Yuanda Robotics, a collaborative robot startup led by a German-Chinese team, is in the process of raising €20 million ($22 million) in a Series A+ round of financing, as the company aspires to challenge larger players like Universal Robots in serving small and medium-sized companies worldwide.
The company is in active discussions with potential investors to conduct interviews and negotiate term sheets. The Series A+ round is expected to complete within the next two to three months, said Tobias Ortmaier, a founding member and strategic lead of Yuanda Robotics, in a recent phone interview with DealStreetAsia.
“We focus more on investors with a technological background or portfolio, especially investors who have experience [working] with companies situated across different continents,” said Ortmaier.
Yuanda Robotics develops collaborative robots, or “cobots,” which tend to be inexpensive, easy to use and safe to be around. They can be adapted to new and repetitive tasks like picking, glueing and packaging, making them well-suited to small-batch manufacturing and ever-shortening product cycles.
The startup leverages embedded cameras, inbuilt artificial intelligence (AI) and computer vision algorithms to develop a cobot that can perform a range of tasks including quality inspection, object detection, part inspection, QR-code referencing, and spatial orientation for companies producing goods like metal, rubber, and chemical products.
Besides being developed in accordance with the highest industry safety standard, the cobot product also boasts a programming and commissioning of new applications experience “as easy as using a cell phone” – a feature that Ortmaier deems to be “especially important” for small and medium-sized enterprises (SMEs) who cannot afford experts or produce small lot sizes with high variability.
“We achieved this by adopting a user interface concept that enables graphical programming imitating the use of an email account on the mobile,” said Ortmaier. He continued that the cobot is powered by proprietary AI and computer vision algorithms to help it “see” the environment, allowing the cobot training to be done “within a couple of minutes.”
With about 40 employees, the company aims to kick off the official sales of its first collaborative robot product in April 2020. Ortmaier said that the company currently has an annual production capacity of up of 1,000 cobots in 2020, which “can be easily scaled up” to a couple of thousands in the future.
Yuanda Robotics is seeking to challenge larger players in the cobot field, including German industrial robot major KUKA and Danish cobot maker Universal Robots.
Its ambition comes as the global cobot market is projected to grow from $710 million in 2018 to $12.30 billion in 2025 at a compound annual growth rate (CAGR) of 50.31 per cent, according to a MarketsandMarkets report. The market growth is driven by an accelerating adoption rate of cobots by SMEs because of their recognizable benefits, improved human-machine interface (HMI) and capability of AI to imitate human behaviour, and one-stop solution for the safe working environment.
“Bigger companies have built an ecosystem, where their major partners and clients – usually car manufacturers like BMW and Volkswagen – require new products to be 100 per cent compatible with the ecosystem,” said Ortmaier. “Although larger players offer [products] with more functionalities and dedicated solutions for their main partners and clients, it is very difficult for them to bring things down because a lot of functionalities usually mean employees need loads of training and the system is very complex.”
“For all these big robotics companies, it is very difficult to make a significant footprint in the ‘long tail’ part of the business,” he added.
A German-Chinese creation
Hanover, Germany-based Yuanda Robotics was established in 2017 between a German technical team and Yuanda Aluminium Industry Group, an architectural façade developer wholly-owned by Hong Kong-listed Yuanda China Holdings Limited.
The German headquarters is primarily responsible for the R&D of AI, computer vision, and its proprietary cobot control software, while a subsidiary in northeastern China’s Shenyang city handles production, supply chain, and talent recruitment, among others.
He expects the company to break even in roughly three years. Going forward, Ortmaier predicts the startup to generate annual revenue of about €1.4 billion ($1.55 billion) in 2025 or 2026, as the company ropes in more strategic partners and more financial support.
The new investment will mainly be used to promote marketing and sales, enhance its product, expand the product portfolio, and increase investment into production. Upon the completion of the round, the startup will focus on two major markets: Europe, which will be covered by the German headquarters, as well as China and the Asia Pacific region that will be served by the Chinese subsidiary.
“I think this German-Chinese collaboration has tremendous possibilities for market entrance and product sales,” said Ortmaier.
Before the Series A+ round, Yuanda Robotics has received two-digit millions of euros in funding. The company plans to start transferring some supply chain-related R&D tasks, such as mechanical engineering and electrical engineering, to China in 2020.
While the startup is yet to roll out its first batch of products, Ortmaier said that the company already considers China’s Nasdaq-style STAR Market as a potential option for its initial public offering (IPO) at some time around 2023 and 2024.
The STAR Market is a tech-focused bourse that “boasts a higher valuation” for companies, which will be a better avenue to raise capital for the expansion of product portfolio, said Ortmaier.