MT Magazine March/April 2022

TECHNOLOGY ISSUE

FEATURE STORY

28

when taken in aggregate, reflect the collective entrepreneurial effort of a sector and the interest level from financial investors as well as select corporate strategic investors. Similarly, acquisitions represent corporate interests in a technology’s future and, to a lesser extent, a maturation of the industry. Reviewing these data and trends was supposed to tell us if we were finally there, but they instead highlighted a different question: Where are we going? Robotics and Automation As a technology category, robotics and automation companies can be categorized broadly by the task types they intend to accomplish. For example, functional robotics companies develop application-specific solutions for agriculture, food preparation, or construction. Industrial robotics are more general and often serve as a platform solution, such as product assembly, in numerous industries. By contrast, health care and service robots serve the medical and hospitality sectors, respectively. More human-focused companies fall under education, to support STEM initiatives, or adaptive, to serve collaborative or social purposes. The last category, technology, represents the companies developing hardware, software, data, and services that enable all the tasks one can imagine. Global venture capital (VC) investment in robotics and automation companies has grown 67.4% annually from $532 million in 2016 to $7 billion in 2021. Any lost momentum from 2020was regainedwithmore than double the $2.9 billion in capital committed in 2021. Within this feverish excitement to capture market share, the largest increases in investment over the last five years were in health care, industrial, and service robots. Despite the attractive high margins in industrial, service, or health care applications, the $3.29 billion in combined funding for 2021 was slightly more than functional and technology companies in that year and, to an even greater extent, over the last five years. When a technology category takes off like this, acquisitions often track accordingly because large corporations are looking to buy time and acquire innovative smaller groups rather than miss opportunities attempting to build the same products or services internally. As a result, each of the last five years saw 17 mergers or acquisitions on average, with 2021 recording a high of 29 in line with investment activity. Geographic trends in robotics VC activity have unsurprisingly highlighted two powerhouse countries: China and the United States. In the last five years, VC groups have invested more than $14.2 billion, or 79.3% of all robotics investment dollars, Rest of World United States VC Investment Into Robotics Startups by Geography China

into companies headquartered in these two countries. U.S. robotics companies received more capital than Chinese robotics companies in every year since 2019. When comparing the investment profile, there were 144 U.S. and 129 Chinese companies in each country attracting this funding since 2016 and across a similar category distribution except in 2019 and 2021. Additive Manufacturing Investments in additive manufacturing (AM) are grouped into four categories. Core investments represent AM processes, 3D printers, and post-processing equipment developers alongside printing service providers, online marketplaces, and other hardware technology enablers. The software category represents companies with a specialization in additive manufacturing software across any part of the computer-aided design, engineering, ormanufacturingworkflow. Applications companies include specialized service companies focused on a particular industry or product class, such as heat exchangers, aerospace and defense, or medical implants. Lastly, materials investments cover materials suppliers, formulators, and developers. Global venture capital investment in additive manufacturing companies has grown 28% annually from $353 million in 2016

AM Investments by Category Over Time

Core Applications

Materials Software

$11..2130B

$1.20B

$1.00B

$833M

$800M

$676M

$600M

$568M

$400M

$363M

$353M

$293M

$180M

$200M

$0

2014 2015

2016

2017

2018

2019 2020 2021

Average Investment Round Size Over Time

$20M

$19.6M

$16M

$14.9 $14.9M

$12M

$11.5 $1 .5M $12.6M

$10.7 $10.7M

$8M

$8.6M $8.9M

$7.9M

$4M

$0

2014 2015

2016

2017

2018

2019 2020 2021

to $1.2 billion in 2021. Any lost momentum from 2020 (down $265 million) was regained twice over in 2021 (up $631 million). The pandemic-related delay in funding from 2020 added on to expected investment needs in 2021 and resulted

in more than double the demand for VC funding. More impressive than the demand was how it was satisfied: Average deal size increased to a record high of $19 million. Larger investment

100%

90%

28.70%

32.16%

40.80%

42.67%

80%

rounds most l ikely represent a combination of increased valuations and the overall startup landscape growing up. Of the four categories – core, applications, materials, and software – the market share

53.83%

56.44%

70%

14.25%

25.54%

60%

13.72%

50%

20.66%

40%

20.12%

18.85%

30%

53.59%

45.75%

45.47%

20%

36.66%

24.71%

26.06%

10%

0

2016

2017

2018

2019

2020

2021

Average Investment Round Size Over Time

$20M

$19.6M

$16M

$14.9 $14.9M

$12M

$11.5 $1 .5M $12.6M

$10.7 $10.7M

$8M

$8.6M $8.9M

$7.9M

$4M

$0