Robco partners with $14M led by Sequoia to bring modular robotics to industrial SMBs • TechCrunch

After years of outsourcing and relocating manufacturing to countries with cheaper labor and larger production ecosystems, the United States and Europe are on a mission to bring back some of that industrial work on their own shores. Today, a startup that thinks it can help make that change is announcing funding. Robco, a Munich-based startup that has built a low-cost modular robot design platform for small and medium-sized industrial companies, has raised 13 million euros (about $13.8 million). The round – a Series A – is led by Sequoia, with Kindred Capital, Promus Ventures and Torsten Reil, Christian Reber and Daniel Dines also investing.

Roman Hölzl, CEO of Robco who co-founded the company with Paul Maroldt and Constantin Dresel, said the plan will be to invest the funds in both expanding the capabilities of existing modules and continuing to add new ones. customers to its modular system. “robotics as a service” model.

Robco’s current offering is based on three components that focus on turning, laser engraving and palletizing, with its business model based on customers ordering what they need and in turn delivering it to them. as a service – the robots themselves are not purchased and remain on Robco’s balance sheet with the idea that they can be refurbished and reused for other customers when needed. The plan is to introduce more modules in milling and quality inspection, as well as consider further geographic expansion, for example into the US market.

Even with the hundreds of millions of dollars that have been poured into various industrial automation and robotics companies over the past few years, Robco believes it has found a niche in the market by focusing on tricky tasks and creating cost-effective solutions to meet needs. needs of small manufacturers. In short, SMEs may sometimes need to increase their productivity, but – either due to the economy of need, or labor shortages, or both – are unable to hire people to fill these jobs on a permanent basis. It’s an area that those who make bigger machines for bigger industrial customers haven’t yet tackled, he said.

“When we think of the market, we think there are two categories that have dominated,” Höltzl said in an interview. “One is component manufacturers, and the other is a fragmented market of system integrators who build expensive, DIY-type robots where you pay $250,000 per solution. No company has yet crossed the chasm to [provide] great and delicious technology that could be deployed in days or months. We do not sell robots or software. We basically offer an automation service and solve a concrete problem. »

Höltzl describes the traditional approach to hiring machine operators as “the classic status quo” – something he saw firsthand in his parents’ small factory, which inspired the founding of the company in 2020 – and not, as you might have thought, Covid-19 and the pressure it put on in-person work, although it certainly gave him a strong undercurrent on which to build interest and possibly sell his ideas on the market. One of the reasons was that many letter carriers had to lay off rather than just furlough their staff and then when it came time to get back online they couldn’t complete jobs and some of their expensive manufacturing machinery remained vacant, and that was before given the weekends and evenings when the staff who were there weren’t working. He cites statistics which indicate that there are around 2 million job vacancies in Europe, with labor costs increasing by 6.6% per year on average.

The cost comparison with using a Robco robot is important: the company today, he said, typically charges $1,000/month, with costs varying depending on the length of the commitment. (costs decrease with longer contracts), overall costs up to $4,000. /month depending on the complexity of the customer’s needs. Typical deployments start at 10 modular machines, he said.

It’s taking off massively, he noted, with strong triple-digit revenue growth, an “exciting unit economy” and so far four patents on its hardware and techniques from a founding team drawn from a large research university and therefore based on AI and engineering expertise – all the details that would have attracted investors like Sequoia who only relatively recently doubled down on Europe with a shiny new office in London, but like others in the VC world are facing tremendous pressure around existing portfolio companies and how they are weathering the significant storms that have hit the tech sector.

All of this means more cautious, and perhaps less exuberant investing, which probably means more strict adherence to returns theses and less about exploring interesting ideas.

“Robco’s approach is unique [in the SMB manufacturing space] because what they do is a bit like Lego. They take a modular approach,” said Luciana Lixandru, who led the investment for Sequoia. “Whatever your use case, you tell them what machine you need and they create the right format. Implementation times are short, one or two days. Then they created a software platform where you put the modules together to create a digital twin. Then, configuration and control is easy, which previously would have required more technical expertise or external consultants. »

She believes this is a big gap that has yet to be filled in the market, with 70% of SMB maker tasks capable of being automated. “It’s not a surgical robot, but something that can perform repetitive tasks that occur in manufacturing.” In this respect, it’s interesting to note that there is a correlation between what a company like Robco is looking to fix and what a company like UiPath is about (a huge investment in Lixandru’s past, and partly how it s made a name in VC) focused on robotic process automation. , the administrative end of running a business.

“This company has come a long way so far with very little,” she added, raising one of the other big signals that investors are particularly relying on these days, pointing out that Robco had only raised “a few million dollars before that, [and] they have real customers, with a bunch of bots already deployed. We have lots of data and evidence that it works. I’m skeptical of 99% of robotics [pitches] and I can see how hard it is to build a market around that, but we see the “why now” here and that’s why we think it’s going to take off.