Issue #17 - The Future of Manufacturing
👋 Welcome to Issue #17 👋
Topics this time: the future of tools, robots blocking entry jobs, many new funding rounds and how to communicate your early traction.
🙏 Thanks again for all the feedback about my presentation Manufacturing the Future 2019.
As always, I hope you enjoy reading this, any feedback, shares or links are much appreciated!
Disclaimer: thoughts and opinions expressed in the newsletter are my own.
What I've enjoyed reading
#tools#
⚒️ Nick Pinkston who is the CEO of Plethoradid a really good and comprehensive presentation about the future of tools. One topic he is highlighting is how slow hardware cycles are compared to software cycles. Among others, this is because hardware is highly complex, factories haven't changed much and many people still work with low leverage tools and are stuck in old CAD systems. He goes on an gives a few examples of new tools that can speed up development such as nTopology.Here is an overview of a manufacturing process and relevant players for each step:
#additivemanufacturing#
🔝 BMW is making a stronger push into additive manufacturing. The company announced lately that BMW wants to produce at least 50,000 components per year using additive manufacturing and also uses these components in series production. Last year, BMW already invested €10M in an additive manufacturing campus near Munich. Using additive manufacturing can cut costs for metal parts by up to 50%.
#pilotpurgatory#
☠️ If you follow my writings, you probably noticed that I'm a big fan of Martin Casado's (a16z)content since a lot of his writing is applicable to manufacturing startups. In another post, he lays out what an "unending chasm" can mean. Crossing the chasm is not only going from the early adopters to the early majority - the chasm can also be every new geography you are trying to sell, ending up in a market that is much smaller than initially thought or that the buyer in the market is very difficult to sell to. To survive that risky ride you have to be very good at weathering transitions and anemic periods. This sounds a bit cryptic but I think he means that you have to be great at always having the big picture in mind ("zoom out") but at the same time iterating on the plan how to get there ("zoom in"). The famous Chasm model:
#automation#
😨 The rise of robotics and the fear that these robots will replace a lot of people in factories is an ongoing topic. By spending more time on it, I came across this article that analyzes the relation between robots and job losses. One result is that even though the number of industrial robots has quadrupled in the last 20 years in Germany, it didn't cause human redundancies. Actually, the report which is cited in this article found out that the effect is close to zero. What usually happens is that jobs are not destroyed but robots reduce the number of jobs for entrants. Of course, this is also a problem we have to tackle but it's a different one compared to making the job people have already obsolete.
About industrial Startups and Companies
#factoryvisit#
🏭 I think many of you will agree that visiting a factory is usually very interesting, especially because manufacturing companies operate so differently and no factory is the same. Therefore, I'm intrigued by the idea of "Airbnb experiences for manufacturing". Amazon is taking a step in that direction already, offering tours to Amazon fulfillment center in North America. Who doesn't want to visit a place like this?
#fundraising#
🤑Xometry, a large on-demand manufacturing marketplace in the US, closed another round of $50M led by Greenspring Associates. This brings its total funding to $113MM to date. The platform is connecting customers with optimal manufacturing solutions, having a network of over 3,000 partner manufacturing facilities. Clients include BMW or NASA and revenue has doubled in the past twelve months. Similar models in Germany are Laserhub (P9 is an investor), Shift or Kreatize.
#fundraising#
🤑 Another company that helps electronics manufacturers to move faster from prototype to production is Tempo Automation. The way how it works is that you upload a CAD file and Tempo Automation will turn it into a circuit board in less than three days. Its algorithms automatically analyze the file and show where to optimize costs and lead times. To strengthen its growth, the company just closed a Series C of $45M led by Point72 Ventures and existing investors Lux Capital and Uncork Capital. Lockheed Martin also joined the round which makes sense given that many customers come from aerospace.
#robotics#
🤖 Microsoft just launched a platform for building autonomous robots. The platform helps developers to train models that power autonomous physical systems. Part of this technology comes from Bonsai, a startup specialized in reinforcement learning for autonomous systems that Microsoft acquired one year ago. A potential use case is teaching a robot how to autonomously traverse obstacles or climb stairs.
#funraising#
🤑 Hamburg-basedCybusthat is building a universal connection to the digital shopfloor raised a new seven-digit funding round led by b-to-v. The company sells a software-based IIoT gateway to manage the data flow between machines, IoT devices and other software systems in the factory. In general, they want to make it easier for factories to connect their assets while ensuring security and granular data access. Today, they count companies such as SCHUNK and B. Braun as their clients.
Additional thoughts on recent development
Communicating your early traction#fundraising#
I see a lot of founders struggle with how to communicate their early traction which usually consists of a few customers and/or pilots. As investors, we try to really understand why do these customers buy your solution and how do they use it. As a guideline, I think this can be a good structure on how to communicate that:
a) company name
b) the use case and how they are using the product: Somehow many people underestimate the importance of the use case (the how). It's critical to understand the problem, the solution they had in place before and the value they are getting from using your solution.
c) buyer persona, user persona and amount of users
d) ACV (subscription / service)
e) timeline (when pilot, in production, rollout)
f) acquisition channel
Industrial Landscape#landscape#
As mentioned, I recently updated my industrial startup landscape. There are now in total 300+ companies in the landscape:
Again, Thanks to everybody for supporting this newsletter and for sending me interesting links. As always, any input, shares, and feedback are always warmly welcome 🙏
Robin