Issue #18 - The Future of Manufacturing
👋 Welcome to Issue #18 👋
Topics this time: microfactories, manufacturing-as-a-service and pay-per-use models as well as incubating manufacturing startups.
🎙️ I recently did a podcast with Artur Schäfer about early-stage investing in manufacturing. You can listen to the podcast here (German only).
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
#pay-per-use#
💵 If you follow my writings, I have touched on the shift to pay-per-use and as-a-service models in the manufacturing industry two years ago. Magazino, a robotics startup from Munich, introduced a new pricing model for its autonomous picking robot which is based on a pay-per-pick basis. With the new model, customers pay only for the work the robot actually does instead of a software license. This gives customers more flexibility and Magazino potentially an easier sell because there is no need for any upfront investment from their customers now. One pick is currently priced at €0.06. According to the founder, "there is an enormous demand in the logistics market for performance-based pricing".
The shift from product to service orientation:
#venturecapital#
💲 Eclipse is one of the most well-known funds investing in the future of manufacturing ("full-stack"). Lior Susan who is one of its founding partners explains in this interview why he left Flex to found Eclipse and why they are also incubating companies. While at Flex, Lior realized that few investors were interested in topics such as supply chain or manufacturing and spinning off companies from Flex such as Elementum- a SaaS to manage your supply chain - worked relatively well so he decided to do this with a fund. It's a bit more like private equity since they only do 8-10 deals per year with 8 partners and they require higher ownership than traditional VCs - but are also more involved in return. BrightMachineswas the first company they incubated at Flex together with Eclipse and most likely won't be the last one.
#portfoliomanagement#
🏭 GE is having a hard time in the last months. Besides the disappointing stock performance last year, the company also thinks about selling its portfolio of start-up investments. Since the inception of GE's venture arm, its portfolio includes more than 100 startups such as Desktop Metal or Element Analytics. The company would prefer to offload the entire basket rather than selling them one-by-one, knowing that some of them are also not performing well. It will be interesting to see who is keen to buy such a big (industrial) portfolio.
#manufacturing-as-a-service#
🛎️ Ordering parts in manufacturing has been a very manual process in the past decades. In the last couple of years, there has been a wave of startups trying to fix this and aggregating the fragmented long tail of manufacturing companies, thus building on-demand manufacturing platforms. I have been to a few suppliers and the sell to them is straight forward since it means: a) higher utilization of the machines b) access to new customers and more revenue and c) more efficient processes.
This wave started in the US with companies such as Xometry(raised $113M), Fictiv ($58M) or Plethora ($25M) which is doing it full-stack with their own machines. By now, we also see a bunch of different players in Europe such as Laserhub (disclaimer: P9 is an investor), Kreatize or 3D Hubs.
This article (German only) gives a very comprehensive overview of the market, the different players and how this can also impact the purchasing processes of the big OEMs.
#automation#
🤖 "Your margin is my opportunity" is one of the famous quotes by Jeff Bezos. Automation is certainly one way that Amazon tries to leverage but even its Director of Robotics says that fully automated shipping warehouses are at least a decade away. Today robots are a great solution for repeatable tasks but in dynamic environments, it gets much more difficult and it's very hard for robots to do the human tasks that warehouse work requires. The current numbers of Amazon basically confirm this:
110 warehouses in the US
45 sorting centers
roughly 50 delivery stations
more than 125,000 full-time warehouse workers
and only a fraction of the overall labor is performed by robots
While automation in warehouses will certainly increase, it's still a long way to go.
About industrial Startups and Companies
#assembly#
🏭 There has been a lot of buzz around Bright Machines in the past already when the company came out of stealth in October last year. Just recently, Bright Machines launched its first product called Machines Microfactories. This product allows workers to instruct a machine to assemble and inspect products how they want. The company scaled up to 400 employees by today and has booked $100 million in revenue with customers in automotive, consumer and electronics companies. Wow. A Bright Machine Microfactory can look like this:
#fundraising#
🤑 UK-based robotics company Automata closed an additional round of £7M led by led by Hummingbird Ventures. Previous investors include LocalGlobe, FirstMinute and interestingly also ABB. The company originally started at EntrepreneurFirst (similar to CloudNC) and develops a “desktop” robotic arm. The founders say that this arm is cheaper and easier to use than the rest in the market and you can set it up in a matter of hours. While this is something I cannot judge, I think it will also remind you after Munich-based Franka if you are familiar with the industry. What I really like about both of them is that they can enable even smaller companies to embrace automation given the low cost and flexibility of the robot.#fundraising#
🤑 Robert from b-to-v describes in this blog post why they invested in Cybus, a middleware that offers a global API to industrial equipment. In his eyes, the problem why the IIoT doesn't really exist yet is due to a multitude of proprietary communication protocols (no standard) and infinite different representations of data and closed doors. This is also one of the reasons why a lot of manufacturing startups are offering some sort of hardware to connect to the shopfloor. Cybus makes it possible to build a semantic data model on top of a heterogeneous machine park and offer a single connection point for any external cloud service with a thin layer of governance in between.
#acquisition#
👀 Amendate, a company that is offering an optimization software for additive manufacturing - a bit similar to nTopology - got acquired just very shortly after the launch. Sweden-based Hexagon which is building computer-aided engineering simulation software announced the acquisition last week. The acquisition helps the company with its focus on additive manufacturing. Amendate was originally a spin-off of the University of Paderborn (Germany) and is less than 2 years old.
Additional thoughts on recent development
Communicating your early traction part 2#fundraising#
I touched on this topic in my last newsletter already. Here is a work-in-progress template you can use to communicate your early traction. Again, understanding the problem and the use case in detail is crucial - I hope this is helpful as a start.
Industrial Landscape #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