The sidewalk delivery robot industry appears to be stagnating, but a pioneer claims it is lucrative and has received funds to expand to meet demand. Starship Technologies, an Estonian delivery robotics business, raised $90 million to solidify its market leadership.
Plural, an Estonian-London VC that announced a $430 million fund last month, and Iconical, backed by serial entrepreneur Janus Friis, a Skype and Starship co-founder, are co-leading this latest investment round.
Starship has secured $230 million from NordicNinja, the European Investment Bank, Morpheus Ventures, and TDC.
As with earlier rounds, Starship Technologies won’t disclose its valuation.
Since Friis and Ahti Heinla (Skype’s first engineer) co-founded Starship a decade ago, its robots have flown 11 million miles across neighborhoods and campuses in 80 U.S. and European locales, delivering 6 million deliveries. Bolt, Co-Op, Aramark, Sodexo, Chartwells, and Grubhub are its partners and customers.
The CTO who was discreetly reinstalled as CEO in December, Heinla, said the business will utilize the fresh money to expand geographically. It will also invest in its software and logistics services and develop a new robot manufacturing scheme with an unnamed partner to speed up car production. At Level 4, its robots are nearly autonomous, with 18 hours of battery life, and are being updated to charge wirelessly.
Heinla stated in an interview that his firm is the largest in the space, with 6 million deliveries and 11 million kilometers driven. That assertion must be contextualized.
Amazon delivered over 2 billion Prime-based items to U.S. consumers in 2023, demonstrating the market’s promise but Starship’s limited size.
However, Starship’s existence and profitability are noteworthy. The closure of FedEx and Amazon’s sidewalk delivery robot projects, Nuro’s reorganization, and other concerns highlight the challenges of creating operations in this domain. Starship’s investors’ U.S. legal conflict complicated matters.
Starship wouldn’t comment on why its former U.S.-based CEO, Alastair Westgarth, left the company at the end of last year, but it appears that Starship is considering a shift toward focusing more on Europe rather than the U.S.
“We are not focusing exclusively on the U.S. at the moment,” Heinla remarked. “I was the starting CEO. Since the company changed, we wanted to position ourselves properly for the future.”
Starship’s Plural partner, Taavet Hinrikus, an early investor and Skyper like Heinla and Friis, stated he backed the leadership move regardless of the funding.
“Building tech companies is hard,” he remarked. “The magic is about the founders, and here we have co-founders who want to change the world.”
Starship and similar companies have a chance. While self-driving vehicles and services struggle with unit economics and safety, governments are exploring more transportation options to minimize traffic and pollution. Additionally, people may make way for the humble delivery robot gently rolling down the pavement.
“Unlike self-driving cars, I think our robots have always been accepted in communities,” Heinla remarked. “People adore them. They attempt to give them bananas.”
