Robco Partners with $14M Led by Sequoia to Bring Modular Robotics to Industrial SMBs

After years of outsourcing and offshoring manufacturing to countries with cheaper labor and larger production ecosystems, the United States and Europe are on a mission to bring some of this industrial work back to 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, the 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 the adding new customers to its modular "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 who in turn , is provided to them as a service – the robots themselves are unpurchased 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 integrate more modules in milling and quality inspection, as well as to consider further geographical expansion, for example in the American 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 (and some of the very notable failures that have inevitably come out of it), Robco thinks it has found a niche in the market by focusing on delicate tasks and creating cost-effective solutions to meet the 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. This is an area that those who make bigger machines for bigger 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. “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 [deliver] great, 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 real-world problem. »

Höltzl describes the traditional approach of hiring machine operators as "the classic status quo" – something he saw firsthand in his parents' small factory, which inspired the creation of the business in 2020 – and not, as you might have thought, Covid-19 and the pressure it has put on in-person work, although it has certainly given Robco a strong current on which to generate interest and possibly sell his ideas on the market.

One of the reasons was that many factories had to lay off rather than just lay off their staff, then when it came time to get back online they couldn't complete the tasks and some of their expensive machinery manufacturing remained vacant, and that was before considering the weekends and evenings when the staff who were there were not working. He cites statistics indicating that there are around 2 million job vacancies in Europe, and that labor costs are increasing by 6.6% per year on average.

It will be interesting to see how and if the issue of "putting people out of work and making them obsolete" - one of the big sticking points for any kind of AI or robotic game that replicates what a human could have done for a living — becomes a longer-term problem for a company like Robco.

For now, the overriding argument seems to be that it is able to quickly fill a void that otherwise cannot be filled (for the reasons we list here; that is, either because that it takes too long to hire and train the workforce to fill the immediate need, or because of deadlines or length of contract), and this is something that needs to be addressed, especially at a when the economy is teetering into a deep recession.

The cost comparison to using a Robco robot is important: the company today, he said, typically charges $1,000/month, with costs varying depending on how long commitment (costs decrease if contracts are longer), overall costs also being up to $4,000/month depending on the complexity of the client'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 ecological unit...