There is a brief moment of beauty in a few months in 2021 when it feels like robotic investments may be immune to broader market forces. We all basically and implicitly understood that this wasn’t the case, but it was a great moment nonetheless.
The truth is, there’s a bit of insulation in there. There’s still enough forward momentum to keep flying for a bit, even as the headwinds grow stronger. But everything finally comes to Earth. We are now about a month away from 2023, when we can begin to assess the damage. Look at these charts collated by Crunchbaseeverything seems pretty clear.
A few top points:
- 2022 is the second worst year for robotics investments in the past five years.
- The figures have fallen fairly steadily over the past five quarters.
According to the first point, 2020 is the lowest. It’s also unusual, given the global pandemic. Uncertainty does not create investment confidence. The full-year numbers were even more impressive as investor confidence expanded early last year. Things really started to slow down in Q2. A quick glance at the bar chart might suggest that 2021 is an anomaly. Yes and no. Well, as far as acceleration goes. No, as far as foresight is concerned. The question is not whether those bars will start to rise year over year, but when.
The same thing that stalled investments in 2020 accelerated them the following year. Even as things reopen, jobs are getting harder and harder to fill, and companies around the world are doing their best to automate. No matter how good we are, we’re not ready to categorize automation and robotics as “recession-resistant”. However, I suspect that those in control of the wallet fundamentally understand that these downward trends are more a product of the macro environment than anything specific to robots.
However, for some early-stage startups, it’s cold comfort. Many runways have been significantly shortened this year. Solace may come somewhere along the way, but in many cases decisive action needs to be taken for those who suddenly find themselves unable to close a round that 12 months ago might have felt. as a predetermined conclusion.
Given the choice between buybacks and closures that some will inevitably face, it seems likely that M&A activity will spike. Sure, there’s less money floating around, but few people can turn down a good deal. In some cases, that will help strengthen the product and the portfolio.
Normally, I see investments surge during the year, but that seems to be part of the natural cycle of companies waiting until after the holiday season to announce. On the other hand, a proper recovery seems inevitable, but only those with high power crystal balls can tell exactly when.