Locus Robotics Corporation, a robotics company that manufactures technology for e-commerce warehouses and distributors, has raised $25 million in a Series B funding round led by Scale Venture Partners. The 17 year-old VC firm based in northern Silicon Valley has approximately $1 billion in AUM and focuses on early-stage internet, cloud computing, and SaaS startups. The recent round of funding indicates support for the hardware industry behind warehouse and manufacturing automation technology.
Locus Robotics was founded in 2014 by Bruce Welty, a veteran in the warehouse technology space. Welty formerly founded Quiet Logistics in 2009, a third-party order fulfillment logistics company which used mobile robots from Kiva Systems to service retailers, primarily in the e-commerce industry, and create cost-cutting efficiencies. Shortly after in 2012, Amazon.com acquired Kiva, now Amazon Robotics, to integrate warehouse automation robotics into their distribution centers. Unfortunately for Welty and Quiet Logistics, the acquisition took away the company’s supply of robots, leading to the creation of Locus and Welty’s own proprietary technology.
Figure 3: Demonstration of human-LocusBot compatibility
Along with their $8 million Series A round in 2016, Locus has quickly advanced its ability to produce highly capable robots to serve alongside warehouse employees in increasing efficiency and productivity for order fulfillment. The company’s main product, coined LocusBots, increases throughput by autonomously minimizing the amount of carrying warehouse employees must do while speeding up the picking process at the same time. Saving workforce exhaustion and minimizing errors within the picking and touching processes allows these robots to seamlessly function and support fulfillment warehouses. Locus also offers controls systems and technology so retailers may integrate, scale, and monitor the technology from introduction with current management systems to growth of operations.
One of Locus’ major current clients is DHL Supply Chain, who uses LocusBots to fulfill online orders for menswear retailer Mack Weldon and beauty retailer Glossier. While some retailers like Amazon.com have created similar autonomous warehouse systems, most of the activity has been targeted at machinery manufacturers and factories rather than retailers who need to package and prepare orders. Furthermore, an ever-increasing e-commerce market accompanied by higher costs of manual labor puts innovators like Locus in a strategically competitive position.
The funding round anticipates expansion into global markets, such as Asian retailers, as well as technological enhancements to enable Locus’ systems to further replace traditional inventory tracking systems and handle returned orders. The startup is expected to generate under $10 million in revenue by the end of 2017 and hopes to breakeven by 2019. Despite these seemingly low financials, the industry is experiencing high capital injection, including $88 million in recent funding for competitors Kindred and Geek+. In addition, the cost of a LocusBot at $35,000 has proven more attractive to large retailers than traditionally investing millions into complex conveyor and other automation systems. On the other hand, retailers who have already invested heavily into older systems are faced with a more difficult decision than newer companies to join the Locus customer base.
While Amazon.com removed Kiva Systems as a supplier for Bruce Welty’s advanced systems, Locus faces a market with greater share for the taking as Amazon Robotics left huge e-commerce retailers like The Gap and Gilt Groupe without a continued supplier. I believe the next few years will remain critical for Locus’ future performance, but should their operations continue to grow at a steady pace and should they make strategic use of new capital, they may be at the front of the pack in reforming warehouse development industrywide. The labor force can look forward to investments shifting the workplace outlook away from fear of superior technology toward a collaborative dynamic between man and machine.