Matt’s Top 3 SPAC Targets – Robotics


Matt’s Top 3 SPAC Targets – Robotics

SPACInsider contributor Matt Cianci this week compiled his three favorite potential SPAC targets that provide practical robotics solutions. We look at why they are compelling and why each could be a fit for a blank-check merger.

2020 has been a big year for SPACs combining with technology companies inching us closer to fully autonomous vehicles, but robots are set to show up in many more contexts than the highway.

Robots in the workplace are frequently thought of as human replacements. But, few companies have developed platforms that can fully replace workers and this approach is saturated with startups.

Meanwhile, robots that increase human productivity and automate undesirable human tasks are getting less attention, despite having much more concrete value propositions. Shahin Farshchi, a partner at venture capital firm Lux Capital, told Tech Crunch recently that this space needs more companies that “Solve latent pain points in specific, well-understood industries versus building a cool robot that can do cool things.”

Locus Robotics

Locus Robotics certainly fits this criteria as a maker of autonomous mobile robots that move products around ecommerce fulfillment warehouses allowing workers that pick specific products from the shelves to focus exclusively on that function. In addition to increasing efficiency, Locus case studies have seen accident rates in warehouses go down 77% by eliminating the work of pushing around heavy carts full of goods.

The Massachusetts-based company raised $40 million in a June Series D to help it expand its European presence, but a task that broad would likely stand to absorb more capital. Meanwhile, shipping companies DHL and UPS each announced this year they would be adding more Locus robots to their US facilities.

Another tailwind for Locus is the fact that while apartment rents in the city may be going down with more people working from home, industrial warehouse space is not. Ecommerce demand has kept rents high with tenants looking to raise ceilings for taller shelves and pallets to get more out of their square footage.

Even with whatever gains companies are able to wring out of those modifications, it is expected that the US may need to add another 1 billion square feet of industrial real estate by 2025 to keep up with demand. That is all positive news for the robots helping to stack the shelves.

Think Surgical

Robots are also finding practical applications in one of SPACs’ favorite sectors – biotech.

Think Surgical provides a platform to aid surgeons performing knee and hip joint replacements both at the planning stages and providing an extra hand on the operating table.

Surgeons program their approach to the replacement, including which areas of bone will be removed and replaced by implants, using Think Surgical’s 3D modeling software. Then, the platform’s autonomous arm will position the joint and indicate the precise locations for bone incisions and implantations to achieve optimal fits. The setup can then be used to make the cuts into the bone itself.

This hardware has been cleared by the FDA since October 2019 and is in commercial use since at least January.

The Fremont, California-based company raised $134 million in March 2019 according to Crunchbase, and could well be on the lookout for more capital. All biotech companies are capital-intensive to scale and Think Surgical got to the commercialization finish line at an unfortunate time as the COVID-19 outbreak suspended many elective surgeries such as joint replacements.

Pitchbook noted Think Surgical raised an additional debt round in April, and a SPAC combination could allow it to de-lever while it waits out the virus and be set to rise once operating tables return to normal business.

Eight SPACs are currently searching for a target in the biotech or life sciences spaces with 16 looking more broadly at the healthcare sphere. Many biotech SPACs have combined with early-stage companies with therapeutics still going through the development process this year, but a more mature commercialized target like Think Surgical could potentially draw post-deal trading volume from beyond specialist biotech investors.

Horizon Robotics

While Locus adds robot bodies to warehouses and Think Surgical puts robot arms in operating rooms, Horizon Robotics is focused on building brains for the machines coming to work.

The Beijing-based company has developed five such “brains” that provide AI-computing and processing that can be applied to a variety of scenarios such as understanding speech and interpreting video. Because the processing is happening within the hardware itself rather than being sent to a cloud, Horizon’s tools can react more quickly and are not prone to connection breakdowns.

Many cloud-based technology players have been awaiting the arrival of widespread 5G coverage to put their next generation tools out in the world. But, Horizon’s products don’t have to wait for that bumpy process to play out and may be able to process faster than 5G-connected devices even once it is widely available.

Its processors have currently found applications in autonomous vehicle platforms not only augmenting the vehicles’ outer vision, but also directed back at the driver to identify safety concerns like intoxication, fatigue or distracted driving. But, its “brains” can be put into nearly any robotics platform that needs to be able understand what it is seeing and hearing and learn as it goes along.

The market for smart robots is expected to grow at a CAGR of 30.5% from about $6.1 billion to $23 billion in 2025.

As a result, Horizon has not lacked for investor interest, but of the 20 major investors its lists on its website, only two are US-based – Intel Capital and Silicon Valley venture capitalist Yuri Milner.

It achieved a valuation of $3 billion as it raised $600 million in a February 2019 Series B, which drew investment from a number of Asian automakers and electronics manufacturers.

So, while Horizon is certainly not hard up for cash, a SPAC combination would be the move that bridges it firmly into the US market. It would also provide the a stock serving as an entry point for retail investors into the growth of smart robotics in Asia.