Europe could be on the cusp of a golden era in robotics
There is no doubt that Europe is a major player in the field of robotics, with a number of leading companies, research institutions, and academic programs based in the region. However, whether or not Europe is on the cusp of a golden era in robotics is a matter of debate and depends on various factors.
There are several promising developments in the European robotics industry that could suggest a bright future. For example, the European Commission has invested heavily in robotics research and development through initiatives like the Horizon 2020 program, which has supported numerous robotics projects across the continent. Additionally, many European countries have taken steps to create a supportive ecosystem for robotics startups, including offering tax incentives, funding opportunities, and access to specialized facilities and resources.
Whilst in the past robotics has seen a similar dynamic, based on 2022 data, investors are starting to place their bets on an up-and-coming contender: Europe.
The United States and China have long been ahead of the pack when it comes to robotics funding. However, data from 2022 is showing that these innovation hubs may have some serious competition as the investment landscape in Europe is starting to outstrip robotics’ biggest players.
The quest for technological supremacy has often been seen as a two-horse race between the U.S. and China. Over the years, we’ve only seen this investment tug-of-war intensify as both economies have vied for dominion to become an innovation superpower. Whilst in the past robotics has seen a similar dynamic, based on 2022 data, investors are starting to place their bets on an up-and-coming contender: Europe.
In 2022, nearly $8.5 billion in funding flowed into robotics companies worldwide — a staggering 42% less than the year prior – in line with the overall global downturn in VC investment. Yet despite the change in economic situation, with total USD investment volume into robotics falling by over 50% for both the U.S. and China between 2021 and 2022, Europe has seen a far more modest decline, only dropping 5% in the same period. Although it’s still early, we’re convinced it’s just the beginning of how Europe is finally beginning to find its place within the modern robotics ecosystem.
Europe emerges as a serious contender with a strong rate of growth
Whilst in the past robotics has seen a similar dynamic, based on 2022 data, investors are starting to place their bets on an up-and-coming contender: Europe.
When we compare Europe’s rate of growth in investment volume within robotics to the U.S. and Chinese markets, we observe a few key trends driving the continent’s recent power play in the robotics market.
With a CAGR of 28% in the period from 2018 to 2022, Europe is already surging ahead compared to global growth figures at 2%. This growth is primarily being led by Germany, which has seen a 77% growth spurt of investment volumes into the robotic space.
Close neighbor France has seen a 54% increase in robotic investment amounts. Meanwhile, robotics powerhouses China and the U.S. have experienced a decline in growth, with robotics investment falling 5% and 2% respectively since 2018.
China and the U.S. experience a 60% slow-down in growth/late-stage funding
To better understand these market shifts, we need to take a deep dive into the funding landscape and explore the state of play by funding rounds.
Slicing our data into grants, early-stage (pre-seed to Series A), and growth/late-stage (Series B and onwards), we observed a major slowdown across U.S. and China robotics funding across growth and late-stage investment rounds.
Both the U.S. and China saw a decline of growth/late-stage robotic investment volume by 60% compared to 2021. Meanwhile, looking at the European market, the total investment volume for growth and late-stage deals was only slightly less than those of 2021.
Surprisingly, China has seen a 4% uptick in early-stage investments, whilst Europe and U.S. followed a similar downward trend – a potential sign for new ventures brewing. The trends in the growth/late-stage funding environments, accounting for the lion’s share in terms of investment volume, help understand the relative stability in Europe.
Comparison in investment volume between 2021 and 2022 across geographies
Comparison in investment volume between 2021 and 2022 across geographies. Image: Picus Capital with data from Crunchbase
Under the surface, 2022 saw more European robotic firms consistently raise capital — 20 growth/late-stage rounds — and fewer outliers driving investment volume. By comparison, European robotics investments in 2021 were more prominently driven by outliers across 13 growth/late-stage rounds with an average round size of $108M USD. Meanwhile, the U.S. and China have seen a decline across a number of deals and mean & median investment amounts.
Growth/late-stage funding is complex. Nevertheless, we think that one dynamic influencing the change in investment volume discrepancy between U.S., China, and Europe is the shift in priorities for growth and late-stage funds – from growth to profitability. The continued funding into European robotic companies at these stages indicates that these companies are able to meet growth stage criteria better than U.S. companies. This is what we believe will also continue to be relevant throughout 2023.
There are also challenges and obstacles that could prevent Europe from fully realizing its potential in robotics. One major concern is the shortage of skilled workers in the field, which could hinder the growth of the industry and limit its ability to compete globally. Additionally, there are regulatory and ethical issues related to the use of robotics in various industries and applications, which could slow down the adoption and deployment of new technologies.
Overall, it is difficult to say whether Europe is on the cusp of a golden era in robotics, as the future of the industry will depend on a wide range of factors, including technological advancements, regulatory frameworks, market demand, and global competition. However, Europe certainly has the potential to be a major player in the field of robotics, and the region's ongoing investments and initiatives suggest that it will continue to play a leading role in the development of new robotic technologies and applications.
