There was a brief but rosy moment in the months of 2021 when it felt like robo-investing might be immune to broader market forces. We all understand fundamentally and implicitly that this is not the case, but it was a beautiful moment nonetheless.
The truth is, there’s a little insulation there. Even with increasing headwinds, there is still enough forward momentum to continue cruising. But everything ends up on Earth. We are now about a month away from 2023 before we can start assessing the damage.view these charts Organized by Crunchbasethings seem pretty grim.
A few top line points:
- 2022 is the second worst year for robotics investment over the past five years.
- Those numbers have been steadily declining over the past five quarters.
According to the first point, 2020 is the lowest. It’s also an anomaly, linked to a global pandemic. Uncertainty does not foster investment confidence. The full-year numbers are all the more startling considering how investor confidence carried over into early last year. Things really started to slow down in the second quarter. A cursory look at the bar chart might suggest that 2021 is an anomaly. yes and no. Yes, in terms of acceleration. No, in the long run. The question is not if these bars will start growing year by year, but when.
The same thing that stagnated investment in 2020 accelerated investment the following year. Even with things reopening, job openings are getting harder to fill, and all companies are desperately pushing automation. As good as it may be, we’re not ready to classify automation and robotics as “recession-proof.” However, I do doubt that those who control the wallet fundamentally understand that these declines are more a product of the macro environment than anything specific to robotics.
For some early-stage startups, however, that’s cold comfort. Many runways have been significantly shortened this year. Consolation may come somewhere in the future, but in many cases, decisive action will be required for those who suddenly find themselves unable to close a round 12 months ago that may have felt like a foregone conclusion.
A surge in M&A activity seems likely, given the inevitable choice for some between being acquired and shutting down. Sure, there’s less money floating around, but few people can turn down a big sale. In some cases, this will help strengthen products and portfolios.
Interestingly, I’ve seen investments ramp up this year, but that seems to be part of the natural cycle of companies waiting to announce after the holidays. A proper bounce, on the other hand, seems inevitable, but only those with a high-powered crystal ball can tell when exactly.