Issue #20 - The Future of Manufacturing
👋 Welcome to Issue #20 👋
Topics this time: big rounds and one big acquisition, the Industry 4.0 disillusion, smart collar workers and B2B Marketplaces.
It has been a while since you've heard from me. That's not because I lost interest in the topic but because I also took some time off during the summer and went running in the Alps. But no worries, September has been very busy so here is a new issue about what happened in the last two months.
As always, I hope you enjoy reading this and any feedback is much appreciated!
Disclaimer: thoughts and opinions expressed in the newsletter are my own.
What I've enjoyed reading
#pilotpurgatory#
⚒️ McKinsey confirmed again the problem of the “pilot purgatory” and that only about 30 percent of companies are actually capturing value from Industry 4.0 solutions today. That’s really disappointing.
The main reasons according to this report are the lack of resources, knowledge of how to scale, the costs of scaling and that it’s hard to justify the business case without short-term impact. The last aspect is very interesting I think and founders should closely watch this when it comes to their ROI calculations. If you can save a few €100ks and it takes months to implement and even more than a year to pay back the ROI, then you will have a hard time I think. Recommended read for every founder.
#manufacturingSaaS#
☁️ I think it’s a smart move that Salesforce is doubling down on specialized solutions for verticals and chooses Manufacturing as one of them - called the Manufacturing Cloud. The reason is that manufacturing has very specific requirements for salespeople and how clients are managed in that industry. When I looked at the landing page, I was a bit disappointed though.As you can see here, the pitch sounds very generic and I hope they will improve that because I totally believe that there is an opportunity for a vertical solution and Salesforce is poised to be one of the leaders here. #workforce#
👩🏭 The number of people working in manufacturing in the US has been shrinking since its peak in 1980. From 2001 to 2009 the sector actually lost more than 4.5M jobs. However, in the last years, the industry is having a comeback including a new labor category of “smart collar” workers according to this report.
The report highlights the importance of digital natives who are using their high educational attainment and tech-savvy skills to reshape and evolve an entire sector. This is also an encouraging development for startups since those people might be more likely to try out new software and bring in digital solutions to factories given their affinity to digital innovation.
#automation#
🤖 Probably the most exciting news for me in the last few weeks has been the acquisition of the AGV company 6 River Systems by Shopify. I met Ryan and Scott last February in Boston and was lucky enough to get a demo of the system and the robots which were super impressive how smoothly it worked. Today, they are operating in more than 20 facilities and what’s interesting is that they usually have a pretty big ramp-up at their customers after the first initial phase so they can scale to nice ACVs fast.
With around $450M, Shopify is paying a very high price for the company. Shopify wants to integrate 6 River now into its fulfillment network to increase the speed and reliability of warehouse operations. Besides that, they also add a team with years of experience in robotics and fulfillment from Kiva and now 6 River Systems. The acquisition comes shortly after Shopify launched its Shopify Fulfillment Network this year in June and I think there is a high chance that Shopify will acquire more companies in that area in the future - watch out!
About industrial Startups and Companies
#IoT#
📈 Samsara is probably a case study for itself.The IoT company just raised a massive $300M round led by Tiger Global that values the company at $6.3bn. Wowza. Samsara was able to triple revenue to $100M last year which is one of the reasons for the high valuation and it might be the fastest-growing I40 company right now. It started out especially with selling its fleet-tracking platform for trucks including dash cameras but the use cases today go beyond just that, most of them are around collecting data with its IoT devices that cost $130 and analyzing the collected data. As an example, one construction company is using Samsara to calculate exactly how to load weight influences fuel usage on trips. With the fresh money, the company wants to increase its footprint in Europe among others and continue diversifying its product offerings.
#fundraising#
🤑 I've been following Tulip, which is building a manufacturing app platform, for a while and after raising its Series B in February this year they just closed another $21M from the toolmaker DMG MORI. While it says $39.5M in the press releases, this includes the $18.5M round the company raised already in February led by Vertex Ventures. The Boston based company plans to further grow outside the US, especially in Europe and Asia. Use cases can be work instructions for mobile workers or better production visibility. For a while now, the company is marketing its products as a "no-code platform for manufacturing".
#fundraising#
👩💻 If you're a CAD designer there is a good chance that you have heard ofShapr3D. The company is the leading mobile 3D Design App for the iPad and just raised €5.5M from Creandum and P9(yes, that's us). CAD software hasn't really changed in decades and with its mobile App for 3D CAD design that was downloaded over a million times already, Shapr3D is making CAD modeling more intuitive and easy to use on the move. Or how Christoph (Partner at P9) said: "Even my kids love playing with this app, which really is a testament to just how easy it is to use and how much it opens up the market for design".
I think it's fair to say that the company is leading the way in making manufacturing attractive on social media with its IG channel that has more than 230k followers. Here is an example of modeling Jewelry with Shapr3D:
#fundraising#
🤑 The robotics company Simbe just raised a $26M round led by Venrock. You might have heard of the company because of its inventory robot Tally that is sliding through retail stores to check the inventory. It makes sure that items are accurately priced and alarms employees if something is out of stock. The robot can check 15,000 to 30,000 products an hour, much more than any human with much higher accuracy. The US supermarket chain Giant Eagle started pilot projects with Simbe earlier this year - just when its competitor Bossa Nova announced that Walmart will roll out its robots to 350 stores.
#fundraising#
🤑 The last bigger update on the financing side makes the manufacturing analytics platformSightMachine. The venture arm of Sony is joining the Series C from April and will be added to the $30M round the company raised in April. This investment should also help the company to strengthen its position in the Japanese market. The company is already partnering with a number of bigger corporates such as Fujitsu and E.ON and now also Sony of course.
Additional thoughts on recent development
B2B Marketplaces#opportunity#
At Point Nine, we’ve been very enthusiastic about B2B marketplaces for quite some time now and I spend a lot of time on the topic. With Laserhub, we also invested in a marketplace for industrial sheet metal. I see new opportunities on a weekly basis but a common mistake I observe is to think that just because there are transactions between two parties in a specific industry, there is a great marketplace opportunity. I usually try to sketch the market structure and the value chain of the market and outlined my thinking here in case it can be helpful for early-stage founders.
Industrial Landscape #landscape#
There are now in total 300+ companies in the landscape (and 20+ on the waitlist):
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
