Sifted - The gaps in the robotics sector

Good morning there,

As you may have gathered from this newsletter and elsewhere, deeptech has been a trend du jour for VCs of late; robots, in particular, are drawing more attention.

But as investors put euros into everything from warehouse visualisation startups to manufacturing robotics companies, where are there still gaps in the market for new companies to pop up? What other use cases could do with a robotic touch? That’s what I recently asked Atomico partner Ben Blume; you can read his answers below.

Elsewhere:

• Is 2024 Turkish fintech's breakout year?
• Sennder’s acquired its way to €1.4bn in revenue — it says the trick is to treat M&A like dating.
• Latest data on European femtech

— Anne Sraders, senior reporter

Entrepreneurs, want to go global?

Three types of robotics companies an Atomico partner wants to see

Deeptech — the catch-all term for companies building in areas like life sciences, robotics, AI and quantum computing — has been a bit of a darling for VCs of late. Investors have been allocating big sums to European companies doing everything from developing new materials to making vehicle structures lighter and stronger, to using robotics to make manufacturing more efficient.

According to Ben Blume, a software and deeptech-focused investor at VC firm Atomico, part of the reason why deeptech is more in vogue with VCs is that SaaS companies have grown a bit lacklustre of late (especially amid reports of slowing growth).

“Because of the very competitive nature of so many spaces [within SaaS] these days,” investors are “looking for things that have more edge, more defensibility,” Blume tells me. “If you push more into deeptech, you inevitably see more of that, because there's more IP in those businesses.” (Atomico defines ‘deeptech’ more as ‘frontier tech’: things like autonomous vehicles, quantum computing, fusion and synthetic biology, new materials generation and climate.) 

One particularly hot area Blume is eyeing? Robotics. Previous waves of interest in the space came too soon — “There were a bunch of interesting ideas and companies there, but a lot of them struggled to find a clear go-to-market,” Blume says. “I think we're now seeing a second wave of that powered by the more powerful AI technologies that exist now, and by the fact that if you want to build an autonomous vehicle today, you've got a lot of existing stack to build on.”

The gaps in robotics for new startups

There are now numerous robotics startups catching VCs’ eyes that are building a wide range of products to help automate various processes, but for Blume “there's still a lot of room” for more innovation.

In particular, he wants to see more companies building robotic exoskeletons — devices that attach to the human body to help with some function. The technology has progressed a lot faster than the adoption or application so far, he says, but “the ability to let people lift the heavy loads they need to for their day-to-day without causing as much damage to their body [is] a really nice use; that's robotics, right? It's smart, it's context-aware…it helps someone, but is also not replacing a worker, which is great,” says Blume.

He sees promise in both workplace and medical applications, like for people with specific industry injuries or the elderly. “I'm guessing that there's also a pretty strong dual-use case there as well — which gets you quite close to some kind of sci-fi, dystopian” Avatar-type thing, he says, referring to technologies with both military and commercial applications. 

Blume is also keen for more robotic applications in the logistics space. “There's also a lot of manual work that goes into logistics, whether it's in the warehouse, at the end delivery, at other points,” he says. “There are probably other really interesting places there where you could drive more automation, and maybe even improve and speed up global freight, which I think is an important thing right now. There's huge bottlenecks and inefficiencies in global shipping and freight.” Atomico has invested in a robotics warehouse visualisation startup, Dexory. 

Another area Blume deems a gap in the robotics market is low-cost robotics for precision manufacturing for smaller companies, in particular in life sciences — things like lab experiment automation, or in hardware like electronics component testing.

Ultimately, from a VC standpoint, startups need to think beyond just a physical robotic arm or hardware component. Blume notes that even if it’s a good idea, it’s hard to protect the intellectual property of hardware — and it could easily spawn copycats. Startups “need to be part of some kind of broader platform vision, where, in the end, the software adds enough value that if the hardware does commoditise, then there's still a valuable business there”. 

Blume is also thinking about how robotics can help improve processes beyond just automating tasks, particularly in areas like construction. “Can you in some way build better buildings because they've got better thermal properties? Or you can use less cement — which is a very carbon-intensive material — because you've been able to build in a smarter way because a robot is building it?” 

I’m curious to hear from you, deeptech investors: What underrated or underinvested sectors are you watching right now? Are you seeing any new or interesting use cases for robotics I should know about? What’s next for the sector? Send me a note.

— Anne Sraders, senior reporter

🇹🇷 Europe’s VCs have often overlooked fintechs in Turkey in favour of backing companies in the UK, France and Germany. That’s despite its highly digitised banking sector, a population of 86m and some of its fintechs sporting customer numbers in the tens of millions. 

• But things look like they’re changing in 2024. Since the European Bank for Reconstruction and Development invested in banking infrastructure startup DgPays back in February, there’s been a flurry of interest in Turkish fintechs.
• So, what’s changed? Sifted’s Tom Matsuda gets into that here.

🌹 Sennder’s acquired its way to €1.4bn in revenue — it says the trick is to treat M&A like dating.

🤔 Can this country show Europe how to compete again? (New York Times)

📣 Readers, we want to hear from you. What’s the best thing on European tech you’ve read recently? Drop us a line.

• Femtech startups in Europe have already raised $297.2m in VC funding this year, surpassing 2021’s record of $270.6m, according to PitchBook data shared with Sifted.
• The new funding highs, though, are highly skewed by the recent megaround raised by London-based fertility app Flo Health, which secured a $200m Series C from General Atlantic last month and became Europe’s first femtech unicorn. 
• While 2024’s deal value is up on last year’s numbers, deal count is actually tracking marginally behind last year’s figures; there have been 26 deals in 2024 so far this year, compared to 55 across 2023.

— Miriam Partington, senior reporter

Founders and operators, get free access to Sifted

Get Sifted for Startups, our free subscription for founders or C-suites looking to get the insight, support and connections needed to grow their business. You’ll unlock unlimited access to all of our journalism plus a spot in our startup database. 

August 21 | Online. Want to turn one-time customers into lifelong advocates? Looking to boost your revenue consistently? The key could be subscriptions. Join us for our next free Sifted Talks to learn the ropes of a successful subscription strategy. RSVP.

August 28 | Online. In the era of remote work and global teams, startups continue to face the challenge of making employee equity clear. So how can CFOs and CPOs provide robust stock options wherever the employee? Sign up to our next Sifted talks to find out. RSVP.

September 4 | Online. Getting the most out of a prospective M&A deal starts with location. With both US and UK firms competing for your business, where do you place your bets? Join our next Sifted Talks to find out. RSVP.

September 18 | Online. Tapping into the gulf: What are Middle Eastern investors expecting from their European investments and what can founders expect from them in return? Sign up to find out more. RSVP.

Lisbon-based FRVR, an AI-driven platform that aims to make game creation faster and more accessible, raised $12.7m in funding. Iberis Capital led the round and was joined by investors including Indico Capital Partners, Lince Capital and Hiro Capital.

London-based Clearly, a climate intelligence platform which uses AI to provide fleet operators with emission and energy insights on a per trip basis, raised $4.3m in seed funding. Pace Ventures and Nine Realms led the round and were joined by investors including Mobilion, Next Gear and M1720.

London-based Adamo Foods, which is developing alternatives to meat whole-cuts made from fungi, raised £2m in seed funding from investors including UK Innovation & Science Seed Fund, Joyful VC, Beeches group, SFC Capital, Katapult, Shake Climate Change, Rothamsted Research and Innovate UK.

Tampere, Finland-based Collo, which provides insights into liquid processes for industrial use, raised €5m in funding. SEB Greentech Venture Capital and FORWARD.one led the round and were joined by Scale Capital.

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.