Strange phenomenon in China's service robot market: industry is hot but investment is cold

Both the national level and the capital market are looking forward to the explosion of the service robot market in the next few years, but before the explosion comes, each company needs to continue to delve deeper into its own field.

In the view of Yang Zhiwei, partner of Jinshajiang Venture Capital, the era of getting financing by telling a story is over. Service robots are an industry with a very high threshold. After paying attention to the industry for two years, he seems to be more cautious about investment.

Since the service robot industry involves multiple core technologies such as hardware and software development, as well as artificial intelligence, a large amount of capital investment is required, but the entry of capital does not seem optimistic.

An investor who has been paying close attention to service robots told the 21st Century Business Herald reporter that according to incomplete estimates, the total amount of capital entering the industry currently does not exceed US$500 million, only a dozen companies have received investment, and most investors are still waiting and watching.

In contrast to the calmness in the investment circle, the interest in service robots continues to rise.

In November, at the World Robot Conference held in Beijing, Vice President Li Yuanchao said: Judging from future trends, service robots will become a new hot spot.

On December 10, the Service Robot Exhibition and Robot Industry Promotion Conference opened in Shanghai and Qingdao; the China Robot Industry Development Conference will also be held in Guangzhou.

Frequently holding conferences cannot solve the pain points of industrial development, but they all send the same signal: the service robot market is rapidly developing.

The 21st Century Business Herald reporter learned that the release of the 13th Five-Year Plan for the robotics industry may be postponed until next year, and the new round of draft for comments will be revised in mid-November. A person involved in the revision of the plan told the 21st Century Business Herald reporter that the new draft proposed more detailed goals and content, including specific plans for service robots.

Arturo Baroncelli, president of the International Federation of Robotics, said at the Robot Conference that it is expected that in the next three years, the number of service robots will exceed 15 million and sales will exceed 20 billion yuan.

Perhaps seeing the huge potential demand, the main players in the market are more diversified, the four major robot companies and domestic mainstream robot manufacturers have laid out their businesses, and start-ups have sprung up like mushrooms after rain. The product forms include various categories such as home use, entertainment, education, and medical treatment.

There are many market participants, but it is not easy to achieve the above goals. "The potential demand for service robots is huge, but the total volume of the industry is small, the technical level is generally low, and it is still far from industrialization," Zuo Shiquan, director of the Equipment Industry Institute of CCID Research Institute, told the 21st Century Business Herald reporter.

Finding explosive niches

Although several major sub-sectors have been initially differentiated, the business model is not clear and all participants are still exploring.

In an interview with a reporter from 21st Century Business Herald, Qu Daokui, president of Siasun Robotics, said frankly: "The prospects for service robots are promising, but so far, it is still unclear in which segment the robots will explode. We only know that there is a large demand for some types of robots, but when the market will start and what the profit model will be, all need to be explored."

How to find the right entry point into the market under huge demand may be the first question that practitioners in this field need to think about and explore.

From the perspective of the products it has launched, Siasun seems to be targeting the public service direction. On December 10, Siasun released a goods delivery robot at the Service Robot Exhibition, which is mainly used in hotels. This robot has the functions of autonomous charging, walking, and avoiding, and integrates technologies such as mobile robots, multi-sensor information fusion and navigation, and multi-modal human-computer interaction. Previously, Siasun also released a food delivery robot.

Song Chenfeng, CEO of Beijing Xiaoyuer Technology Co., Ltd., said that he has found a direction and is at the forefront of the industry. When most similar companies are still in the conceptual stage, Xiaoyu has already achieved mass production, which is rare in the industry.

The company's "Xiaoyu at Home" is positioned as a family intelligent companion robot with multiple functions such as face tracking and recognition, multi-party video calls, interactive social sharing, etc. Current data shows that users communicate with their families through Xiaoyu 6-8 times a day on average and talk for more than 75 minutes a week.

"Everyone agrees that robots can enter homes and provide services to family members," said Song Chenfeng.

As a former Microsoft Xbox product manager and a former apprentice of Kai-Fu Lee, Song Chenfeng also had previous entrepreneurial experience. With his team and precise product direction, Xiaoyuer Technology gained the favor of capital in the early stages of its business.

At present, Xiaoyuer Technology has completed nearly 30 million US dollars in financing in rounds A and B, and the company's valuation has reached 100 million US dollars. After the capital was in place, Xiaoyuer Technology introduced Foxconn to expand its production capacity and achieved large-scale mass production in June this year.

Song Chenfeng believes that the company was able to attract investors because it caught the demand. "Only when the demand is clearly stated can we get the money. In the A round, we first look at the team, and then the direction and demand. We found a point to enter the family in the big demand and reached an agreement with the investors." Song Chenfeng said, "In the B round, all investors are Xiaoyu users. After having experience, they made the decision to invest."

Beijing Kangli Youlan Robot Technology Co., Ltd. is also a darling of capital. The company is currently jointly invested by Kangli Elevator and Tsinghua Unigroup.

In September this year, Kangli Elevator issued an announcement that the company plans to raise 1.41 billion yuan in additional funds to develop intelligent manufacturing, of which 490 million yuan will be used to acquire 56% of the shares of its subsidiary Kangli Youlan and increase capital. This is Kangli Elevator's second investment after it invested more than 50 million yuan in the company at the end of 2014.

Kangli Youlan CEO Liu Xuenan revealed to reporters that the next round of financing is underway, and investors include not only Kangli Elevator, but also a number of listed companies and investment institutions.

The Youyou robot has a similar appearance to the Japanese emotional robot Pepper, and is the second commercially available product after Pepper. "We have received many orders, which is why investors value us. The stories we told have all come true," said Liu Xuenan.

Ju En Technology, which has also attracted investors' attention with its technical strength, released a housekeeping robot, Xiaozhi, in mid-November, and was approached by many investors. He Yong, CEO of Ju En Intelligent, revealed to reporters that the company's A round of financing received a total of US$6.2 million, including from Jinshajiang Venture Capital. The ongoing B round of financing is going smoothly and will be announced in a while.

"Although there are many companies developing service robots, the number of service robots available on the market is extremely limited," said He Yong. "The core technology of robots is artificial intelligence, and the core technology of artificial intelligence is actually in the cloud."

Waiting for a good project

As the number of market players gradually increases, the number of investors paying attention to the field of service robots is also increasing, but the speed of capital entry is not fast.

As one of the institutions with more investments in the industry, Jinshanjiang Venture Capital has invested in three projects. "The entire investment circle is looking at service robots, but most of them are still conceptual, and few can produce products. The industry threshold is high, and the team and technology are mainly considered in the early stage, but whether to continue to invest in the future depends on the application of technology in vertical fields." Yang Zhiwei said.

JD.com Investment Director Yang Shiyi has been paying attention to service robots for more than three years and has looked at dozens of projects. Although he knows all the products on the market, he has not yet made an investment decision. In his opinion, new market players have emerged in an endless stream in recent years, but there are not many exciting products, and the real explosion of the market is still a long way off.

Yang Shiyi recalled that when he was looking at projects in 2013, no company was working on them, and the products were aimed at geeks. Now, there are more related companies, and with the development of IoT technology, they are gradually becoming available to the general public.

But the more he understands, the more he is willing to wait for a better project. "The explosion will happen in the niche areas that are supported by traditional categories. It is difficult to create a new product education market. It may not be realized even after ten years. At present, there are two major market prospects and product directions that are at least clear, family members and education, "toys" category." He said.

"For 'toy' products, it depends on the product and shipment volume. If you can't make a product, just wait and see. For high-tech robots, it depends on the technical level. It doesn't matter if you can't make a product within one or two years."

Different investors value different things, but they all share the same expectation for breakthroughs in artificial intelligence technology.

Sun Meng, vice president of Gobi Ventures, expressed interest in companies that break barriers in the field of artificial intelligence. "The greatest value of artificial intelligence is how it can more intuitively understand human behavior. Companies that do well in this field are more likely to attract capital attention."

Chen Kai, partner of SK Telecom Ventures, believes that artificial intelligence was originally a term in computer science, and from an investment perspective, it should be implemented in application scenarios. The market for combining robots with smart homes is huge.

"I've only seen dozens of them now. Maybe I'll have it when I see the 100th one," Yang Shiyi joked.

The night before the outbreak?

Both the national level and the capital market are looking forward to the explosion of the service robot market in the next few years, but before the explosion comes, each company needs to continue to delve deeper into its own field.

Attaro Baroni, president of the International Federation of Robotics (IFR), predicted at the World Robot Conference that domestic service robots, entertainment robots, service robots for the disabled, security service robots, cleaning robots, etc. will all become very important categories of service robots.

"We believe that with the continuous improvement of technologies such as electronic devices, indoor navigation and artificial intelligence, the global service robot field has a market worth hundreds of billions of dollars. We will maintain continuous innovation," said He Yong.

"Before that day comes, we need to expand offline sales, connect online and offline, enhance the experience, and impress consumers with higher cost-effectiveness," said Song Chenfeng.

"Judging from the robot development plans of Japan and South Korea, the next step will focus on service robots. I personally feel that the time for a domestic explosion has not yet come, and it is difficult to judge when the starting point will be. At this stage, we should not invest blindly. Companies should focus on technological research and development to welcome the explosion." Zuo Shiquan said.

Qu Daokui is full of confidence in service robots. "Unlike industrial robots, the demand in the service field is unpredictable. Various cross-disciplinary technologies are developing, and the market explosion will be realized as the technology matures."