Venture capitalists investing in AI and robotics startups recommend they reassess their marketing strategy amid financial uncertainty spreading alongside COVID-19.
Jocelyn Goldfein, managing director of Zetta Venture Partners, mentioned the present local weather may imply startups have to realize larger proof factors to boost their subsequent spherical. Her firm helps startups take into consideration whether or not to boost cash now, make the cash they’ve last more, minimize prices, or dash to profitability.
“I think our advice to startups is now trending toward … if we have the opportunity to raise money now, let’s take it,” Goldfein mentioned. “I think we’re optimizing and gearing a little more toward survival and a little less toward growth at all costs, but for the most part, if you’re an early stage company with a great invention trying to demonstrate product-market fit, you can do that.”
Goldfein spoke on a panel at an all-day AI and robotics convention held Tuesday on the University of California, Berkeley. She was joined onstage by Y Combinator companion Eric Migicovsky, Innovation Endeavors founding companion Dror Berman, and TechCrunch reporter Connie Loizos.
Goldfein mentioned she’s not inquisitive about investing in autonomous driving corporations, calling the business overhyped and dominated by “behemoth” corporations. GM’s Cruise, for instance, has a $19 billion valuation, whereas Google’s Waymo raised $2.25 billion in a funding spherical introduced Monday.
All three VCs mentioned they’re nonetheless taking conferences with startup founders, although Goldfein mentioned she takes no offense to individuals changing an in-person assembly to a video name.
“We’ve started thinking what it took to survive and thrive in past economic recessions for startups,” Goldfein mentioned. “And the good news for a seed stage startup or an early stage startup, if you’re trying to demonstrate product-market fit, if you need five to 10 design partners or enterprise customers, a recession makes absolutely no difference to you — you’re going to go find those five to 10. It may take you longer, you may have to work harder, you may face fiercer negotiation on pricing, but you can get them and you can raise series A funding.”
Innovation Endeavors founding companion Berman mentioned he thinks robotics startups shouldn’t change a lot in response to COVID-19 as a result of they should be maintaining a tally of long-term targets, and that requires self-discipline. Despite uncertainty, startups nonetheless should show there’s a marketplace for their use case as a result of that’s what they’ll want to boost cash and develop.
“So I wouldn’t panic,” he mentioned, recommending that founders look forward to “reasonable evaluations.”
Berman mentioned he’s presently most inquisitive about investing in robotics startups in structured or industrial settings, like life sciences, provide chain logistics, and building, and fewer inquisitive about, for instance, robotic greedy programs for choosing robots in ecommerce warehouses.
In different recommendation to startups feeling COVID-19 reverberations, on Thursday Sequoia Capital shared a letter to portfolio corporations like Airbnb, Bird, and Drift. The letter advises them to organize for a drop in enterprise exercise and supply-chain disruption, and to evaluate their money runway, funding alternatives, capital spending, and whether or not they need to lay off staff. It additionally says they need to give staff clear-eyed assessments of how the rapidly altering scenario is impacting operations.
“False optimism can easily lead you astray and prevent you from making contingency plans or taking bold action. Avoid this trap by being clinically realistic and acting decisively as circumstances change. Demonstrate the leadership your team needs during this stressful time,” the letter reads.
The letter resembles Sequoia’s “RIP Good Times” presentation forward of the financial downturn in 2008.
Migicovsky, Y Combinator normal companion and startup college course facilitator, mentioned robotic startups must be conscious to not underestimate long-term upkeep prices, since understanding these prices is essential to determining the way you fund and construct a enterprise.
“A lot of early-stage entrepreneurs haven’t actually worked in the industry that they’re building a device or a robot to work in. And so I think one of the things that we see is underestimating the impact of maintenance and wear and tear,” he mentioned. “If you’re spending more on maintenance than you expect, that may actually sink in and ruin the unit economics you have been fighting so hard to pull off.”
Migicovsky sees extra alternatives forward to discover edge computing use circumstances.
“We’ve seen more and more people work on edge computing, specifically around AI applications on chip [or] on device. [We] haven’t seen as many great use cases pop out to actually use those chips. We’ve seen more chip companies doing that, so that would be one thing we’d love to see: more applications of edge computing,” Migicovsky mentioned.
Goldfein desires to see extra robots resolve issues that people can’t but resolve in well being care, in addition to serving to reverse the affect of local weather change.
Berman is inquisitive about purposes like Vicarious Surgical, which makes use of robotic digital actuality to beam a surgeon right into a robotic, or in transferring robots from structured to unstructured environments with pc imaginative and prescient.
Migicovsky says he sees a chance to develop a financing firm that permits a robot-as-a-service enterprise mannequin for AI startups.
“We’re realizing that robot-as-a-service is a fantastic business model. It’s really compelling for the end customer because they have a business need that they need to solve. And they recognize that there’s a specific ROI that they would get if they had this robot on staff,” he mentioned. “Someone needs to put together a financing company that’s specifically designed for [a] robot-as-a-service business model. There already is venture debt, which kicks in if you’ve been able to raise a series A, but we’re looking before that stage when you’ve maybe raised a seed round from one of us.”