Last week, we co-hosted Robotics Inflections: The Next Chapter in Silicon Valley with Cybernetix Ventures, where founders and investors came together to discuss key topics shaping the future of robotics. The event highlighted key inflections on technology and business fronts, with conversations that were equal parts thought-provoking and practical.

As the robotics industry enters a turning point—from the successes of scaled RaaS models to groundbreaking advances in new form factors and generalizable models—the panelists discussed the keys to success for the next generation of founders. In this blog, we breakdown the top takeaways from the event.

1. The business of robotics: What sets great companies apart

Software as a differentiator

On what truly distinguishes successful robotics companies, a recurring theme was the importance of software. While hardware is an essential component, it’s the software—AI-driven analytics, integration with core systems, and customer-centric tools—that serves as a primary differentiator. Founders were encouraged to focus on investing in their software approach to create long-term value.

Key business scaling strategies

Industry veterans shared their top tips for scaling:

• Go deep within a vertical: Startups should iterate quickly outside of the lab and deliver products that solve real-world challenges. Working very closely with early customers helps create tight product alignment with their needs.

• Strategize what to build vs. buy: Building everything from scratch can be a costly mistake. It is important to identify which components need to be custom-built, versus what can be sourced off-the-shelf.
• Prototyping and iteration are critical: Robotics is inherently complex, but founders can simplify their path by starting small, prototyping quickly, and staying open to pivots. Simulation tools can help validate ROI ahead of building physical systems, saving time and resources.

Overall, keys to scaling include the value of deep customer insight, strategic focus, and flexibility in building.

2. What investors look for in robotics startups

Robotics companies face unique challenges. During fundraising, venture investors often use robotics-specific criteria when deciding whether to partner with founders. Three key evaluation metrics were highlighted:

1. Ease of deployment and ROI: Solutions must offer clear value while minimizing adoption and implementation friction for customers.
2. Strong unit economics: While metrics like gross margin and burn multiple can take a backseat during early stages, it becomes critical at the growth stage.
3. A clear TAM (Total Addressable Market): Investors want to see realistic, specific markets identified that are prepared for automation and sized in the billions—not just broad, catch-all categories like “logistics” that are inherently associated with giant numbers.

3. Technology trends: forces shaping the robotics future

Simplicity is key

One key insight that stood out is the importance of simplicity – solving an application with the most compact form factor and fewest degrees of freedom (lowest complexity of motion).

By limiting hardware innovation to what is essential and focusing on software for differentiation, robotics teams can streamline their development process and scale more effectively. Simulation tools were highlighted as a potential game-changer, enabling teams to validate ideas virtually before committing to physical systems.

Humanoids: Hype vs. reality

Humanoid robots have captured the public imagination in recent months. However, while current technologies—like multi-sensor systems, tactile interfaces and general-purpose vs application-specific models—are advancing, they’re not yet practical for industrial applications. Wheeled robots and hybrid platforms are seen as more reliable for factory environments, versus purely legged form factors.

Safety and reliability remain paramount for adoption in industrial use cases.

Robotic Foundation Models (RFMs): Opportunities and challenges

The conversation around RFMs— robotics foundation models —was met with measured optimism. While exciting, RFMs raise important questions: 1) Does generalization improve performance meaningfully? 2) Do generalized capabilities align with customer ROI?

For most use cases today, specialized models tailored to specific applications continue to outperform generalized solutions. However, RFMs could play a role longer term in expanding markets by supporting more flexible robotics systems. There is a tradeoff between a single system performing many tasks with moderate performance (“jack of all trades, master of none”), versus a more specific system executing one or a few tasks at extraordinary levels (“master of one, or a few”).

4. The business model question: Robotics as a Service(RaaS) vs CapEx

This was the topic of engaged conversation and some debate. The following key insights were brought out:

• RaaS drives growth through recurring revenue: This model creates a dynamic relationship with customers, offering ongoing value through continually improving software and services. It’s not just about selling a product—it’s about delivering an evolving solution that keeps customers engaged and invested over time. However, while RaaS affords more predictable revenue streams and stable year-to-year top-line, it requires substantial upfront funding and careful cash management.
• Upfront /CapEx oriented models can still benefit from a recurring revenue layer: Founders who adopt a traditional CapEx approach were encouraged to explore additional revenue streams, such as software subscriptions or maintenance services, to create steady cash flow while retaining flexibility.

Speakers emphasized the importance of carefully evaluating a company’s margins and funding runway before committing to a specific model. For many robotics startups, the decision between RaaS and CapEx is not just about short-term feasibility—it’s about aligning the business model with long-term growth potential, customer ROI, and customer budgets.

Looking ahead: pragmatism and patience

As robotics continues to redefine industries, one thing is clear: building successful companies requires a balance of vision, pragmatism, willingness to adopt the latest technologies and a relentless focus on solving real customer problems.

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"You don’t need to build everything. Find the sweet spot between what you want the robot to deliver and how to get there in the simplest way."

Our Robotics Inflections event highlighted the importance of staying grounded in practicality while embracing the complexity and opportunity that robotics advancements bring.

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At NGP, we continue to be excited about robotics, automation, and the intersection of AI and physical systems, having invested in companies like GrayMatter Robotics, ANYbotics, and SVT Robotics. If you’re a founder building in this space, or an enterprise customer exploring new solutions for your business, please each out to our investment team: Debjit, Upal, Eric, in the US and Christian Noske if you are based in Europe.