Google’s Moves into Robotics Haven’t Spurred Investment Growth (Yet)

When Google acquired Boston Dynamics, maker of military-focused animal robots, in December 2013, the world saw a glimpse of the robots of the future. Despite this highly publicized acquisition, the Robotics space has not seen the investment growth that some speculated might follow.

Over the last two years there have been a total of 49 robotics investments, with 24 investments totaling $154M in the last four quarters. This represents a 4% decline from the 25 deals in the same time period a year before (Q2’12 – Q1’13), and a modest 4% growth in funding year-over-year. Q1 2014 was particularly bad posting tepid deal and funding numbers.

Small Deals Account for 61% of Volume

Robotics investments have been fairly evenly spread out over the past two years in terms of equity funding stages. While Seed/Angel rounds took the largest share of all equity deals, 30 of the 49 total investments fell under $5M.  Interestingly, the majority of sub-$5M investments were debt, not equity financings.

Stealth startup Anki’s June 2013 $50M Series A was the largest round of the past two years and an outlier as far as Series A transactions go. Other large transactions in the last year include Liquid Robotics, which raised $45M from InterWest Partners, Riverwood Capital, and VantagePoint Capital Partners in March 2013, as well as robot vacuum manufacturer Neato Robotics, which collected a $14M Series E in August 2013, and looks to take on iRobot’s Roomba.

Silicon Valley & Massachusetts Lead the Way

Silicon Valley and Massachusetts dominated in terms of share of deals for Robotics companies accounting for 46% in the past two years with over 20 combined deals. International startups also received attention with $25M of funding across 7 deals, the largest being a $17M Series A in September 2012 to Finnish ZenRobot.

Google’s Hungry for Robots

Robotics companies have had 12 exits in the past two years. The one that garnered the most attention was the acquisition of the previously-mentioned Boston Dynamics by Google in December 2013 for an undisclosed amount. While the creators of a robot that runs faster than Usain Bolt generates headlines, Google was merely continuing its feverish pace of activity in the space, with 6 other acquisitions in the past two years, the only corporate acquirer with multiple acquisitions. Other acquirers include FSN Capital (acquired Troax Group in July 2013), SunPower (Greenbotics, November 2013), and iRobot (Evolution Robotics, September 2012).

Robotics also saw an IPO in Q1 2014 $76M with the offering of Cyberdyne, a Japanese company building a variety of medical based robotic devices.

Robotics remains a relatively small and specialized industry that has yet to break out from an investment perspective. As Google makes moves in the space, it will be worth watching to see if this spurs additional investment and exit activity from the likes of incumbent robotics players including iRobot, Lockheed Martin, Electrolux and Sierra Nevada Corporation to name a few.