Building a new robotics company is not easy. Still, robotics certainly appears to be a promising field in which to launch a startup, given the robust growth forecast for robotics technology in the past years.
There is a significant surge in need for automating the workforce, and the market shows impressive growth in the use of robots for professional, personal, domestic, and industrial applications.
The global robotics market, which was valued at $37,875 million in 2016, is projected to reach $70,715 million by 2023. The factors like tight labor, hazardous work environment, efficiency, and productivity have impacted demand for robots like farming, construction, logistics, healthcare, security, inspection, personal assistance, and defense.
According to studies, 230,000 robots were sold worldwide in 2014, about 27% higher than the previous year. The number of field robots, including milking robots, sold in 2010 accounted for 30% of the total unit supply of professional service robots. In 2013, 2.7 million household robots were sold worldwide, while almost 14,000 robots were installed in 2018, up 23% from 2017.
All these numbers show that there has never been a better time to start a robotics company. This post will discuss some of the critical things you should consider before you rush into creating a robotic startup.
1. Identify the right market
If you have an exciting idea of a new robot, the first thing you should do is to figure out if anyone will buy it. You should spend ample time understanding your potential customers and the market you are about to step in before you build anything. The best way to know if the customers would be willing to pay and buy your robot is to take a direct approach, i.e., “go and ask them”! You should perhaps make a list of 100 potential customers, pick up the phone, and start calling to get their invaluable feedback and validation for your idea. You can even find a potential customer willing to participate in a proof-of-concept or pilot project that could lead to your first big win.
Besides, aspiring robotics entrepreneurs must also obtain domain expertise – a deep understanding of their specific industry (healthcare, agriculture, manufacturing, etc.) or business processes (supply chain, inventory management). When it comes to choosing a market, smart entrepreneurs often prefer to go after niche markets, overlooked by both competitors and incumbents, so that it can result in making a few enemies along the way. You should also probe into various aspects such as the market size, key factors driving the market, estimated growth, existing technologies, products and barriers, customer pain points, etc.
2. Build a successful business model
Creating a successful business model means to create an ongoing value proposition for your potential customers. At the core, it should describe how your startup makes money. It’s an explanation of how you deliver value to your customers at an appropriate cost.
Successful entrepreneurs experiment with their business model on a small scale and make mistakes at an early stage when they can afford it. The business model will be “work in progress” for some time, eventually making it more robust, as it needs it to be successful for the company. A robust and scalable business model narrows your customers down to two or three detailed buyer personas, determines business processes, and develops a strong value proposition with a demand generation strategy.
3. Build an interdisciplinary team
The people part of a robotics startup should receive special care since most investors and venture capitalists focus their attention. They believe that ideas are a dime a dozen: only execution skills count.
Typically, young research-oriented companies like robotics startups are founded by scientists and researchers with too much exposure in research activities, but little or no experience in running a business, which requires entirely different skills and attitudes.
This is a common problem that most young research-intensive SMEs and startups face. In addition to financing crisis, they often lack entrepreneurial skills, failing potentially successful ideas and enterprises. Therefore, startups need to get specific support for developing and commercializing their products right from the early stage to increase survival rates.
Entrepreneurial and management skills, therefore, are vital. The startups should build an interdisciplinary team, consisting of engineers from a variety of specialties, and right business people with suitable skillsets and aptitude, because running a successful robotics enterprise involves a wide range of business skills, including sales, channel marketing, budgeting, and demand planning.
Sufficient access to capital is a particularly complicated challenge during a startup life cycle, starting from product development, R & D, market-entry, and further growth. Obtaining venture capital funding could be the single biggest challenge in the robotics market, even though the founders have an impressive list of credentials such as a Ph. D. in robotics, or four years of experience working in robotics company.
Given all the challenges related to limited access to financial resources, entrepreneurs should understand and know the different sources of capital for robotic ventures. Therefore, before jumping into the business world, the founders must tap into available resources that can enable the company to leverage everything to expand into the broader robotics market.
There are some specific do’s and don’ts when it comes to catching the eye of a venture capital firm. One way to look at it is to think of applying for VC funds the same way you would approach a job application. Do your homework, customize your pitch, follow instructions, and be persistent. Don’t spam every VC you can find with a generic pitch. Try to understand what types of startups a particular VC firm specializes in. Understand how the VC firm works in terms of how hands-on they are and align it with your preferred style.
Growing a business can be an all-encompassing experience. Entrepreneurs put so much energy and time to build and grow their businesses. However, it is essential to remember that success also depends on good business relationships. Opportunities do come from people. If the startup has the right network in place, most of the challenges faced can be solved by reaching out to its contacts. It takes time to build a network, and there are no shortcuts to meaningful connections with people who know, like, understand, and support the startup.