4.8 million for a software-only robotics startup?
Welcome to the Robotics Roundtable
This is our first newsletter. In it, we take an article that piqued our interest and discuss it from our unique perspectives. Sevy - the mechanical engineer, Connie - the software engineer, and Sean - the social entrepreneur and finance dork.
This week we chose an article from one of our favorite sources of robotics news: the Robot Report. The article: Roboto AI raises $4.8M to build data tools for robotics developers got our attention for a few reasons. Firstly, that’s a large sum to raise for a seed round. Second, their core offer might represent new trends in the robotics industry. Finally, the product has the potential, in conjunction with other related technologies, to increase the pace of robotics entrepreneurship.
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Best, - Connie, Sevy, Sean
Article Summary
Seattle-based Roboto AI has emerged from stealth with $4.8m in seed funding from investors led by Unusual Ventures. Roboto AI is partnering with researchers and professors at the ETH Zürich AI Center to create a platform that supports robotics data. The company’s founders, Benji Barash and Yves Albers-Schoenberg, who have experience building infrastructure at Amazon Robotics, are working to create a data platform that allows users to easily search across sensor data using natural language. They hope to make development easier for robotics companies; “think copilot for robotics.”
Sevy’s Corner
My background is mostly on the mechanical side of building robots. That being said, I work with robotics developers and know they are excited by developments in AI like co-pilot or in this case Roboto-AI to speed up coding tasks. Instead of going into more detail and speaking for them, I am going to zoom out and talk about robotics startups and their tools as a whole.
Starting a robotics company is hard because of the complexity of mechanical, electrical, and software engineering systems working together alongside all the other inherent challenges of a startup such as product, sales, marketing, and raising money. Many early robotics companies take a shortcut and develop only software tools to fill the needs of other companies building physical robots. It is a good bet because there are less development costs for expensive prototyping and incremental hardware costs. Philosophically, it could become a problem however. Think of software only robotics companies as making dog food and companies making physical robots as dog breeders. There need to be many more breeders producing dogs to support the dog food makers. And there will be consolidation down to the dog food makers who provide a useful product and get popular. Early robotics companies do need software tools to grow because doing everything themselves is costly. However, I think we also need more full dog robotics companies jumping in to solve real problems and breeding more robots.
Connie’s Corner
I find it heartening that robotics is reaching a level of interest where a company only creating tooling for robotics can exist and find funding. It's a common story that a nascent robotics company will have a grand idea--only to be bogged down by creating software infrastructure that roboticists often lack experience in (nor do I think it's important to learn in order to be a roboticist). My one concern is that robots span many industries. I am interested to see who their early adopters will be, and how they scale when they need to meet different business needs.
Sean’s Corner
I believe Roboto AI is part of a larger trend I call plug-and-play startups.
This trend has the potential to increase the number of startups launched per unit time (e.g., per year), by reducing points of friction that increase cost, risk, and pull founder attention away from a startups core job: determining their customers’ big problem and solving it.
We’ve seen this trend throughout the corporate R&D ecosystem as aspects of research and design increasingly get digitized and then automated. We see it more broadly in all SAAS software.
We are increasingly seeing it in software-based entrepreneurship. The no-code movement has made rapid, non-technical concept testing not just possible, but increasingly the norm. This trend means that complex ideas can be rapidly tested in the way app and website ideas were tested a decade ago.
Robotics entrepreneurship has remained stubbornly resistant to increases in the pace of startup creation. I believe this is mostly because of the physical-development and multi-domain expertise required. Whereas a website requires knowing a few languages, one robot requires multiple software and hardware engineers, making rapid idea testing far more difficult and risky. This risk means higher barriers to investment and therefore a lagging robotics industry growth curve (in comparison to similarly sized software development).
As a result, companies like Roboto AI, seem to point to a future where startups-as-experiments become easier and lower cost. This ultimately reduces the financial risk and hopefully increases the number of robotic-based startups.
Synthesis
Collectively, we feel that Roboto AI won’t change robotics in the short-term, but, depending on their vision, has the potential to lower the barrier to entry for robotics startups by reducing initial startup costs.
Further, it exemplifies a trend we are following called: Robotic Software as a Service (RSaaS). This off-the-shelf software will allow new robots to be built more quickly, more reliably, and potentially with lower cost.
Roboto AI further opens up the possibility of enhanced training, by integrating real-world data from all of a robotics company’s robots. However, we disagree on the value of pure, computer generated simulation as a training tool, but do think the integration of real world data with computer simulation is potentially very powerful.
This software also offers the opportunity for new revenue and business models. We believe this positions Roboto AI well because in our increasingly complex and volatile economy new revenue and business models will become necessities for business survival. However, we disagree on whether it will increase overall investment in robotics.
We think this larger potential might explain the large $4.8M seed round.
Finally, and this is a more general comment - we see an increasing trend of robotics being developed market-first versus what we’ve seen in the past: technology-first-customer-seeking.
Historically, the large development cost has meant robotics companies have tended to sprout from academic labs and then seek out customers - a very risky & difficult startup approach. However, we are seeing more and more robotics companies starting with a specific market in mind.
Given how Roboto AI, and similar RSaaS companies, reduce development costs & the difficulty with making solution-first companies successful, we see this trend increasingly reverse over the long term.
We hope you enjoyed this, if so or if not, you can let us know at welcome@lalovesrobotics.com