to stay home, businesses were faced with a problem: how to keep the lights on. Another related problem emerged as well: how to deliver goods at scale to people who can’t — or don’t want to — leave their homes.

What many outside the sector perhaps didn’t recognize is that the solutions were already there. Amazon’s unending drive to outflank the rest of the world birthed an industry with its 2012 acquisition of Kiva. In March 2020, companies like Locus, 6 River Systems and Fetch were happy to jump in and help warehouses automate.


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Investments began flooding into robotics around this time. Most warehouses aren’t automated, so there’s tremendous room for growth. Categories like construction, agriculture and healthcare, among others, were very much looking to automate. Robotics was in a nice little bubble when the VC slowdown began as well, though it was not immune.

Slowed investments have been compounded by continued economic woes, and the recent bank collapses have further shaken confidence. Robotics has always been a tricky sector for investors, after all: It requires a lot of money and continued commitment to bring things to market at scale. Anyone looking to make a quick buck should avoid the category at all costs.

In spite of all that, however, robotics remains vibrant and exciting, and it unquestionably has a bright future of exponential growth ahead. No one can accuse the category of being a hype bubble. It hasn’t entered the hype cycle the way things like crypto and generative AI have.

And there’s not a lot of gray area here. That’s something roboticists love about robots: They work or they don’t. What’s been continually and increasingly proven is that they absolutely do.

It’s been a few years since we conducted a robotics investor survey, but the time in between has arguably been the most important years for the sector. We spoke to 13 of the top robotics VCs to discuss where the category is and what the future looks like:


Milo Werner, general partner, The Engine

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

Robotics innovation had somewhat plateaued: Capability to innovate was heavily based on a startup’s ability to raise capital. The more money, the better the robotics; think Boston Dynamics. But with the growth of multimodal AI models, we see a huge opportunity for robotics to become multipurpose because these models enable common sense and require little training. The best example of this is Google’s PaLM-E, which is a generalist robot that takes verbal commands. This is just the tip of the spear and generalist robots are going to become much more common.

What is the next big robotics success story after warehouse/fulfillment?

Basically everything around you will become a robot. The simplest example is autonomous vehicles. These are very advanced robots and have been open to riders since 2018. The labor shortages are going to drive significant growth in the service sectors, including cleaning, food and care services.

While there are already automated single-purpose solutions in these areas, more general purpose robots are going to start to take front stage in the next decade.

What categories are the most underserved by robotics startups? What would you like to see more of?

I’d love to see more robots in the home. I think there is a real opportunity for a general purpose robot that supports in the kitchen. Where is the Instant Pot of stir fry?

How essential is DARPA/defense funding to the category in 2023?

Public sector support will be very important. The private sector is the fastest way to scale, but it is directionless. The public sector is great at providing direction and focus.

Can/will robotics play a fundamental role in addressing climate change?

Absolutely. You’re already seeing robotics implementations across agriculture, ranging from robots that assist with crop maintenance, supplement workforce to address labor shortages, and offer tools and processes that are self-sustained from the sun and don’t require recharging.

Another area robotics are helping with climate change is in enabling more accurate, cleaner trash and recycling streams. Robots are automating our grid and today, in essence, our entire energy supply can essentially be thought of as a giant robot: integrating and decentralizing power generation and moving quickly to intelligent automated controls.

Will robotics and automation replace human jobs in the long run?

Yes, absolutely, but it’s more freeing humans from work than replacing them. We should look at this with excitement. The harder challenge is going to be steering that productivity in a positive direction. I’d love to see us really embrace spending time building a positive global community with prosperity across the planet.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

It’s just a financing question. It’s just another way to get paid for the value you are delivering. Think of Peloton: People rent them, and for no better description, it’s an exercise robot.

Following the lead of robot vacuums, how long will it take before additional home robot categories go truly mainstream?

This is closer than you think. Now that safety concerns have been addressed, adoption will be driven by cost, usefulness and value creation.

Abe Murray, managing partner, Alley Robotics Ventures

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

We are one year into our robotics investing journey; the new normal is all I know. Certainly valuations have come down alongside tech valuations, and the end of ZIRP is having a broad impact on venture investing. However, we remain unwaveringly optimistic about robotics in the long term.

Robotics companies must have great business models to account for their significant CAPEX requirements, so in many ways, they were well-positioned for the shift in the environment. We will continue investing in great companies regardless of the macro environment.

What is the next big robotics success story after warehouse/fulfillment?

We believe that infrastructure automation and construction tech will see huge benefits as companies in the space start to hit scale. We need to build and maintain more infrastructure, commercial and residential assets to meet the needs of a growing and aging global population. The Inflation Reduction Act is a strong tailwind for these sectors. We see agtech coming up as well.

What categories are the most underserved by robotics startups? What would you like to see more of?

All of them! We believe there should be 10x more robotics startups than there are today. There are gaps and opportunities everywhere. We are excited when we see companies across the spectrum of possibility from Tennibot (the autonomous tennis assistant) to Endiatx (delivering microrobots for the human body) come to market — and we think there should be many hundreds more like this. With companies like Viam making hardware innovation accessible to software engineers, more builders have the tools to get started. Even in logistics, the most saturated space in robotics, fewer than 10% of warehouses are automated.

How essential is DARPA/defense funding to the category in 2023?

DARPA funding is a nice-to-have option, but the majority of funding still comes from VC firms and corporate investors. Many of our companies do benefit from non-dilutive grant funding — most via SBIR and similar programs, which we appreciate.

We also appreciate a strong defense industry. While DARPA funding is critical for some companies, we have seen many companies that focus initially on defense applications struggling to scale further, so don’t recommend it as a primary source of funding.

Will robotics and automation replace human jobs in the long run?

Do dishwashers and vacuum cleaners replace human jobs? Yes, but they also free people to pursue higher-value activities. Robots and automation are the same: Each bit of productivity they deliver frees a human to do more meaningful and important work. We are firm believers that there is infinite purposeful and lucrative work to be pursued by humans: As we free ourselves from task A, we unlock opportunities to pursue tasks B, C and D.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

As investors, we love ARR (annual recurring revenue). We find that companies that deliver an ongoing service have a strong sense of customer needs and adapt more quickly in a changing world. Our companies need to be flexible. Some buyers and industries require a full purchase of the robot, often with an ongoing service contract — this is fine, too. As long as margins are good and revenues are growing, we are happy.

Following the lead of robot vacuums, how long will it take before additional home robot categories go truly mainstream?

We do not prognosticate on consumer robots. We love them, but consumer behavior is hard to predict and understand. The home is about the least structured environment out there, making any robotics solution targeting the home particularly challenging. We are rooting for folks climbing this mountain, but [we are] not jumping in yet.

Kelly Chen, partner, DCVC

How is robotics investing different today from previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

The last few years have been a series of changing concerns as well as opportunities. After the major hardware supply chain issues, startups are learning to eliminate single points of weaknesses (i.e., bottlenecks to shipping products). This comes with sacrifices to the design and cost in the near term, but it will prepare robotics startups for strong and robust scaling in the long term.

A slowing economy usually means corporate customers are less willing to make large capital investments to solve their short- to medium-term labor problems, but robotics startups are increasing pushing for a recurring pricing model (robotics as a service) or a price per pick model, allowing customers to pay with a smaller lump sum and OPEX over time.

As for the bank crisis, robotics startups often secure venture and equipment debt, so we are happy to see new banks step up to provide these types of services to the startup community.

What is the next big robotics success story after warehouse/fulfillment?

We have only just scratched the surface on warehouse/fulfillment. Most robotics companies, even well-funded ones, are far from deploying at-scale contracts in logistics. As companies work their way through common problems like reliability, pricing model and speed, we will start to see operations in these centers look quite different.

Defense robotics is part of the wave of next big robotics success stories. It’s a difficult but critical problem space as we think about national security, as well as private security. Drones, autonomy, monitoring assets: It’s an expansive problem and an area DCVC has invested in for years.

What categories are the most underserved by robotics startups? What would you like to see more of?

We had a huge nursing staff shortage during the last few years, and it still hasn’t recovered. Especially as we look forward another decade, where the baby boomer ratio to caregiving age will more than double, these health and aging areas where humans can’t fill the gaps are critical. As people are living longer, this goes far beyond nursing to direct medical care and triage.

COVID and political tensions have shown the massive reliance we have on other countries for our hardware supply chain. As we move toward more domestic reliance and minimize exposure to logistical issues, we will need to work on the early part of the supply chain, from materials to manufacturing and assembly, a prime problem space for robotics capabilities.

How essential is DARPA/defense funding to the category in 2023?

The first wave of robotics entrepreneurship talent came largely from universities, NASA and defense companies. Many of those companies needed government grants, especially with the lack of VCs willing to fund deep tech a decade ago.

We have come a long way. Private funding channels exist and entrepreneurs are now also coming from the industry — or from those first wave of robotics startups. Defense funding is a huge lift in the early stages, but criticality has changed with more proof points of success, more capital and more commercial-focused robotics founders.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

Fantastic, if possible! Customers are very slowly starting to pay for RaaS. Many of them come from old-school industries where hardware has always been bought outright, so this initial shift is very promising for robotics startups as well as valuations down the line.

Following the lead of robot vacuums, how long will it take before additional home robot categories go truly mainstream?

Medium-term, at best. Alphabet’s folding of Everyday Robots goes to show how even large resources cannot make home service robots viable today. The home is a highly unstructured environment. Going beyond the relatively simple exceptions that existing vacuum robots need to learn, the rest of the home is much more difficult. Additional tasks are in 3D, which may mean more sensors, actuators, manipulation, different grippers, force control, and much less predictability. We are not there yet in making this reliable and economical.

Neel Mehta, venture investor, G2 Venture Partners

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

Robotics remains a category of growing interest. The pandemic accelerated adoption of robotics due to widespread worker shortage. Companies that were previously resistant to exploring automation could no longer afford to wait. While the current macro landscape is more challenging, high labor cost and employee turnover persists in most industrial businesses (particularly logistics and manufacturing).

Our investments continue to perform well as the addressable market for automation continues to expand, and more companies are becoming receptive to deploying automation (not just one-off, but at scale). That said, in this environment, there is an increasing focus on underlying unit economics, which is driven by customer ROI and payback timing.

Additionally, we are increasingly focused on more flexible automation, which requires significantly less upfront investment in fixed infrastructure. Especially in this environment, flexible automation is much more scalable and the ROI is easier to justify.

What is the next big robotics success story after warehouse/fulfillment?

I’d say it’s either going to be food or manufacturing.

Food

We are seeing restaurants, co-packers and frozen meal manufacturers increasingly gravitate toward robots. I’m specifically talking about high-mix production, whereby food production is more complex with lots of ingredients and SKUs (automation is already common in low-mix production).

We’ve heard that the food industry is 40% understaffed and operating at less than 50% capacity. Working conditions are also poor, and worker performance is inconsistent (resulting in waste). It’s still early days for this space, but there are a handful of interesting companies deploying robots at frozen food manufacturers and restaurants (e.g., Miso Robotics, Chef Robotics, Hyphen, etc.).

Manufacturing

The onshoring of manufacturing due to IRA-related tailwinds is going to have a massive impact on the deployment of robotics in the next five to ten years. There is a growing skills mismatch that will result in millions of unfulfilled manufacturing jobs in the latter part of the decade. Welding is particularly interesting because of the aging population of human welders.

What categories are the most underserved by robotics startups? What would you like to see more of?

There aren’t a lot of startups focused on intelligent food automation. Similarly, for the scope of the problem, I don’t see a ton of companies developing truly AI-powered robots for manufacturing applications. Construction robotics is another category that currently seems underserved.

How essential is DARPA/defense funding to the category in 2023?

I don’t have a strong view here. My intuition says that DARPA/defense funding is not that essential to this category. DARPA was critical in bringing enabling technologies to market such as LiDAR, however. Additionally, we do see defense as an early adopter/buyer of robotic applications, which can help startups get off the ground and generate early revenue.

Can/will robotics play a fundamental role in addressing climate change?

Absolutely. We are already seeing this play out within warehouse automation. E-commerce already has a 36% lower carbon footprint than brick-and-mortar retail. If you apply automation to that, you can reduce the carbon footprint even more.

At the highest level, robots can dramatically increase throughput within the same facility, leading to a reduced physical footprint for warehouses and driving down energy and materials consumption. Eventually, autonomous, electric long-haul trucking will play a huge role in reducing [the] CO2 footprint from middle-mile and last-mile delivery.

Outside of logistics, robotics is also going to play a huge role. The IRA is the single largest investment in reducing emissions in U.S. history. However, for that to materialize, we need to strengthen U.S. manufacturing and increase renewables capacity significantly. Robots will play a huge role in all of this.

Will robotics and automation replace human jobs in the long run?

I think it’s less about robots replacing humans and more about robots augmenting human productivity and filling the growing gaps in the labor force. In manufacturing, for example, the U.S. is probably going to be at least 2.5 million workers short of what it needs to keep up with normal economic growth.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

Very few robotics players have been able to pull off RaaS at scale. RaaS helps create predictable and recurring revenue streams for robotics companies and also streamlines customer adoption by minimizing upfront investment.

Oliver Keown, managing director, Intuitive Ventures

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

Robotics is inherently capital-intensive. We’ve seen a tougher fundraising environment, deals taking longer, valuations being pressured, and capital efficiency pressed. We hear from startups about commercial headwinds being acute — customers taking longer and pushing off expensive equipment sales/trade-ins from interest rates (given that capital equipment is intrinsically linked to customer financing access).

What is the next big robotics success story after warehouse/fulfillment?

Healthcare. We’re bullish that there are untapped clinical domains where the advancement of robotics can deliver a real impact. Furthering that, the shift toward automation offers a huge opportunity for task-shifting and driving access of healthcare (diagnostics, surgery, interventions) to broader populations.

There is an equity component to this: No longer needing the physical proximity or expense of the best hospitals, future generations of robotics in healthcare could be tele-operated or automated to provide best standards to all.

What categories are the most underserved by robotics startups? What would you like to see more of?

Automation and miniaturization in healthcare. Integration of the robot and biological manipulation. To take minimally invasive care to the next level, there needs to be technology that enables treatment to the right patient at the right time at the site of disease — from immunotherapy to gene and cell therapy, to novel energy modalities.

How essential is DARPA/defense funding to the category in 2023?

Huge. If you look back at Intuitive’s success over 25 years, this was sparked by the type of high-risk, high visionary innovation funded by DARPA. Long lead times should be expected, but funding in 2023 could be paving the future of robotics in a diverse range of fields for the next 50 years.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

Looking to healthcare and Intuitive as an example, it can be extremely successful. Customers want a solution, and the more robotic manufacturers can innovate to reduce the barriers (capital) to customers to deliver value, the better.

Rohit Sharma, partner, True Ventures

How is robotics investing different today from previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

I think the exuberance of 2021 and 2022 has given way to more rational exchanges between investors and founders. There is a renewed focus on the customer instead of growth or pure-technology, and there is an element of excitement about how fast-developing techniques in the machine learning and AI domain might play a role in delivering more effective robots. On the customer interaction front, there is a bit more of a focus on what value it delivers to them, and how quickly is that value going to make a difference in the customer’s operations.

What is the next big robotics success story after warehouse/fulfillment?

Look for more success stories within industrial environments rather than consumer robotics. We expect enterprise/industrial buyers of robotics to continue to adopt automation in an increasing number of tasks and in larger “fleets” versus pilot deployments.

What categories are the most underserved by robotics startups? What would you like to see more of?

We would like to see more startups in the area of mobility and robotics in structured environments like industrial yards, factories, loading docks, construction sites, etc.

Can/will robotics play a fundamental role in addressing climate change?

If automated machines and robots with electric propulsion can replace fossil-fuel-powered vehicles, especially in the medium to heavy machinery segment, it will be beneficial.

Following the lead of robot vacuums, how long will it take before additional home robot categories go truly mainstream?

It is very hard to design autonomous, low-cost, general purpose robots that can operate in and around humans in a safe and effective manner. The home environment is full of anomalies and exceptions that happen every minute. While such machines might exist easier in our collective imagination — carrying out general purpose cleaning, food-prep, cooking and various other tasks around the house — we would likely see a limited version of these capabilities get tested in an industrial environment before they are suitable for in-home use.

Helen Greiner, advisor, Cybernetix Ventures

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

There is not as much need to build from the ground up, as there is more infrastructure available with ROS, ISAAC, Viam, AWS Robomaker, etc.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

Investors love them, customers can like them if they can move cost from capital equipment to ops budget. RaaS is great for recouping R&D costs over time, but not as good if the company is paying for BOM up front and recouping over time. This creates a cash flow issue. Analogies to software are not accurate.

Following the lead of robot vacuums, how long will it take before additional home robot categories go truly mainstream?

Five years for lawn mowers in the USA, based on vision-based navigation (combined with GPS) coming out. No setup wires and better UIs will drive demand. The network effect (neighbors copying neighbors) will drive demand after initial adoption. Thirteen years for a humanoid helper, based on Agility and X1 cost reduced and smarter.

Kira Noodleman, partner, Bee Partners

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

COVID-19 has urgently shown us a glimpse of a more roboticized, automated, resilient future of work that extends across the supply chain and beyond the mission critical. While this trend started in manufacturing, it has now moved well beyond into areas like healthcare, R&D, agriculture, waste management and many more.

Our current volatile economy has made investors demand asset-lighter, often software-powered hardware solutions that bear less risk given the increased nimbleness of said solutions. What feels new today in automation is how quickly and flexibly you can set up a system to work. And there is an increasing industry acceptance that if it is too expensive to automate, it might as well be not possible (because everything technically can be automated). Globally, shifts in recent years have added pressure to the U.S. to step up its game.

The average robot per 10,000 workers globally is 141 (source: IFR). In the U.S., we’re at 244 (above average), but there are six countries ahead of us: China just passed us (350), and the No. 1 is Korea (1,000!) — clearly they are a manufacturing juggernaut. Yet, the U.S. has the largest GDP in the world, and this feels unacceptable.

What is the next big robotics success story after warehouse/fulfillment?

Manufacturing! The U.S. ranks 27th in the world for automation and 98% of manufacturers don’t have automation. In this setting, customers often want X specific stations automated. An important accelerant is a startup showing up as a partner and asking questions like, What if we do 90% of that task for 10% of the cost? It’s often about how robotic companies can collaborate with their customers to rearrange things to get those types of outcomes. The bottom line is, where can you automate pieces? As long as those pieces make sense, it’s a huge win.

What categories are the most underserved by robotics startups? (What would you like to see more of?)

Structured environments like airports (internal operations versus consumer facing) and/or domains with repetitive cycles (prime for automation) like restaurants. Stodgy industries left behind, like recycling. Categories with newly realigned incentive structures (e.g., the U.S. healthcare system transitioning to a value-based care model).

Will robotics and automation replace human jobs in the long run?

I believe the primary objective of automation is to​ improve upon limitations of human performance​, and both mirror human features (increasingly taking humans out of the loop) and expand them in ways (speed, precision, uptime) that have not been heretofore possible.

I believe this empowers humans to both create and do higher-order jobs that leverage their creativity and flexibility, like managing robots. I also believe history has told us that every industrial revolution (after enough time) creates more (and often different) jobs than it takes.

Specifically around manufacturing, I do not believe robotics solutions oriented toward manufacturing are taking human jobs. As an example, Boeing recently had 2,000 layoffs in functions like finance and operations; at the same time, they added 10,000+ jobs in manufacturing/engineering. The point is, we have a massive labor shortage and in fact need robotics solutions to help us fill this gap and stay globally competitive.

In the near term, I would argue that a robot won’t take your job, and see this question as more nuanced: Competitors are automating with robots, so the non-automated competition is in a tighter spot and said employees will unfortunately likely be the first to lose their jobs.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

RaaS lets you flex up and down as you need, and I believe this is going to be a powerful momentum driver going forward. I believe the SaaS model will ultimately happen in RaaS (and today, there is certainly plenty of wood to chop to get there).

Dayna Grayson, co-founder and general partner, Construct Capital

How is robotics investing different today from previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

The pandemic increased the need for automation, without a doubt. The need to augment outdated factories, analog processes and scarce workforce availability is real and not slowing down post-pandemic.

However, ironically, the broader investing market is more conservative with respect to robotics this year versus last. In the past two years, investors were awash with money and looking for new ways to invest and that attracted a number of “tourist VCs” to hardware investing, in particular.

But, this space requires experience and understanding of complex business models that are not like SaaS. Cycles take longer, iterations of products take longer and scale takes longer. The upside is that contracts are big, industry impact is big and outcomes can be huge. So some of the tourists have left in hopes that spaces like generative AI can provide the quick hits they’re seeking. Regardless of investor interest in the space, customer demand for robotics and automation is stronger than ever.

How essential is DARPA/defense funding to the category in 2023?

DARPA/defense funding is an important source of capital in the robotics category. Government writ large will continue to be an important stakeholder in the ecosystem, as recent commitments to rebuilding the U.S. industrial base have brought greater government attention to innovation in key foundational industries like manufacturing, supply chain and logistics, and transportation and mobility, to name a few.

Will robotics and automation replace human jobs in the long run?

We see it less as automating away jobs and instead automating away menial and undesirable tasks. In most cases, incorporating robotics allows human workers to take on higher-order, more complex tasks and do their job safer, better and more efficiently.

In some industries, like food manufacturing, there is such a high number of open jobs that automation is a necessity to meet customer demand. Automation can thus have the net effect of increasing employee productivity, satisfaction and retention.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

The RaaS model has strong potential, but it is still in its infancy and many robotics companies are struggling to get it right. Those who do it well sell very simple systems that involve a number of commoditized or off-the-shelf parts. These startups innovate in very specific and isolated technical ways, which add all the real, defensible value to a company. Then they lease the rest of the system to customers, which provides the RaaS model and high-margin, recurring revenue to the startup.

Paul Willard, partner, Grep

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

At Grep, we have seen the slowing economy make it harder to get that first robot pilot with a potential new customer, as many companies are reluctant to invest in anything new. Once a RaaS program gets a foot in the door to pilot and demonstrate solid returns, however, companies will still lean into positive ROI as ever.

When you are trying to boost profitability in a business, the robots are your friends. For instance, once a store installs a Zippedi inventory robot, they see revenue increase significantly, and in tough times, it is especially important to boost the balance sheet.

What is the next big robotics success story after warehouse/fulfillment?

Like SaaS, RaaS is a horizontal, not a vertical, market. RaaS will disrupt every aspect of the physical world versus SaaS being applied to knowledge-based work. There are many RaaS companies in the making building up to scale right now. Every fast-growing RaaS company is revolutionizing an industry.

What categories are the most underserved by robotics startups? What would you like to see more of?

Historically, RaaS has been tough to close a business model on when an arm is required; arms with good motors cost tens of thousands of dollars and take many months’ rent to recover the upfront capital cost. Recently, Grep has seen some really nice arms that cost an order of magnitude less and the price is continuing to drop as more and more manufacturers are copying good designs. This is going to close the business model on a whole new class of RaaS that is able to manipulate the physical world better than before. Prepare for the bots to be “armed.” :)

Can/will robotics play a fundamental role in addressing climate change?

Both of us at Grep VC are big fans of electric vehicles, and we are excited about all the ways the robots will help the planet. Electric robots will replace many things that previously burned gas. For example, Zipline is all electric and also uses significantly less energy than a 3,000-pound gas-burning delivery vehicle. Similarly, Monarch autonomous tractors are electric and end diesel burn in the fields. Agriculture robots will be able to do things like “hand” pull weeds, ending the need for chemical weed control.

Will robotics and automation replace human jobs in the long run?

In some cases, robots will change human jobs, but ultimately the robots will create far more, better jobs than they replace. Many robots create business models that could never close, where the value provided exceeds the cost, with humans doing the work. All robots need humans to install, operate and maintain them, so there are the direct robot support jobs created, which are good jobs.

But more importantly, when a new industry, like instant delivery via robot aircraft, comes to exist, it will unlock other industries that can use this efficiency to do something previously impossible. In this way, the robots will create many whole new industries that are difficult for us to imagine ahead of time as people figure out how to use new capabilities.

Following the lead of robot vacuums, how long will it take before additional home robot categories go truly mainstream?

It has already started. Labrador robots help mobility-challenged folks fetch and carry things around the house. So medication is always handy and taken on time, grocery delivery from the front door can be carried to the fridge and pantry to be put away, and dinner can be carried from the stove to the dining table while the customer has their hands full perhaps with a walker, a cane or a wheelchair. There will be more as the hardware that makes up the robots gets less expensive and more capable, simultaneously.

Cyril Ebersweiler, general partner, SOSV

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

The interest in robotics has never been higher, particularly among early-stage investors. This is largely due to advancements in software, firmware and hardware that have reduced technical barriers and made robotics more accessible to a wider range of businesses. The COVID-19 pandemic has only further accelerated this trend, as companies of all sizes were forced to rethink their workforce strategies in response to the pandemic. This is particularly evident in the food and beverage and retail industries, where robots are now serving cocktails, pizzas and performing cleaning tasks.

While the growth of the robotics industry is still relatively slow, the second generation of robots developed since 2014 are now generating tens of millions of dollars in revenue. This is a promising sign for the industry, and investors are eagerly anticipating the emergence of a leading robotics company that will go public.

What is the next big robotics success story after warehouse/fulfillment?

I think that in order to replicate the success story in that space, you need to observe two things: a naturally growing market (~20%+ CAGR) and a local market with no other solution available or customizable. It is striking that you can build a “big” robotic warehouse startup and own your local market from the get go.

Building a successful robotic warehouse startup and quickly dominating the local market is a prime example of this. We’ve seen this in many countries around the world. While it may not be immediately clear what the next growth-oriented market for robotics will be, it is worth exploring other areas of pressure, such as inflation and a shortage of labor. Combining robotics with agriculture and the food and beverage industry has the potential to yield significant results in the coming decade.

What categories are the most underserved by robotics startups? What would you like to see more of?

As the robotics industry matures, entrepreneurs are facing the challenge of combining cutting-edge technology with innovative solutions to tackle difficult markets. One such example is the healthcare industry, where robots are increasingly being used as assistant surgeons or even performing surgeries entirely.

A decade ago, launching a venture of this scale would have required billions of dollars in investment. Today, we are seeing companies successfully complete clinical trials after raising only a few million dollars. In the coming years, we can expect to see a convergence of robotics and other advanced technologies, resulting in solutions that were once considered science fiction becoming a reality. The field of biomimicry, where technology is inspired by biological systems, is also likely to play a significant role in the development of new robotics solutions. Boston Dynamics’ Atlas is now 10 years old!

Will robotics and automation replace human jobs in the long run?

Automation at large will take different forms, and the speed at which the robotics industry is propagating gives us ample time to train future workers for their next tasks. I always come back to the “dull, dirty, dangerous” jobs matrix and feel contempt. There might even be another opportunity on the horizon: the creation of multiple local businesses, powered by automation.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

I think entrepreneurs have been misled by the “SaaS” playbook and should have held some degree of flexibility to adapt to their market. Luckily, new robotics companies are not falling into said dogma (to the detriment of their valuation, perhaps), and work on their business modeling closer to the realities of their customers. The tension in traditional businesses between CAPEX and OPEX is very real, and so is the ownership of critical infrastructure.

Following the lead of robot vacuums, how long will it take before additional home robot categories go truly mainstream?

Most robotics companies eyeing B2C have moved to B2B over the years. The time, scale and amounts of money required to launch such a brand these days isn’t exactly what VCs are looking for.

Claire Delaunay, private investor

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

The pandemic highlighted the fragility of our productions and distributions and their dependency on having a workforce coming every day and on time to work. The other acknowledgment was that being a customer without backup options on a lot of basic goods created in China, for instance, is highly disruptive to the overall economy. Bringing more-resilient production systems locally is, therefore, a necessity, and robots have a central role to play.

I look for certain specificities: modularity, ease of programming, repurposability — being able to use the same infrastructure SW and HW for multiple verticals will unlock the next wave of automation — collaborativeness (some things are easier to automate than others and automating 100% is still far-fetched).

Therefore, robotics applications that can be integrated into more traditional systems alongside traditional workflows will play a key role in the coming years (versus fully automated warehouses). The overall balance is also much more favorable for investors: The slowing economy provides a lot of opportunities for strategic investment on good terms as the cash is spare. Investments over $10 million can still happen but are subject to higher scrutiny on the startup’s ability to generate revenue in the medium to short term.

What is the next big robotics success story after warehouse/fulfillment?

Agriculture and construction are two promising sectors. The climate change mitigation pressure is forcing these areas to modernize their processes in new ways that include robotics. The ultimate nut to crack for both agriculture and construction would be to enable new levels of collaboration and reactiveness to work alongside humans.

What categories are the most underserved by robotics startups? What would you like to see more of?

For conventional robots, cleaning, trash or old goods recycling and sorting. Construction is slowly picking up. Underwater robotics (exploration, monitoring, cleaning, welding) is also underserved with still very primitive tech.

Can/will robotics play a fundamental role in addressing climate change?

They could, but they still need to be designed with this particular trait in mind. Some carbon emissions studies and analyses need to be taken into account while conceiving the robot, either to inform directly the design of the robot or establish protocols of usage around the robot that is clearly taking into account the carbon emission cost like it would be done on the BOM when choosing the parts, for instance.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

Really cool to create some kind of circular economy and limit the number of physical units deployed while maximizing the lifetime of the robots. But it is still very challenging for startups to make small revenues monthly per customer, especially when the number is pretty low. It also forces a lot of operational costs on the startup that are not necessarily easy to scale geographically.

Peter Barrett, co-founder and general partner, Playground Global

How is robotics investing different today from previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

Robotics needs to be about amplifying people, not replacing them. It is also about grounding AIs to the physical world. Without sensing and actuation, AIs are just brains in jars.

We define robotics more broadly as human augmentation systems that enhance productivity and enable humans to perform higher cognitive flexible tasks as well as physical ones. This is a broad area where we think we’ll see venture dollars flowing, as there is a gap created by decades of off-shoring, geopolitical events and a changing demographic.

We think about investing in the space with the following elements in mind:

  • From demos to operational KPIs: We focus on sector heuristics beyond just underlying technology demos that are around throughput, uptime, reliability and robustness. The eventual customers of these systems care about these metrics for their underlying business. Any startup claiming value creation has to show a path to improvement of said metrics.
  • Domain specific systems: Beyond sensing and actuation, there is nuance required in the thinking aspects of developing a system largely determined by the boundary conditions set by the operating design domain. We believe that systems designed for specific applications and, more broadly, industries will beat any general purpose system; this is not much different from skilled human capital versus unskilled human capital.
  • Human-centric system design: Automation/robotic systems have always served their purpose by considering a human in the loop. Human capital offers flexibility, decision making and adaptability that current SOTA systems cannot provide. Product and process design need humans in the loop given the complexity and creativity required to use first principles. As such, systems that don’t consider humans in the loop will not be maximizing their potential utilization.
  • Unit economics: System design has to take into account unit economics of the application. We look at the ROIC (return on invested capital), scalability of design, and marginal economics as part of underwriting the technology.

What is the next big robotics success story after warehouse/fulfillment?

The next big robotics success story comes in the form of a domain-specific automation system. This could be in an unstructured, archaic environment such as a lab, a farm, a mine or a manufacturing environment. Creating a domain-specific implementation will unlock insights that we are not thinking about at the moment.

What categories are the most underserved by robotics startups? What would you like to see more of?

Humans in the loop, collaboration with automation rather than being “behind the fence.”

While there have been attempts to create dexterity through better actuation and control, there hasn’t been an inflection point in a scalable fine motor skill implementation yet.

Given the advances we have made in LLMs, the implementation of robotic systems could be much different to what we see today (PaLM-E is a good indication of what might be possible). This translation tool that works agnostically across different systems can increase the penetration of robot systems.

We believe unique sensing modalities can unlock new information about the world that isn’t accessible today, which allows unique thinking and actuation in the framework of sense, think, act; this can be in different topologies in the world (including but not limited to deep seas).

How essential is DARPA/defense funding to the category in 2023?

DARPA programs have funded the advancement of fundamental research in robotics, such as manipulation, navigation, material handling and perception. This will continue to be important to underwrite some of the scientific risks while the industry/startups will aim to engineer commercially viable solutions.

Can/will robotics play a fundamental role in addressing climate change?

Robotics can play a role in addressing climate change [in] the following ways:

  • Better recycling and end of life treatment.
  • Higher granularity, better sensing.
  • Robotics can be used to reduce spoilage/scrap and increase yields of crops through (agricultural automation), perishables and manufacturing materials (new machines).
  • More carbon-efficient extraction of minerals.
  • Use of generative AI to create unique engineering designs that will use unique processes to create lightweight structures that use lesser materials and energy.

Will robotics and automation replace human jobs in the long run?

Robotics and automation will be used to conduct tasks that humans don’t want to spend their time on (think high-physical and low-cognitive tasks). These tasks don’t have sufficient human capital anyway.

However, we believe that robotics and automation are ultimately tools for humans, and having a human-centric automation system design is critical to implementation success.

What are your feelings on the RaaS (robotics-as-a-service) model for monetizing robots?

The model success is dependent on the unit economics per pick/per hour or any other SLA (service level agreement). While RaaS can overcome friction of upfront capital expenditures for entities that have an issue with raising working capital, funding this with venture dollars is probably not a good use of the high cost of equity capital.

Typically, the companies willing to underwrite robotics technologies have the capital expenditure to own the equipment and might prefer that given the risks associated with longevity of startups. Capital-leasing options have been around in other industries (auto leasing, mining leasing).

The equipment design has a fundamental say in the capital expenditure requirements, building a cheaper system (through amortization by pick, which can be leveraged through high throughputs) can help with the unit economics, allowing for this model to be successful.