Wandelbots: Next capital round - some thoughts

To be honest, I am gobsmacked: Wandelbots has already raised a total of $123 million with the Round C announced yesterday. The amount shows that the team around Christian Piechnick has done everything right so far. In addition to strategic foresight, the art of well-managed tech companies is perhaps also to come across as "normal" despite all their technology orientation. No matter where or how (video, live), Wandelbots employees always strike me as particularly likeable.

Since I can't yet comprehend the current valuation, first some thoughts.

I wonder about two things:
1. the profit expectation of the investors, who want to get back many times their investment.
2. the need for money from Wandelbots - why so much?

Where do investors see Wandelbots and the market itself in a few years?

I had already seen a valuation of €90 million for the last financing round, which took place in summer 2020(link). At that time, the company had received a total of around €32 million from the two financing rounds. This cash amount is now offset by US$123 million and thus a multiple. Assuming that the previous shareholders have not diluted their shares too much, the current valuation - all an assumption based on a brief analysis - should probably be around 300 million.

What is certain is that investors expect a multiple back as a result. In a few years, the company should thus be worth several billion. This will only succeed if the company prevails against the competition in its current core business, no-code programming. Because even if the market grows quickly, a market share of "only" 25% with a then conceivable (some strong market participants) price competition does not seem so promising for profits.

So I assume that the investors are satisfied with the development of TracePen, but see a lot of potential in the software platform, which is becoming more and more concrete.

Robotics platform

According to the press release: "Wandelbots is planning to expand and open up its robotics software platform next. Providers of automation solutions and software developers can then use the technology to develop their own solutions in the shortest possible time without being tied to a manufacturer.

Christian Piechnick emphasizes the advantage of the platform: "In the future, anyone without robotics expertise will be able to develop their own ideas at record speed. And this is completely independent of the robotics hardware used. We can't wait to see what developers create in the future based on our platform. By opening up our technology, we will realize our mission to democratize robotics with user-friendly software for everyone."

I am curious to see what software will be sold via the platform. Today, software is often offered together with hardware (e.g. bin picking with camera, palletizing solution right with cobot and station). I can imagine that the platform will become especially interesting when companies already have the hardware and want to become more and more flexible. However, this will still take a few years, I think.

TracePen

The TracePen has 100 users so far, according to Bernd Heinrichs, Chief Growth Officier, in a really very good video(link). In the current year, 2021 sales of the pen are expected to increase tenfold. That would put us at 1,000 users. With a monthly fee of 300 €, which I once heard about, monthly revenues of 300,000 € would come about (+ purchase price). This would be a lot of money for a small company, but Wandelbots already has 140 employees. That's why I'm amazed that only Universal Robots and Yaskawa are still being served. Rolling out to other robots is not that easy.

The need for money

According to the 2019 balance sheet, Wandelbots reported a loss of €1.5 million, capitalizing roughly the same amount, i.e. requiring €3 million in cash. At that time the company had 43 employees, now it has 140 employees. Including the apparently started market entry in China (see the figure above) and the USA, maybe 20 Mio€, maybe 30 Mio€ p.a. are needed. First revenues are coming in, but still at a lower level. So to be on the safe side, the amount of new funding seems appropriate after all. Maybe Wandelbots wants to acquire other companies in the future. In any case, it remains exciting and Wandelbots, the flagship startup in Saxony, has the potential to become a flagship company for Germany.

It also remains exciting because Chinese investors are apparently still being sought. Handelsblatt quotes Jonas Schreiber as saying, "Our priority this year is also to open up new markets," says Schreiber. "China is by far the largest market in robotics." The next step, he says, is now to look for potential investors and customers in the People's Republic.

To the video: This also shows why good funding is important. Like so many robotics videos, it has surprisingly few views even a month after its release (currently around 240). The market is simply still limited:

Are we networking? LinkedIn
-> To the Cobot group on LinkedIn(Link)

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The author of this blog is significantly involved in the AI/robotics project Opdra. He advises robotics companies and investors on market analysis and funding/subsidies. More about him can be found here.