There don’t seem to be any sidewalk delivery robot services going, but the person who came up with the idea says it makes money and has now raised more money to grow to meet market demand. A startup from Estonia called Starship Technologies was one of the first to use robots for delivery. It has now raised $90 million to solidify its place at the top of its field.
There are two new investors in this round: Plural, a venture capital firm with roots in both Estonia and London that announced a new $430 million fund last month; and Iconical, an investor based in London backed by Janus Friis, a serial entrepreneur who helped start Skype and is also a co-founder of Starship.
Starship has now raised a total of $230 million. Other investors in the company include the Finnish-Japanese company NordicNinja, the European Investment Bank, Morpheus Ventures, and TDC.
As in past rounds, Starship Technologies is not saying how much it is worth.
Friis and Ahti Heinla (Skype’s first engineer) started Starship ten years ago. Since then, the company’s robots have made 6 million deliveries in neighborhoods and on college campuses in about 80 places in the U.S. and Europe, traveling a total of 11 million miles. Companies like the grocery store chain Co-Op, the on-demand transportation business Bolt, and food service companies like Aramark, Sodexo, Chartwells, and Grubhub are some of its partners and customers.
Heinla, who was CTO but was secretly made CEO again in December, said that the company will use the extra money to grow into new areas. It will also soon start a new robot manufacturing plan with a partner that hasn’t been mentioned yet to make its cars faster. It also plans to keep putting money into its software and logistics services. Its robots can currently work at Level 4, which is very close to being fully autonomous. Their batteries usually last for 18 hours, and they are now being upgraded so that they can be charged wirelessly.
Heinla said in an interview that his company is the biggest player in the space right now because it has made 6 million deliveries and driven 11 million miles. But you need to look at that comment in the bigger picture.
Amazon delivered more than 2 billion Prime-based items to customers in the U.S. alone in 2023. This shows how big the market could be, but also how small Starship is right now.
But it’s interesting that Starship is still around and making money. It’s hard to build businesses in this space, as shown by the fact that FedEx and Amazon had to shut down their well-known sidewalk delivery robot projects, Nuro had to restructure, and we’ve heard of problems at other companies. Plus, Starship’s owners were in a legal battle in the U.S., which made things even more difficult.
As a result, Starship wouldn’t say why its U.S.-based CEO, Alastair Westgarth, quit at the end of last year. However, it looks like Starship has been thinking about how to best move into its next phase in the current market, which includes focusing more on Europe rather than the U.S.
“Right now, we are not just focusing on the U.S.,” Heinla said. “All I can say is that I was the first CEO.” There were changes at work, and we wanted to set ourselves up well for the future.
Plural partner Taavet Hinrikus was an early investor in Starship and, like Heinla and Friis, a very early Skype user. He said that the change in leadership happened separately from the fundraising, but he backed it.
He said, “It’s hard to build tech companies.” “You know what they say about founders: the magic is in their hands. Here we have co-founders who are determined to shift the world.”
Starship and other games like it do have a window of chance. Self-driving cars and services for them are still having a hard time because of tough unit economics and safety concerns. However, cities and towns are opening up to more transportation options to help cut down on pollution and traffic. It also sounds like people are more likely to make room for the simple delivery robot that rolls slowly down the path.
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“I don’t think our robots have ever been rejected by communities like self-driving cars,” Heinla said. “A lot of people love them. They try to feed them bananas.
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