13 VCs talk about the state of robotics investing in 2023

Robotics is a fascinating topic. It can be frustrating, too. When I started covering the space nearly 15 years ago, there was a sense that something big was looming, just over the horizon. But roboticists are a pragmatic bunch, offering projects for adoption more than a decade into the future.

There were times in the intervening years when it felt like those goal posts were being pushed back. This stuff is extremely hard to get right, and it's even harder to make systems robust and repeatable at scale.

But the beginning of the pandemic offered what truly felt like a tangible shift. As everyone not deemed an essential worker was told to stay home, businesses were faced with a problem: how to keep the lights on. Another related problem emerged, as well: how to deliver goods at scale to people who can't -- or don't want to -- leave their homes.

What many outside the sector perhaps didn't recognize is that the solutions were already here. Amazon's unending drive to outflank the rest of the world birthed an industry with its 2012 acquisition of Kiva. In March 2020, companies like Locus, 6 River Systems and Fetch were happy to jump in and help warehouses automate.

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Investments began flooding into robotics around this time. Most warehouses aren't automated, so there's tremendous room for growth. Categories like construction, agriculture and health care, among others, were very much looking to automate. Robotics was in a nice little bubble when the VC slowdown began, as well, though not even it was immune.

Slowed investments have been compounded by continued economic woes and the recent bank collapses have further shaken confidence. Robotics has always been a tricky sector for investors, after all: It requires a lot of money and continued commitment to bring things to market at scale. Anyone looking to make a quick buck should avoid the category at all costs.

In spite of all that, however, robotics remains vibrant and exciting, and it unquestionably has a bright future of exponential growth ahead. No one can accuse the category of being a hype bubble. It hasn't entered the hype cycle the way things like crypto and generative AI have.

And there's not a lot of gray area here. That's something roboticists love about robots: They work or they don't. What's been continually and increasingly proven is that they absolutely do.

It's been a few years since we conducted a robotics investor survey, but the time in between has arguably been the most important years for the sector. We spoke to 13 of the top robotics VCs to discuss where the category is and what the future looks like.

We spoke with:

Milo Werner, general partner, The Engine

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

Robotics innovation had somewhat plateaued: Capability to innovate was heavily based on a startup's ability to raise capital. The more money, the better the robotics; think Boston Dynamics. But with the growth of multi-modal AI models, we see a huge opportunity for robotics to become multipurpose because these models enable common sense and require little training. The best example of this is Google's PaLM-E, which is a generalist robot that takes verbal commands. This is just the tip of the spear and generalist robots are going to become much more common.

What is the next big robotics success story after warehouse/fulfillment?

Basically everything around you will become a robot. The simplest example is autonomous vehicles. These are very advanced robots and have been open to riders since 2018. The labor shortages are going to drive significant growth in the service sectors including cleaning, food and care services.

While there are already automated single-purpose solutions in these areas, more general purpose robots are going to start to take front stage in the next decade.

What categories are the most underserved by robotics startups? What would you like to see more of?

I'd love to see more robots in the home. I think there is a real opportunity for a general purpose robot that supports in the kitchen. Where is the Instant Pot of stir fry?

How essential is DARPA/defense funding to the category in 2023?

Public sector support will be very important. The private sector is the fastest way to scale, but it is directionless. The public sector is great at providing direction and focus.

Can/will robotics play a fundamental role in addressing climate change?

Absolutely. You're already seeing robotics implementations across agriculture, ranging from robots that assist with crop maintenance, supplement workforce to address labor shortages, and offer tools and processes that are self-sustained from the sun and don't require recharging.

Another area robotics are helping with climate change is in enabling more accurate, cleaner trash and recycling streams. Robots are automating our grid and today, in essence, our entire energy supply can essentially be thought of as a giant robot: integrating and decentralizing power generation and moving quickly to intelligent automated controls.

Will robotics and automation replace human jobs in the long run?

Yes, absolutely, but it's more freeing humans from work than replacing them. We should look at this with excitement. The harder challenge is going to be steering that productivity in a positive direction. I'd love to see us really embrace spending time building a positive global community with prosperity across the planet

What are your feelings on the RaaS (robotics as a service) model for monetizing robots?

It's just a financing question. It's just another way to get paid for the value you are delivering. Think of Peloton: People rent them, and for no better description, it's an exercise robot.

Following the lead of robot vacuums, how long will it take before additional home robot categories go truly mainstream?

This is closer than you think. Now that safety concerns have been addressed, adoption will be driven by cost, usefulness and value creation.

Abe Murray, managing partner, Alley Robotics Ventures

How is robotics investing different than in previous years? What role have the pandemic, slowing economy and recent bank crisis had on your investments?

We are one year into our robotics investing journey; the new normal is all I know. Certainly valuations have come down alongside tech valuations, and the end of ZIRP is having a broad impact on venture investing. However, we remain unwaveringly optimistic about robotics in the long term.