Issue #42 - The Future of Manufacturing

Topics this time: the climate crisis is a hardware problem, manufacturing tech in the public markets, different robotics systems, and many new investments in Q4 2022.

Dec 30, 2022

👋 Welcome to Issue #42 👋

Hey there!

I hope you had some relaxing days over Christmas together with your families and friends.

2022 has been a year with a lot of challenges and changes for many of us. The geopolitical situation, the current macroeconomic environment and the climate crisis force many countries to rethink their supply-chains and where they are manufacturing their goods. There is an increasing interest from investors in DeepTech and manufacturing tech again. As an example, US-based venture capital investor a16z is very vocal about American Dynamism and excited to invest in companies that support the national interest including industrials and manufacturing. I believe 2023 will be a good for the manufacturing tech industry, in particular in two areas:

DeepTech 👉 developing new physical products from scratch such as drones, robots, 3d printers, new materials, batteries, and air capturing solutions.
Automation and efficiency 👉 increasing the efficiency in factories, automating processes, and replacing repetitive work with robots.

Since many of you asked, I will update my Industry 4.0 landscape in January 2023 and deliver that to your inbox including a quick summary of what happened in 2022.

Besides that, building Kwest keeps me very busy. We continue to be focused on the renewable energy industry and in particular on solar and energy storage companies to help them manage their installations and automate their operations. If you want to learn more, let’s chat.

Enjoy reading - and as always, sharing and feedback is a gift.

To a very exciting, joyful, and healthy 2023.
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!

🤖 Software won’t solve the climate crisis - DeepTech is required

Karthee from MFV Partners, an early-stage DeepTech venture fund, has written a guest article for VentureBeat on why software won’t solve the climate crisis and why DeepTech companies are crucial. He argues that hardware solutions and engineering-led innovations such as air capturing solutions or large scale battery systems will enable some of the most significant climate action. With that in mind, investors need to prepare for longer but more impactful takeoffs.

Sam from Project A Ventures has written a similar piece. He underlines that in the years to come “software innovation is meeting hard engineering”. Something that he calls “RealTech”. Check out his comparison of Software vs. RealTech companies along various dimensions such as product, tech-stack, financials, and moats.

The most extensive article on that topic comes from Packy McCormick in his Newsletter NotBoring with the title: The Good Thing About Hard Things. It’s a detailed piece about the next big thing in tech after software has eaten the world for the past 10 years.

🤖 Industry 4.0 search terms over time

IoT Analytics has published an article about Industry 4.0 search terms over time. As you can see in the image below, especially cobots and digital twins have seen a sharp increase in interest on Google while machine vision has stayed relatively flat.

Industry 4.0 technologies search interest from 2011 to 2022

📉 Manufacturing tech companies that went public by way of SPAC are suffering in the current economic climate

Many of the manufacturing tech companies that used SPACs to go public are suffering in the current economic environment. While manufacturing companies are generally suited to the public market because they take so long to build (h/t Andre Wegner), SPACs were mostly used to sell manufacturing tech companies at very high revenue multiples. The big gap of revenue and valuation is now hurting these companies in the public markets - especially in an environment that favors revenue and profitability over growth. One example is FastRadius that has raised $167M and got bought for ~$16M. Below is its stock price over time:

🤑 $28bn in new clean energy manufacturing investments already announced in the US

On the 16th of August, the US signed the Inflation Reduction Act. One of the goals is to promote clean energy and investments into domestic energy production. Since the sign-off, roughly $28bn in new manufacturing investment have been announced. These investments have been made primarily in the field of electrical vehicles, solar, and battery manufacturing areas. As an example, FirstSolar has announced it will spent $1.2bn on building a new solar panel manufacturing plant.

👟 Repairing old Nikes sneakers automatically

To all robotics and automation geeks, I recommend checking out PCH Innovation’s project together with Nike in detail. They’ve built a robotic cell (see below) that can automatically repair old Nike sneakers. The solution can handle a range of various sneakers and complex materials. One press article described the system as a “car wash for shoes”.

🤑 AMP Robotics has raised $91M led by Congruent Ventures

AMP Robotics is bringing digital intelligence to the waste and recycling industries. The company is applying artificial intelligence to identify and recover recyclables in various areas from plastics to electronics to metal. Below is a snapshot of how the software works. AMP Robotics has raised a $91M Series C led by Congruent Ventures and Wellington Management to scale its business operations while continuing its international expansion. To underline the potential of recycling, only 5% of the 44 million metric tons of plastic waste managed in the US in 2019 was getting recycled, while 86% was landfilled and 9% was combusted.

💰 Pelico has raised $18.5M co-led by 83North and Serena

Manufacturing companies currently face an extremely volatile environment. Pelico is trying to help factories to manage changes in the operational context better by building an operations management system for factory teams. Pelico’s software supports factory teams to anticipate bottlenecks such as part shortages and quickly resolve issues with AI-assisted recommendations and simulations.

Pelico has now raised $18.5M co-led by 83North and Serena to accelerate product development, strengthen its international presence and scale its customer base. As an example, Pelico also helped Safran to reduce parts shortages by 72% in 6 weeks.

📉 After unfulfilled SPAC deal, BrightMachines raised $132M

In May 2021, BrightMachines announced a SPAC deal valuing the company at $1.6bn. You can access the original investor deck for that SPAC deal here. The graphic below is from that deck which gives you a good overview of the complex digital manufacturing landscape today.

In December 2021, the SPAC deal did not materialize. In October this year, BrightMachines raised $100M in equity led by existing investor Eclipse Ventures and $32M in debt co-led by Silicon Valley Bank and Hercules Capital. The company will use that money to scale its micro factories which are software-driven production lines.

💸 RobCo has raised $14M Series A led by Sequoia

Sequoia has made its first robotics investment in Europe. Munich-based RobCo is developing modular robotics for industrial SMBs and has secured Sequoia to lead its $14M Series A. The company focuses on industrial SMBs and sells its solution as a modular-based “robotics as a service” model, the robots themselves are not purchased by its customers and stay on RobCo’s balance sheet. The main use cases for RobCo’s customers are lathe turning, laser engraving, and palletizing.

🤑 Workerbase has raised a €10M Series A led by Almaz Capital

Workerbase is building a low-code SaaS platform to orchestrate processes in the manufacturing industry. Companies such as GKN, Siemens, and Porsche are already using Workerbase for what they call “Dynamic Process Execution” on the shop floor. By using Workerbase, manufacturing companies can react quickly in a constantly changing production environment and adapt their processes based on real-time information.

To scale its customer base, Workerbase has raised a €10M Series A led by Almaz Capital together with Porsche Ventures, and Bayern Kapital alongside existing investor Point Nine.

💸 Omnio becomes part of IBM’s Sustainability Software portfolio

Omnio has developed pre-built connectors for thousands of industrial devices to stream unified data, trying to solve the integration hell when you’re building industrial applications. Since November, Omnio is part of IBM’s Sustainability Software portfolio with the goal of supplying the data industrial companies need to transition to a sustainable future.

V. Additional funding news in short 👇

👉 Software Defined Automation (DE): has raised a $10M Seed round led by Insights Partners for its Industrial-Control-as-a-Service offering. Read more…

👉 SoftRobotics (US): has raised a $26M Series C led by Tyson Ventures for its robotic picking solutions. Read more…

👉 Locus (US): has raised a $107M Series F led by Goldman Sachs, G2 Venture Partners and Stack to scale its flexible warehouse robotics solution. Read more…

👉 GuideWheel (US): has raised a $9M Series A led by Breakthrough Energy Ventures for its FactoryOps platform to digitize manufacturing operations and reach sustainable peak performance. Read more…

👉 Acerta (CA): has raised $7.8M in Series B funding led by BDC Capital Industrial Innovation Venture Fund and Thrive Venture Fund for its predictive quality analytics for precision manufacturing. Read more…

👉 Fruitcore Robotics (DE): has raised €23M led by Capricorn Partners, KOMPAS, and XAI technologies to scale the customers base of its develop easy-to-use “digital robots. Read more…

👉 Ambi Robotics (US): has raised $32M in additional funding led by Tiger Global and Bow Capital to deploy its item-sorting robots in warehouses. Read more…

👉 1MRobotics (US): has raised a $16.5M Series A led by Ibex Investors for its ‘nano-fulfillment’ centers. Read more…

VI. Additional content and the I40 Landscape

Startups by former employees of German industrial corporates

I will update the Industry 4.0 Landscape in January 2023 and deliver that to your inbox including a quick summary of what happened in 2022. So stay tuned 😎
For now, here is an updated version of Startups by former employees of German industrial corporates 👇

The Future of Manufacturing