Issue #7 - The Future of Manufacturing
Welcome to Issue #7. This issue focuses on increasing the productivity of workers, new funds focused on manufacturing, trends in the industry and full-stack startups.
💡I'm doing a few 20min calls do discuss any sorts of ideas or problems in manufacturing. If you are interested, feel free to reach out. 💡
🙏 Special thanks to Nathan for sending me a lot of links last month. He is running a great newsletter covering all things AI. 🙏
I hope you enjoy reading it and if you do so, any feedback, shares or links are much appreciated!
Disclaimer: thoughts and opinions expressed in the newsletter are my own.
What I enjoyed reading
👷♀️ One of the recent NYT articles is underlining the impact of a low unemployment rate on manufacturing, an interesting macroeconomic trend. A significant number of manufacturing companies are facing a hiring challenge, especially in rural areas (German Mittelstand, I'm looking at you). One solution to the problem can be an increase in automation e.g. with robots. A different solution can be training employees to increase their productivity. Independent of the solution, this is a big opportunity for entrepreneurs who can help these manufacturing companies in solving that problem. I'm particularly excited about companies that help to increase the productivity of workers.
🤝 It still strikes me how little digital cooperation there often is between mechanical and design engineers compared to how we work in tech with all the cloud-based tools (I wrote about this already in my last NL). Looking at the design space, this is a great overview of M&A transactions in CAD and CAE. It's kind of obvious that the big players - Autodesk, Dassault, PTC, Trimble - have done a lot of M&A in the last years to strengthen their market position. Where is the new engineering design tool that can be a breakthrough?
🧐 Our friends at Atomico are one of the very few big European funds that are actively investing in manufacturing startups (kudos!). They recently announced their investment in CloudNC and Oden Technologies and just a few days ago Scandit – software for mobile enterprise apps – raised a $30M Series B led by GV. Siraj, Steve and Benoutlined in this piece why they are so excited about the future of the manufacturing industry.
🤓 At the same time, Bilal who is a Partner at Lux Capital (check out their amazing portfolio of deep tech companies) summarized 10 things that will change the manufacturing sector. In my eyes, the most interesting trends he mentions are:
1) Sensors and connectivity: devices are now affordable and capturing all the data on the shopfloor, needed for many applications such as analytics or predictive maintenance.
2) Cobots: I do not think humans are going to be replaced by robots anytime soon. Therefore, I’m bullish on robots that will allow people to focus on other tasks and "upgrade" them.
3) Additive manufacturing: that will change afoot in the end-to-end manufacturing.
4) Automating manufacturing lines: from detecting errors automatically (e.g. Instrumental) to shopfloor workflow tools (e.g. Tulip) which includes also wearables and mobile computing in my eyes.
About industrial Startups and Companies
🤑 US-based Root.vc which invests in “deeply technical founders” who are tackling “interdisciplinary engineering problems" just closed their second fund of $76M. They have been an early investor in companies such as Instrumental or Plethora. I hope to see them more in Europe in the future. Congrats!
🤑 The Austrian VC firm Speedinvest also announced its new €25M fund focused on the industrial sector (Article in German only). Investors in the fund include manufacturing companies such as Doppelmayr and Wacker Neuson. One of their first investments is a company called Metis Labs (EF alumni). They are working on software to improve the performance of process manufacturing.
🏭 The online marketplace for custom manufactured parts Xometryraised $25M. At the same time, they acquired one of their rivals, MakeTime to strengthen its position. Noteworthy that Protolabs stock is up 91% compared to last year, the company grew its revenue by 34% year over year.
😲 Some of you might have heard of a company called AutoLabAI. It is founded by the former Autodesk CEO and the company raised already $163M within a very short amount of time and has more than 400 employees. Investors include Eclipse. It is not exactly clear yet what they are building.
Additional thoughts on recent development
Full-stack Manufacturing startups
In my eyes, many people underestimate full-stack manufacturing startups which offer both the hardware and the software. Most of the younger startups that go that path might look like hardware companies but they are actually strong software companies.
Good examples include e.g.
- DesktopMetal: they built a 3D printer but besides the software for their 3D printers they also offer software to simplify generative design for 3D printing.
- Franka Emika: they are developing high-performance industrial robots but also offer e.g. an AppStore
I believe in the long run, the software and also the compatibility between the software and the hardware will be a strong moat (think of the Apple iPhone).
My colleague Rodrigo outlined some lessons learned about these - what we call - Hardware-as-a-Service companies (HaaS).
Factory Monitoring-as-a-Service
There is a couple of companies working on some kind of monitoring system for factories where you e.g. have a dashboard for all the connected machines. It's often some sort of modern MES. I'm wondering what are the emergent players in that segment? And what's the better strategy, i.e.
a) do deep integrations and go after big enterprise customers that potentially pay big ACVs or
b) plug'n'play solutions for smaller manufacturing companies with little integration effort.
Any thoughts? 🧐
Industrial Landscape
I haven't had the time to update my industrial landscape but will try to do that in the next couple of weeks since there are 20+ companies on the waiting list. On another note, since I'm going on holiday, the next issue will be in September.
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