Robco joins $14 million led by Sequoia to bring modular robotics to industrial SMBs – businessroundups.org

After years of outsourcing and offshoring manufacturing to countries with cheaper labor and larger manufacturing ecosystems, the US and Europe are on a mission to bring some of that industrial work back to their own shores. Today, a startup that believes it can help with that shift is announcing funding. Robco, a Munich-based startup that has built a platform for designing low-cost modular robots for small and medium-sized industrial companies, has raised €13 million (approximately $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 all also investing.

Roman Hölzl, Robco’s CEO who co-founded the company with Paul Maroldt and Constantin Dresel, said the plan will be to invest the money both in expanding the capabilities of the existing modules and to continue adding more customers to its modular base. robotics as a service model.

Robco’s current offering is based on three components focusing on lathes, laser engraving and palletising, with the business model based on customers ordering what they need and this in turn being delivered as a service to them – the robots are not purchased themselves and remain on Robco’s balance sheet with the idea that they can be refurbished and reused for other customers if necessary. The plan is to add more milling and quality inspection modules, and to look at further geographic expansion, for example into the US market.

Even with the hundreds of millions of dollars 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 building cost-effective solutions to meet the needs of smaller manufacturers. In short, SMEs sometimes need to scale up their productivity, but are unable to hire people to fill those jobs permanently, either because of economic necessity or labor shortages, or both. This is an area that those making larger machines for larger industrial customers have yet to address, he said.

“When we think about the market, we think there are two categories that have dominated,” Höltzl said in an interview. “The first is component manufacturers, and the other is a fragmented market of system integrators building expensive and artisanal robots where you pay $250,000 per solution. No company has yet crossed the gap [provide] great, delicious technology that can be deployed in days or months. We do not sell robots or software. We actually 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 – not, as you might have thought, Covid-19 and the pressure it put on personal work, although that certainly gave it a strong current to generate interest and ultimately sell its ideas in the marketplace. One of the reasons was that many factors had to lay off rather than just give their staff time off, and when it came time to go back online, they couldn’t do any tasks and some of their precious production machines just sat idle, and that was given before the weekends and evenings when the staff that was there was not working. He cites statistics that say there are about 2 million job vacancies in Europe, with labor costs rising at an average rate of 6.6% per year.

The cost comparison to using a Robco robot is big: The company today, he said, typically charges $1,000 per month, with costs changing based on job length (costs drop as contracts are longer), with total costs up to $4,000/month depending on the complexity of what the customer needs. Typical deployments start at 10 modular machines, he said.

This is booming, he noted, with strong triple-digit revenue growth, “exciting unit economics” and four patents so far on its hardware and techniques from a founding team that grew out of a major research university and is thus based on AI and technical expertise – all the details that would have attracted investors like Sequoia, who have only relatively recently really doubled down in Europe with a shiny new London office, but like others in the world of VC are under tremendous pressure around existing portfolio companies and how they are weathering the severe storms that have hit the technology sector.

All of that means investing more cautiously and perhaps less exuberantly, which probably means sticking more strictly to the statements about generating returns and less about exploring interesting ideas.

“Robco’s approach is unique [in the SMB manufacturing space] because what they do is kind of like Lego. They are taking a modular approach,” says 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. The implementation times are short, one or two days. They then created a software platform where you create a digital twin by merging the modules. Then configuration and control is easy – something that used to require more technical expertise or external consultants.”

She believes this is a major gap in the market that has yet to be closed, as 70% of tasks for SMB manufacturers can be automated. “This is not a surgical robot, but something that can perform repetitive tasks that go on in production.” In that regard, interestingly enough, there is a correlation between what a company like Robco is trying to solve and what a company like UiPath (a huge investment in Lixandru’s past, and part of how it made its name in VC) focused on with robotic process automation . , at the administrative end of running a business.

“This company has come a long way with very little so far,” she added, highlighting one of the other big signals that investors mostly rely on these days, pointing out that Robco only had “a few million dollars for this picked up, [and] they have real customers, with a bunch of robots already deployed. We have a lot of data and proof that it works. I am skeptical of 99% of robotics [pitches] and I can see how hard it is to build a marketplace around it, but we’re seeing the “why now” here and that’s why we think it’s going to take off.