Issue #41 - The Future of Manufacturing
Topics this time: defining industrial tech milestones, electric batteries, why we need more automation, and new investments in Q3 2022.
👋 Welcome to Issue #41 👋
Hey there!
I hope you could recharge your batteries during our hot summer and take some time-off. This is the third issue of 2022 - and while many people were on vacation, a lot has happened in the market. The increased investor appetite for climate tech, deep tech and efficient businesses, make manufacturing more appealing than during the “grow-at-all-cost”-time last year.
At Kwest, we continue to build technology for companies that build a new physical infrastructure. Our core focus is to help these companies to standardize and automate their operational processes such as onboarding, repair management, installation acceptance, or incident management. If this sounds interesting to you, let’s chat.
I’d also be grateful if you follow our journey at Kwest on LinkedIn and Twitter. If you’re curious about how we’re building product, sign-up here.
Enjoy reading - and as always, sharing and feedback is a gift 🙏
Robin
Got a friend or colleague interested in the future of manufacturing? Help me spread the word by sharing the newsletter if you like it!
III. What I’ve enjoyed reading 👇
🤖 Defining industrial tech milestones
Seth from Eclipse Ventures, a VC firm that is very active in the manufacturing industry, has published a great piece about important milestones and metrics for industrial tech companies.
This is a really important topic. Many founders who are building in manufacturing often ask for metrics and milestones they need to achieve to make investors excited. However, many industrial tech companies often find themselves compared with traditional software companies - which is a bad comparison. The industrial tech industry is also less developed compared to the traditional SaaS market which makes it harder to find comparable examples or counterparts. Seth defines in his article six metrics that matter for hardware-as-a-service companies. He also shared a framework they are using at Eclipse to evaluate execution progress across the early stages as you can see below. I highly recommend to read the whole article.
🤖 Arguments and data to show that robots don’t have a negative effect on workers in manufacturing
In the past few years, the media has created a lot of fear about the “risk of automation”. If you follow my writing, you know that I’m convinced that manufacturing workers won’t be replaced by robots anytime soon. I was happy to read Noah Smith’s piece about the importance of automation to reshore manufacturing back to our home countries (in his case the US). In his post, Noah points out the following facts to underline that automation has not had a negative effect on workers so far:
No high unemployment: the employment-to-population ratio is now at about the same level as at the peaks of 2019, 2007, and 1990
No pushed down wages: wages at the low end of the distribution have been outpacing wages at the high end
Furthermore, the US has not seen a productivity boom and also has a low density of robots compared to South Korea or Singapore for example.
The bottom line of his article is - and I very much agree - countries such as the US or Germany urgently need automation in order to compete effectively with China. And the good news is: it doesn’t negatively affect our workers.
🔋 Is the battery the next general purpose technology that transforms our society?
Following up on the previous piece, Noah Smith (follow him!) has written another interesting post about the importance of battery in the next decade. He believes that the battery will be “the general-purpose technology that will really transform our society”. Now that’s a bold statement. Batteries have not only enabled smartphones but will also play a key component for our energy transition and cars. The insane improvements in cost and energy density for batteries underline why the technology is so important.
🏭 Skeleton invests €220M to build a fully automated in Leipzig
The Eastern part of Germany is increasingly becoming the German powerhouse for modern manufacturing. With Estonian Skeleton Technology, a new player announced a massive investment to built a new and fully automated factory there. The goal is to build 12 million cells of “next-generation supercapacitors” which are energy storage cells used for passenger vehicles and heavy-duty transportation. It’s noteworthy that Siemens plays a big role as it will support Skeleton as a technology partner to build the factory and digitize the whole value chain.
🔍 Investors will need deeper technical due diligence capabilities
Many investors are currently discussing the next big mega-trends. Global challenges such as climate change are among others a “hardware problem”. We need to completely rebuild our infrastructure in the years to come to solve our climate crisis. Deep tech startups that are trying to solve hard problems in industries such as energy, transportation, infrastructure, and manufacturing are poised to be the next generation of break-through companies argues Dakin Sloss in this article.
Similar to the earliest venture capital firms that invested in telecommunications and semiconductors, investing in modern deep tech companies requires strong technical knowledge. According to him, many investors today that have invested in mobile consumer or SaaS, are not in a position to understand the risks associated with deep tech companies. The Theranos-scandal showed us how critical it is to validate the scientific breakthroughs though. As mentioned in the intro, it’s a good time to build a deep tech company and some investors need to adopt if they want to invest in that area.
👩🏭 European workforce crisis and four ways how to mitigate it
Massive delays at the airport, restaurants that are closing down, waiting times of several months for installing a solar panel, or lack of firefighters to combat forest fires. Europe is facing a dramatic workforce crisis and summer 2022 was just a glimpse into what will happen in the upcoming years in Europe if we don’t act on it faster.
After having talked to 100’s of people about the European workforce crisis in the past 1.5 years, I want to give an overview of the problem, discuss possible solutions and share what I’ve learned along the way in this article. Since I spent most of my time on upskilling and reskilling, this paragraph is more detailed than others. If you want to chat with me about that topic, please reach out anytime.
PS: Germany is actually reaching that point where the country will have more people older than 60 than younger than 30 as you can see below.
IV. About industrial Startups and Companies
🤑 Geek+ raised another $100M and is valued at around $2 billion
The Chinese warehouse robotics company Geek+ raised another $100M led by Intel Capital, Vertex Growth and Qingyue Capital Investment. This brings its valuation to around $2 billion. Geek+ can proof its success with impressive numbers, making $150M in revenue last year and $300M in orders. The company has expended to North America, South America and even to Europe. I suspect that they also have a cost advantage and can offer their robots at a cheaper price compared to European counterparts for example.
💰 Countdown Capital raised $15M for its second fund
To “rebuild the American industrial base”, Countdown Capital has raised its second fund of $15M. Interesting is the following quote from the Head of Manufacturing at Anduril who is an LP in the fund:
“The stuff that he invests in, most VCs shy away […]. It’s really hard to find funding as an early-stage company. There is not a huge amount of competition for him or Countdown at these stages because there aren’t that many VCs.”
This again underlines the need for more specialized investors in that sector.
📉 Fabric laid off 40% and shifts from service to platform
While the tech industry has seen many layoffs, companies in industrial tech have done few layoffs so far. However, Fabric, a micro-fulfillment company focused on robotics technology for last-mile operations has announced to cut 40% of its workforce. The company has recently been valued at $1bn after it raised a total of $330M. Instead of providing the micro-fulfillment all in one as a service, some customers are asking to operate it on their own to keep the direct relationships with their customers. Hence Fabric decided to change its strategy and focus on developing the platform and not on offering it as a service anymore.
💸 Infineon acquired Industrial Analytics
As the name points out, Industrial Analytics is developing software for the early detection of critical developments of machinery and industrial equipment. The German-based company got acquired by Infineon to strengthen Infineon’s service business in the area of predictive maintenance.
🤑 Realtime Robotics raised nearly $15M as it pivots completely away from hardware to software
Realtime Robotics has launched its own software to streamline and optimize the use of industrial robotics and has raised nearly $15M to scale it. Manufacturing and logistics companies can use the software to create a digital twin simulation of their robotic work cells without the need of programming. The software doesn’t stop there, it also allows to control robots in the real-world. Given the strong increase in robots, there is a need to improve their orchestration, efficiency and effectiveness.
V. Additional funding news in short 👇
👉 CNC24 (DE): has raised €8.25M led by Future Industry Venture and Coparion to scale its B2B platform for precision parts. Read more…
👉 Geomiq (UK): has raised £7M led by AXA Ventures, TechNexus Venture Collaborative and existing investors to streamline the process of manufacturers securing the supply of parts. Read more…
👉 Natron Energy (US): has raised $7M led by Nabors Industries to manufacture sodium-ion batteries. Read more…
👉 Tozero (DE): has raised €3.5M led by Atlantic Labs to recycle materials such as lithium, nickel and cobalt from lithium-ion batteries. Read more…
👉 Fort Robotics (US): has raised $25M Series led by Tiger Global to scale its communication technology for smart machines. Read more…
👉 Wingcopter (DE): has raised $42M in Series A led by Rewe Group to build drone solutions for commercial and humanitarian applications. Read more…
VI. Additional content and the I40 Landscape
Industry 4.0 Map - Reinventing the Factory Stack
I updated the map in December 2021 - there are now more than 500 industrial startups in the landscape. I will update the map at the end of 2022 again.
