Robotics In Life Science -- A Hidden Gem For Startups (Part 1 of 2)

Tau Ventures focuses on AI investments in healthcare and enterprise, but we are also fascinated by automation and very occasionally invest in that space. Case in point Elemental Machines which provides Lab as a Service (LaaS) -- off-the-shelf sensors measuring environmental metrics like temperature, pressure and motion to produce drugs and foods at high quality. One area of particular interest for us is how robotics is playing an increasing role in life sciences.

1) High Growth Potential

Robotic technology in life sciences can be specific to common pipetting volumes done in research labs at academic institutions and a range of industrial R&D departments. In the pandemic and post-pandemic world, it becomes more apparent, for example, that such robotic technology has important use-cases in our world. Specifically, they would allow research for smaller, more nimble biotech companies or even research groups to produce or experiment with vaccines at a faster, more consistent rate to equalize the playing field against groups at larger pharmaceuticals using mass-producing pipetting machineries.   The CAGR for pharmaceutical robotics systems was 13.2% from 2016 - 2021 and is expected to be 7.2% YoY from 2021 to 2022. This indicates several points: 

• COVID-19 has exposed pain points in drug development/research development verticals; many can be solved through robotic automation.
• Consistent pre-pandemic CAGR strongly implies robustness even in market post-pandemic.
• There is a large use case for robotics in the life science industry.

Our overall view: this is a largely untapped market ripe for new technologies to thrive in. 

2) Fundraising Is Up

The robotics market is usually directed towards large industrial manufacturers and machinery. But entities such as institutions and companies that conduct any and all scientific research that require pipetting, which captures most of the life science industry, have been left out.  Some of the driving forces of market growth in this area is that high throughput and low cost diagnostics are becoming more valued due to increasing awareness and need from the pandemic and potentially future infectious disease. Conferences and exhibitions, as well as high profile startups with robotics systems in pharmaceutical manufacturing, are starting to get name recognition. Case in point, below are some major rounds just recently: 

• Synthego – enables access to CRISPR, $200M series E, announced Feb 2022
• DNAnexus – managing DNA sequence data, $200M series H, announced Mar 2022
• Creyon Bio – drug development using data-first approach, $40M series A, announced Mar 2022
• Octant Bio – tools + AI to engineer small molecules, $80M series B, announced Apr 2022

According to Grand View Research, the market size of life sciences in the US in 2021 was $106B, which makes robotic life sciences potential market size at $2.1 - 6.3B assuming a 2-6% market penetration. Our overall view: Dx/Tools are leading the fundraising, creating further opportunities. 

3) Emerging Incumbents

Historically robotics in life sciences has been an extension of large conglomerates, such as Kawasaki Heavy Industries, KUKA AG, Mitsubishi Electric Corporation. However, there are very few companies targeting smaller scale automation with flexible and bespoke protocols as opposed to fixed large scale pharma manufacturing. Which is where startups are maturing into the new set of incumbents:

	Opentrons	Perrone Robotics	Boston Dynamics	Energid Technologies
Employees	317	34	240	30
Total Raised / Backing	$256M from VCs	$13M from VCs	Alphabet -> Softbank -> Hyundai	Acquired by Teradyne in 2018
Post Valuation	$1.8B	$25M	$1.1B	$28M
Description	Open-source lab automation robots designed to automate processes.	Retrofit kits intended to be used in the local transit of people and goods for autonomous vehicles.	Robots specializing in building dynamic robots and software for human simulation.	Real-time motion control software to meet the requirements of industrial, commercial, collaborative and consumer robotic systems.
*data from PitchBook

Currently we see a sparsity of competitors. Opentrons, for instance, looks for its closest comps in other industries such as autonomous vehicles or motion control infrastructure. More on this in the next article. Our overall view: we are hitting the inflection point of new players starting to establish themselves, with much more ahead.

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Note from Amit Garg: Primary author for this article is Sharon Huang. Originally published on “Data Driven Investor," am happy to syndicate on other platforms. I am the with 20 years in Silicon Valley across corporates, own startup, and VC funds. These are purposely short articles focused on practical insights (I call it gl;dr -- good length; did read). Many of my writings are at https://www.linkedin.com/in/amgarg/detail/recent-activity/posts and I would be stoked if they get people interested enough in a topic to explore in further depth. If this article had useful insights for you comment away and/or give a like on the article and on the Tau Ventures’ LinkedIn page, with due thanks for supporting our work. All opinions expressed here are my own.