Sifted - Robots are rising in Europe

Good morning there,

About a year ago, a German VC told me they thought Europe might have an AI edge over the US — at least, in one particular area: manufacturing and robotics. That conversation has been swirling around my mind in the last few months, as we’ve seen several big funding rounds for European AI-powered robotics startups so far this year. It got me wondering why VCs are eager to fund these companies now and if — or how — robots are starting to take over more of Europe. I dig into the state of the industry below.

Elsewhere today, we take a look at what’s holding back Swedish spacetech, go inside one of France’s highest-valued companies, Doctolib, and host Cherry Ventures general partner Sophia Bendz on the Sifted pod. 

Also, founders: we’d love to hear from you about how your relationships with your investors are going. You can fill out our quick and anonymous survey here — we’ll be publishing the results soon.

– Anne Sraders, senior reporter

/A message from our sponsor Notion

Exclusive offer for the Sifted startup community 

Get six months of Notion Plus, a tool which consolidates multiple tools into one — docs, wiki and project management — for free, with unlimited AI (a value of up to $6k).

Robots are rising in Europe 

2024 has felt more science and less fiction, with investor money flowing into everything from AI-powered robots running automated assembly lines to humanoid machines helping with daily tasks. 

In Europe, where industrial and manufacturing industries play a key role in many local economies, these AI-supported robots are catching the eye of top investors. German robotics startup RobCo, which makes automated robots for small and mid-sized manufacturers, raised Series A funding from US powerhouse Sequoia Capital in 2022, and earlier this year raised a fresh $43m Series B from fellow American VC Lightspeed Venture Partners; OpenAI-backed Norwegian startup 1X, which makes humanoid robots, raised a whopping $100m in Series B funding in January led by EQT Ventures.

Other robotics startups working in different areas like construction have recently raised earlier-stage funding, including Dutch bricklaying robot startup Monumental’s $25m February round and home building startup Automated Architecture’s £2.6m fundraise last month.

Funding has held up relatively well across the whole robotics sector; a little over $2bn was invested in 2023, compared to about $2.4bn in 2022 and over $2.5bn in frenzied 2021, according to Dealroom data analysed by Sifted.

“Investor interest now is at the peak in robotics,” especially amid the AI frenzy, Péter Fankhauser, CEO and cofounder of Zurich-based ANYbotics, which is building four-legged autonomous robots for industrial inspection, tells me. His startup, which caters to companies like chemical manufacturers and oil companies, raised $50m in Series B funding last May from Walden Catalyst and NGP Capital.

To be sure, robotics companies have been around for decades. But “it wasn't always as hot” for generalist VCs as it is now, says Christian Noske, a partner at NGP Capital (and an ANYbotics investor) who says he’s been investing in industrial tech for 12 years. Noske says he’s busier now than in the last 12 months, and is currently closing three deals. “It's much more competition,” he says.  

According to Roman Hölzl, who cofounded RobCo in Munich in 2020, the sector has been increasingly lively in the last 18 months. “You've seen the YC request list; out of the 20 topics, like, 10-plus topics have been around deeptech, energy, robotics, automation, industrials, climate,” he says, referring to US startup accelerator Y Combinator’s call for startup ideas. “I think that's kind of reflective of the overall trend we're seeing when it comes to the market of talent [and] startups.” 

Adoption of robotics has been both a long time coming, and swift. “Companies have a C-level mandate on robotics. They have budgets for it,” says Fankhauser, who started his company in 2016. He adds that US-based competitors like Boston Dynamics have helped push robots into mainstream awareness. Meanwhile, Hölzl tells me RobCo has been more than tripling its revenue year over year. He declined to provide specifics, but coyly admits it's “maybe” in the ballpark of a recent Forbes estimate citing nearly $10m. Others like French warehouse robotics company Exotec recently announced $1bn in sales.  

There’s a handful of reasons for the surge in adoption.

Among them, says Hölzl, is the shortage of skilled workers for manufacturing jobs. “That's only going to accelerate even further,” he says, as more people reach retirement age. Another big factor is the attention on supply chains and globalisation post-pandemic: “We're seeing a trend towards more local manufacturing. That's been pitched for many years, but I think it's much stronger now than it was ever before,” argues Hölzl.

Robots have also become cheaper to produce in recent years, Noske points out. The widespread use of GPUs, edge computing and low-code, no-code platforms means that software and compute have become more scalable, he says. At the same time, hardware technology has become cheaper. That’s made it “more approachable,” says Noske. 

Another reason, founders like Fankhauser point out, is the advancements in AI now make it more feasible to use cheaper physical parts. He says we can use “worse components, quality wise, but the AI helps us to compensate for that”. The AI and software helps robots “see”, learn how to walk and manoeuvre industrial worksites.

I find the AI element here particularly interesting. Europe has played second fiddle to the US’ AI titans like OpenAI — but it might have an edge when it comes to these more specialised applications. At least, that’s what some investors think. About a year ago, Pawel Chudzinski from Point Nine told me he thinks Europe could have a “natural” upper hand when it comes to applying AI to manufacturing, particularly robots.  

Noske generally agrees: embedded software expertise “plus hardware understanding” in Europe “is a perfect combination then to connect that with AI”. However, he points out the region is still largely missing growth capital — those $100m rounds — and momentum like in the US, which he argues still has superior software talent. 

I’m curious to hear what you think, readers: where can Europe play to its strengths in industrial tech? Are there exciting European robotics companies I should have on my radar? I’m all ears.

– Anne Sraders, senior reporter

💰 Two former Luko employees have raised €25m in funding for their automated financial management startup Payflows. Balderton Capital led the Series A round, which also saw participation from existing investors Ribbit Capital, Headline, 20VC and French shopping mall Galerie Lafayette’s family office. 

• Payflows’ funding round is the latest financing for fintechs catering towards the B2B segment over consumer. In the first quarter of this year, European fintechs catering to business clients raised $2.1bn — close to double the $1.2bn funnelled towards consumer fintechs, according to Dealroom.

🚀 How Sweden is failing its spacetechs.

👀 Healthcare platform Doctolib has conquered France — but can it take on Europe?

🎙️Sophia Bendz on angel investing, why we need quotas and what she learnt from Daniel Ek.

🤷‍♀️ Five years ago, the British Business Bank (BBB) launched the Investing in Women Code initiative, which aimed to support female founders in myriad ways. Fast forward and the commitment has 240 signatories — but almost nothing has changed. So what next? Amy Lewin explores the issue.

📊 Tomorrow, Sifted’s head of research Jonathan Sinclair will present the key takeaways and data points from Q1, followed by a pitch from the highest scoring early-stage startups we scouted over the past three months. This event is exclusively for Pro subscribers. RSVP. 

📈 On May 15, contributing editor Éanna Kelly will bring together a panel of experts to chat about the evolving startup landscape and how data could be the key driver when scaling businesses old and new. RSVP. 

💻 AI has opened the door to a host of new and more cunning cyber attacks, and it’s costing victims more money: global payouts to hackers hit $500m in the year to September 2023, rising by nearly half in that timeframe, according to analytics firm Chainalysis. Meanwhile, companies are expected to shell out over 14% more this year on security compared to 2023, according to research firm Gartner. A cohort of startups have been popping up to address the issue, as a new Sifted briefing explores.

• That said, funding for cybersecurity startups slumped in 2023 following a record haul in 2022, with about $1.3bn raised last year compared to nearly $2bn the year before. 

Still, Sifted has mapped out 61 early-stage companies worth keeping an eye on here. 

In the wake of reports that French AI startup Mistral is raising yet another multimillion-dollar funding round, London-based AI investment firm Air Street Capital has a useful new article on the economics of companies building foundation models. Are these big models the new oil, part of a goldrush or a black hole for investors cash? Read it here.

Mont-Saint-Guibert, Belgium-based Cognivia, which develops machine learning algorithms for clinical research in the pharmaceuticalcal industry, raised €15.5m from investors including Vesalius Biocapital, SFPIM-International and Wallonie Entreprendre.

London-based Infogrid, a smart building platform for facilities and building management, raised $13m in Series B extension funding from investors including Keyframe Capital, A/O, Northzone and The Venture Collective. 

Eindhoven, Netherlands-based VitalFluid, which develops plasma activated water that can be used as a sustainable alternative to agrochemicals like pesticides and fertilisers, raised €5m in seed funding from investors including Future Food Fund, Graduate Entrepreneur Fund, Horticoop and Innovation Industries.

Vilnius-based Softloans, which provides embedded revenue-based lending for SMEs, raised €1m in pre-seed funding. FIRSTPICK led the round.

If you’d like to submit a deal, get in touch. 

For more deals, analysis and M&A insight, become a Pro subscriber to receive our weekly Deals newsletter.

Join us for the unveiling of Central Europe’s fastest-growing startups

Mark your calendars for June 3 and join us at ViennaUp for an evening of innovation and excitement as we unveil the Sifted 100: Central Europe Leaderboard. Prepare to network with leading innovators from the startup sphere, gaining exclusive insights into industry trends and perhaps uncovering the next groundbreaking venture. 

Refer a friend!

Enjoying our newsletter? Forward it to your network so they can sign up here to stay informed with industry news and insights, just like you.

• Sign up to our specialist newsletters if you want more on fintech, climate tech, startup life and VC.
• Tune in to Sifted’s podcast, Startup Europe.
• Join the Sifted team along with 3,000+ startups, founders and investors at Sifted Summit this October. Get your ticket now!
• Join Sifted’s journalists for live Sifted Talks with industry experts, diving into the biggest questions facing startup Europe.
• Access investment-grade research on the hottest sectors, rising stars and success stories from across European tech by subscribing to Sifted Pro.
• Follow us on LinkedIn and X.