When Dmitry Grishin launched a US $25 million VC firm focusing exclusively on consumer robotics, he encountered a lot of skeptics. They told him that the robots he's interested in were still the stuff of science fiction and it was too early to invest in them. That was two years ago. Today, he says, there's been a "big shift." What changed? "Now everybody believes in robotics!"
Grishin, a Russian Internet entrepreneur and co-founder of Mail.Ru Group, one of Russia’s largest tech companies, says robotics has gotten a lot of attention since giants like Google and Amazon began investing heavily in robots and drones, as well as areas like home automation and what is known as the Internet of Things (early this year Google acquired Nest Labs, maker of smart thermostats, and Amazon is reportedly pursuing its own smart home projects at its secret lab in Silicon Valley.) Now, Grishin says, almost every VC firm is keeping an eye on the robotics startup landscape.
I met with Grishin recently in New York City to get an update on his investments and plans. He insists that competition is a good thing: it's a sign that the robotics industry is growing, and a bigger market benefits entrepreneurs, investors, and consumers too. He said that since starting Grishin Robotics in 2012, he's looked into some 600 investment opportunities all over the world. These were in various stages of development, ranging from business ideas pitched to him by entrepreneurs to full-fledged startups already selling products.
Grishin said he's spent around $6 million in eight deals so far: Double Robotics (maker of affordable telepresence robots); Orbotix (known for its robotic ball Sphero and the newly released Ollie wheeled robot); Swivl (robotic video device for communication and recording); Boombotix (maker of wearable audio devices); RobotsLab (robot kits for teachers and students in STEM); Spire (low-orbit small satellites that provide data to customers); Petnet (robotic devices that let owners feed their pets); and Bolt (hardware incubator to get startups up and running).
I asked if, at some point, Grishin plans to ramp up the number of deals and also inject larger sums into his startups, given that building robots is notoriously complex and costly (at least compared to pure software companies). Grishin said he wants to do more deals per year but, of course, he wants to find the right deals.
"Robotics need dreamers," he said. "But there are too many dreamers now, and we need more practical people developing actual products."
Grishin said that while looking for business opportunities, he saw too may entrepreneurs proposing cool new robots and concepts but with no business cases to support them. The robotics industry, he added, needs more startups to fail to allow entrepreneurs to learn from past mistakes and come up with more enduring plans.
And he doesn't think that pouring large amounts of money into a robot startup is necessarily a good thing; he prefers to see companies starting small and iterate their designs to continually improve their offerings. As an example, he mentioned Petnet, which is commercializing a robotic food dispenser for pets. It might look like a simple gadget, but Petnet is adding new features such as sensors to track how much food a pet is eating (which might give hints about its health) and microphones and cameras so owners can interact with their animals from anywhere. This approach, Grishin said, will allow Petnet to create a product that has the right capabilities and price point to eventually "disrupt a multi-billion dollar industry."
For those considering starting a robot company, Grishin has some advice to offer:
1. Find a particular problem that millions of people have and imagine how a robotic device could fix it. "Focus on everyday things," he says. "Don't try to be too broad; it's better to be a niche where smart hardware and software could make a big difference."
2. Hardware is hard, so be prepared. Build a team with solid experience in both hardware and software. Grishin likes companies that have prototypes or are at a pre-order stage. But it's okay to come to him with just an idea—if he likes the idea, he says Bolt can help transform it into a business.
3. Manufacturing is critical. Grishin argues that robotics entrepreneurs need to acquire more experience with production—how to deal with manufacturers in Asia, ensure quality across their supply chains, manage logistics and so forth. He points to the alarming number of crowdfunded hardware projects that have failed.
4. Finally, don't forget about design. "Design is super important," he says. "Nobody will buy an ugly robot."