In 2021, the robotics industry exploded. More than $17 billion was invested into VC-backed startups – nearly x3 increase on investment in 2020. And while 2022 investment levels have dipped, the robotics industry is weathering the current storm better than most.
That’s why we had to tune into TechCrunch’s Robotics Session with Bruce Leak, General Partner & Managing Director at Playground Global, Helen Liang, Founder & Managing Partner of FoundersX Ventures, and Kelly Chen, Partner at DCVC, to learn more about what investors are looking for.
And the resounding answer: know the problem that you’re solving.
Helen Liang called out the move away from technology advances pushing the market – aka, what can a robot do? – and towards a greater market pull of focusing on what problem the robot solves and how BIG a problem it solves.
And this all contributes to staying power. Bruce Leak called out the value that vertical solutions have because you are selling a solution to a particular pain point. And it immediately communicates the ROI of your solution. Horizontal solutions, he calls out, require others to work out how to apply it to drive value.
An example from Helen Liang of a recent investment made by FoundersX was Charge Robotics, a company using robots to build solar panels. With energy usage shooting up and a shortage of labour impacting the speed at which solar farms can be built, there was a clear – and clearly attractive – solution to an immediate problem.
While agreeing that her focus now centres around vertical solutions, Kelly Chen highlighted that there are still some opportunities for horizontal solutions where there is a broad enough problem that can be solved. Micro fulfilment solutions, for example, can be cross-sector while still serving the same function – and ultimately solving the same problem.
How do robotics startups need to present in this market?
There needs to be a big shift in the way that much of the robotics industry communicates its value. To borrow the words from Helen Liang once again, it’s no longer about what the robot does, but what problem it can solve.
Storytelling will be critical here, particularly for companies at early investment stages. You must go beyond talking about how your technology solves the particular pain point. Demonstrate you understand the context of the issue you are solving, that you have a perspective on the macro trends and how they will evolve, and that you have a vision for the long-term play for automation and robotics in that industry.
When your value is based on your ability to scale, investors are no longer looking for the most capable robot, but the best solution to a problem.
By Kate Baldwin, Founder & MD at The Flywheelers