Issue #23 - The Future of Manufacturing

👋 Welcome to Issue #23 👋

Topics this time: Corona and its implications, robotics outside factories, Seed and Series A fundraising.

Hello and Salut! I hope you are all well and healthy during these turbulent times. Corona is obviously having a big impact on our economy and also on the manufacturing industry. For this issue, I decided not to give my own opinion but I wanted to share a few readings that are hopefully helpful and interesting.

👉 Together with Andy from Project A, we also plan to have an online discussion about the impact of the current situation on the manufacturing sector. If you’re a founder, please sign-up for it here.

On the German ecosystem: In case that’s interesting for you, I recently published a post about the fragmentation of the German ecosystem and why we need more collaboration between our fragmented ecosystems.

Disclaimer: thoughts and opinions expressed in the newsletter are my own.

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What I've enjoyed reading

#SurvivingCoronaI#
📝 Gil Dibner from Angular Ventures, a fund that is focused on enterprise software, wrote a guide for early-stage enterprise tech companies on how to survive Coronavirus. In short, there are mainly three aspects:

• People: be sensitive, work from home, stay put for now.

• Revenue: work with customers, make yourself available, rebalance the marketing mix, emphasize self-service onboarding in your product where you can.

• Cash Management: stress-test your runway, consider slowing down any increases in burn rate, close the deal, plan ahead and report.

In addition, and this is my personal opinion, the current situation can be a good time to gain market share, in particular for B2B marketplaces. Customers won’t forget if you’re here for them and help them solve their problems and keep the supply chain running right now.

#SurvivingCoronaII#

This is a phenomenal podcast with Bill Gurley and Chetan Puttagunta from Benchmark who talk about early-stage investing in the face of Covid-19 and how (enterprise) founders should respond to it:

• Entrepreneurship does not sleep and during hard times the quality of the average entrepreneur goes up due to the higher risk environment.

• Early-stage companies have an advantage because they are able to engage with their end-customers and have meaningful conversations about business value and adapt their value proposition.

• Consumer startups are more affected than startups selling to enterprises. Enterprise companies most likely won’t replace their software stack from today to tomorrow.

• Entrepreneurs have to be more creative about how they engage with their customers and do modeling for multiple scenarios to have an action plan for each of them.

• Understanding the drivers of your business and what happens if assumptions change slightly is in particular important right now.

#RemoteWork#
📟  Now that many (if not all) of you have to work remote there is a flood of new resources about best practices and how to make remote work successful. I think a great way to learn is to learn from companies that are doing this successfully for many years (and before Corona). I’d recommend the following articles and lists:

• Resources for companies embracing remote work from GitLab and they also cover the transition for a company going remote. Gitlab has more than 1200 employees who all work remotely and they are super transparent about everything, including their compensation.

• Very comprehensive Remote Wiki on Notion - from top reads, company policies to health resources.

• Work From Home Guide by GetYourGuide. I found that a great and detailed example of a big tech company that needed to move to remote work.

#ImplicationsFromCorona#
🌍  McKinsey published a comprehensive summary of the implications for businesses that they update regularly. So far - and this can well change depending on how it all develops - their take is that it will take until Q4 2020 or even Q2 2021 until we see a “genuine recovery” in the US and Europe, depending on how fast we get it under control. According to McKinsey, their clients respond with 5 sets of actions:

• Leadership alignment and portfolio of actions

• Workforce protection and policies

• Supply chain stabilization (=> again, probably positive for b2b marketplaces)

• Customer engagement and communication

• Financial stress-testing

I think they make a good comment at the end of the article that I would everybody encourage to think about: The near term is essential, but don’t lose focus on the longer-term (which might be worse).

#SeriesA#
🤑  Especially in Europe most of the investments into manufacturing startups have been at the seed stage in the last 2-3 years - which means many founders have to go out for a Series A soon-ish. YCombinator published a very comprehensive guide to Raising a Series A. There is also a very interesting data point I wanted to share since I think might be counterintuitive but “founders who take pre-emptive offers take 1.4% more dilution for less money (!) than those who run processes”.
While many Series A and late-stage investors claim publicly on Twitter that they are “open for business”, the founders I’m working with tell me the opposite at the moment. This is again a good post by Gil Dibner on the current fundraising climate and that right now it’s pretty tough to raise your Series A+; but not impossible! To be seen how it will develop over the next few weeks.

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About industrial Startups and Companies

#Fundraising#
🤖  In particular, for small- and mid-size manufacturers it’s still not easy to get the productivity benefit of robots. Just a few weeks ago, Ready Robotics went out of stealth and announced a $23M round led by Canaan (also an investor in nTopology and a few other manufacturing startups). The tool helps manufacturing workers without any coding experience to program the robots their plant uses. Ready Robotics is robot-agnostic and can work with the likes of Kuka and Universal Robots among others - which is very interesting since the robot manufacturers offer their own control platform but lack interoperability between different robots. Fingers crossed that they can speed up software programmability of the robots.

#Fundraising#
🤑 Robots are starting to be more common also outside factories, for example in construction. Scaled Robotics just raised a seed round of €2M led by Construct Venture and PropTech Fund Surplus. Instead of construction people going around the construction side with laser scanners, a four-wheels robot is building a 3D point map of a space which is then compared to a construction model to check if there are any construction mistakes. Apparently differences can be noted down to the centimeter which can save construction companies a lot of costs early on before the mistakes get bigger. At the same time, it also provides a repository for all information relating to project quality and progress. Here is a quick video and this is how the robot looks like:

#MarketingExample#
📡  It’s not easy to do modern marketing in a very traditional industry. If you need some inspiration, I think Laserhub (*p9 portfolio company) did a good job with this video and explaining their digital one-stop-shop for sheet metal parts. Getting to nearly 5k of views within a few weeks is quite a good achievement in B2B I’d say.

#Fundraising#
📊  Warehousing and automation is a topic I cover from time to time, given the many players that operate in that segment ranging from AGVs to robots and the pull from the market. NoMagic is a Polish startup that focuses on pick’n’place robots to eliminate tedious tasks in warehouses. The company successfully raised a Series A led by Khosla Ventures and Hoxton Ventures. The robots are already used in the warehouses run by Cdiscount in France and the company will use the money to scale its customer base. Other companies in that space are Covariant (US), Micropsi (DE) and Osaro (US) among others.

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Additional thoughts on recent development

On pre-seed and seed #summary#
I know that there is a lot to worry about currently but I want to encourage everybody and in particular, founders who just started a company to continue doing so (and please talk to me!). Here is why in short:

• First checks will continue to be written, it’s not a “bad” time to start a company and to build a product over the course of the next 18-24 months.

• There is a lot of early-stage capital available from Seed funds and funds such as Point Nine that are actually used to invest remotely.

• Some of the most valuable tech companies have been founded during recessions (e.g. Airbnb, Uber, Stripe, Instagram, WhatsApp). Yes, none of the examples is in manufacturing, so it’s up to you to change that :-)

Industrial Landscape #landscape#
There are now in total 330+ companies in the landscape:

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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