Entrepreneurship

Startups Tackling Labor Shortages Draw More VC Interest – Crunchbase News

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For decades, startups and the venture capital industry have touted themselves as engines of job creation.

Sure, they’ve ushered in technologies that decimated scores of jobs and occupational categories from newspaper deliverers and taxi operators to travel agents to telephone operators.  

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But, the argument goes, startups have also pioneered whole new careers that didn’t exist decades ago. This includes titles like social media marketer, robotic process automation engineer, Uber driver, Airbnb host, Instacart shopper …  and the list goes on.

Now, in a job market beset with labor shortages, it seems the gig economy startup boom may have created demand for services far exceeding the supply of workers. If so, we can expect that going forward, startups working to automate repetitive, risky or unrewarding tasks will be getting a greater share of buzz in venture circles. 

“Certainly today we see areas of work where there aren’t enough people to do that work,” said Peter Barrett, founder and general partner at Playground Global, a deep-tech focused venture firm that is backing startups looking to bring automation to areas including cancer therapy, farming and e-commerce fulfilment. 

More money to mechanize jobs

Those are a few of many industries targeted by automation-oriented entrepreneurs. In fields from construction to transport to homecare to food service, employers are struggling to fill open positions at prevailing wages. 

Startups and growth-stage companies are increasingly securing funding to do these jobs. A survey of seed-stage funding rounds in Crunchbase for 2021 showed labor-saving robotics as an increasingly popular investment theme. A curated list featured companies such as Bear Flag Robotics, a developer of autonomous tractors; Pickle Robot, maker of bots for package handling and logistics; and Chef Robotics, which is bringing robotics to restaurant kitchens.

Of course the popular mental image of automation — a metal man doing someone’s job — isn’t an accurate depiction of how things actually work, Barrett notes. In the real world, automation may be purely software or a mix of hardware and software. And the notion of taking a job isn’t quite right either. Usually it’s more about reducing or altering the human tasks required to do the job.

That’s the concept behind one of the biggest venture-backed exits of 2021, the IPO of robotic process automation (RPA) provider UiPath. The company, recently valued at around $38 billion, touts its mission on its homepage: “We make software robots, so people don’t have to be robots.” In other words, it looks for ways to get software to do the boring and repetitive aspects of desk jobs.

UiPath is one of several RPA companies to raise massive funding, with the sector seeing brisk investment and dealmaking of late. Two tech behemoths — SAP and ServiceNow — have made acquisitions in the space this year, respectively snapping up German startup Signavio and India-based Intellibot.io. Meanwhile, UiPath’s best known venture-backed rival, Automation Anywhere, is reportedly getting prepared for a potential IPO filing of its own.

RPA software allows companies to automate aspects of invoicing, data entry and even customer service and marketing. Purveyors of the technology generally pitch it as a way not to eliminate jobs but to free up time for employees to focus on higher-value activities. However, some observers of the space see a good likelihood that bots will reduce the ranks of white-collar jobs over time. 

Industry and agriculture

Startups are also targeting industrial jobs. Path Robotics, a developer of  autonomous welding robots, just raised $56 million in Series B funding to scale a technology founders and investors say could help relieve an expected severe labor shortage among American welders. Without some solution, such as automation, the company says the shortage could lead to “a choke point for American manufacturing across industries.”

The list of other industries automation-oriented startups are targeting is lengthy, covering agriculture, shipping, warehouses, and pretty much anywhere there’s a repetitive job to be done.

Of course, there are plenty of jobs robots can’t do. For instance, when visiting California lettuce farms as part of diligence for autonomous tractor portfolio company Farmwise, Barret said he was struck by the skills involved in picking lettuce.

“It’s a highly skilled, multisensory talent … It has to look right, smell right, sound right,” he said. “No one knows how to make a robot that can do that.”

Restaurant workers increasingly made of metal

Meanwhile, on the hourly wage front, actual metal machines are coming to do jobs in a number of categories.

“For restaurants, we think intelligent automation is going to transform the industry,” said venture capitalist and startup entrepreneur Buck Jordan, founder of Wavemaker Labs, which is incubating and developing several labor-reducing technologies in the food-prep space. His portfolio includes Miso Robotics, maker of a burger-flipping robot, as well as machines that will make precise boba milk tea and artisanal pizza.

On the food front, it’s noteworthy that much of the recent startup activity around automation seems centered on products and services, such as custom boba tea and on-demand delivery, that have become mass-market hits in the past couple of decades. It’s a reminder of the extent to which we modern humans regularly add new and enticing consumables to our routines.

Relying on actual humans to satiate our never-ending wish lists will inevitably be futile.  If we want to continue and augment upon a modern pampered lifestyle of on-demand products, services, and deliveries, it’s clear machines will need to do an even bigger share of the work.

Illustration: Dom Guzman


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