Traditionally, few venture capitalists would touch industrial startup companies. Time cycles were too long and clunky hardware complicated things. However, deep digitalization is taking hold, the expectations are that the industrial sector will evolve much faster. What has changed?
Sketch of an early helicopter prototype drawn by Leonardo da Vinci in 1483. (Photo by Kean … [+]
One reason venture capital and corporate investment have shied away from industrial startups is that they have been few and far between. After all, if you cannot find something exciting to invest in, there’s little point having a strong venture activity and a dedicated fund.
Perhaps it is also the case that industrial conglomerates were looking inward to find innovative ways instead of looking outward for it. As a result, venture capitalists considered the manufacturing space the place for incremental innovation, though less interesting.
Augmented Lean: A Human-Centric Framework for Managing Frontline Operations
In reality, though, the startups have always been around but they were typically swapped up by incumbents before they got to be of a scale that they had true impact on the market. What that also meant is that the overall paradigm in industrial tech remained the same. A bit like a yogurt beyond the expiration date. What seems to have happened now is that some of the “yogurt” culture of industrial startups has become beneficial. Think of it like inserting probiotics into the mix. As a result, some startups have been able to bypass this logic and are spreading a new industrial culture. I think of the phenomenon as a Lean process coupled with a human-centric approach to technology, what my co-author Natan Linder and I call Augmented Lean.
Is there Venture Capital For Industrial Technology?
Conversely, over the past decade, especially in the last three years, venture has discovered industry 4.0. In a note on the Industrial Technology Sector, White Star Capital (2020) points out that industrial technology funding in the period has amounted to more than $160 billion, at a 24% share of VC funding, with 29 VC-backed unicorns. They write that a key driver has been the drastic cost-reduction per unit of necessary devices such as robots, IoT devices, and 3D printers. White Star is “especially interested in businesses democratizing industrial automation in a world where custom products and personalized fulfillment are becoming the standard and consumer demands become more unique,” highlighting its portfolio companies Vention, a cloud based CAD-platform for custom order of industrial equipment with short lead time, Mnubo, and Packhelp, Europe’…….