Tom Whitehouse, GCV contributing editor, hosted a breakout speciality sector session on advanced manufacturing. Douglas Trafelet, managing director of data provider PitchBook, began the session by presenting data on venture capital-backed investments in advanced manufacturing businesses around Europe.
The data suggested that while the deal count in European manufacturing had gone down since 2012, the total capital invested had increased. The top seven deals In manufacturing all involved Russia-based companies, including $1bn for SP Glass at the start of 2012, before the price of oil dropped in 2014. The only large deal since then had been the $108m round for Germany-based Devialet in November last year. There had also been few large exits from VC portfolios, with Arcam’s $680m takeover at the end of last year the most substantial.
Grant Allen, head of ABB Technology Ventures (ATV), the corporate venturing arm of Switzerland-based industrial conglomerate ABB, said key areas for ABB were robotics and industrial automation as well as electrification products and power grids. “Robotics is the tip of the manufacturing innovation spear,” he said. He showed a video on YuMi, a robot created by ABB to work alongside humans in manufacturing facilities.
Allen highlighted the importance of robotics for ABB, telling delegates: “Six out of our last 11 investments were in robotics. We care a lot about robotics.” Overall, ATV had made 29 investments worth more than $150m since its launch in 2009, with 15 active portfolio companies and three investments in VC funds. Its exits included Industrial Defender’s $165m acquisition by Lockheed Martin, Validus VC, which ABB acquired, and Persimmon’s $37m purchase by Sumitomo. Of its portfolio, Trilliant has been seen a flotation candidate.
Robotics investments allowed ABB to go into new areas of equipment manufacturing, a case in point being ABB’s backing of US-based Soft Robotics, whose robotic actuators for manipulation and material handling had the ability to grasp fresh produce, electronic components, consumer goods and clothing.
In terms of current hot trends, Allen named the internet of things, the rise of industrial robots and the nearshoring of US industry, as well as growing investments in manufacturing automation and industrial robotics in China, as the latter faced the problem of an ageing population.
David Paul, director of business development and R&D at automotive parts manufacturer Magna International, said that while the automotive sector was traditionally “a very conservative industry”, recent developments in autonomous and connected vehicles had created opportunities for Magna in the emerging mobility ecosystem.
Much like Allen, Paul spoke about the significance of robots that would be working alongside humans in the smart factories of the future. Among other trends, he highlighted artificial intelligence for transport, human-machine interaction, and augmented reality, which was a growing area in manufacturing for training and simulation purposes.
The breakout session included speakers from two startups – Wolf Beele, CEO of Flowcastings, a Germany-based castings manufacturer backed by General Electric, and Magnus Lindvall, managing director of Sweden-based Microbas Precision, which produces precision components and systems in special materials and metals that are customised in terms of shape, material, dimensions and tolerance.
During the interactive discussion, the speakers touched on the issue of partnerships between corporations and startups. Allen said the best approach in his experience was to try to connect startups with other corporate divisions first so they struck up partnerships, and then to come in subsequently as a CVC investor.
Paul added: “We are the investor and the market for many of them, which is our advantage. However, there is a great deal of mutual respect when working with those companies. It is all about respect.”
Beele said it was important to consider opportunity and cost when a commitment by a CVC brought an emerging -company closer to a corporate that would be a blue-chip customer but which may turn away other potential big customers. He also said he believed advanced manufacturing to be “the natural extension to what industry 4.0 is striving to deliver”.
