Why We Invested in Locus Robotics
E-commerce has quickly become a pillar of the modern industrial economy, representing an impressive 22% of global sales in 2022.¹ This has been massively positive from a sustainability perspective as e-commerce has an up to 36% lower carbon footprint than brick-and-mortar retail.²
However, persistent labor shortages and rising wages mean that e-commerce players are struggling to keep up with today’s demands. Approximately 73% of warehouse operators can’t find enough labor,³ which threatens the speed, reliability, and affordability that consumers have come to enjoy with e-commerce.
The clear solution is increasing levels of warehouse automation, which comes in several flavors from fixed automation including automated storage and retrieval systems (ASRS) and goods-to-person (G2P) systems to more flexible solutions such as cobots, which roam freely in the warehouse assisting workers with their fulfillment tasks.
Automation further enhances the sustainability value prop for e-commerce by dramatically increasing throughput within the same facility, leading to a reduced physical footprint for warehouses, and driving down energy and materials consumption (to run and construct sites).
In speaking with blue-chip e-commerce players, we learned that flexible automation has the most compelling growth trajectory over the next 1–2 decades, the advantage being threefold: (i) no significant upfront investment required, (ii) clear ROI in both large and small warehouses; and (iii) high suitability for brownfield sites (6–7x larger opportunity than greenfield) with minimal disruption to the existing site layout.
Enter Locus, the market leader in autonomous mobile robots (AMRs) for warehouses.
Rather than replace humans, LocusBots work alongside warehouse employees to enhance productivity and throughput while increasing order or “pick” accuracy. Locus has historically focused on piece-picking operations for small items across e-commerce, healthcare, and industrial applications. However, they’ve recently expanded their capabilities with new higher payload, industrial strength bots. With its full product suite of Origin, Vector, and Max bots, Locus is well-positioned to go after a massive $45B+ market opportunity for warehouse automation.
G2 is thrilled to co-lead Locus’s Series F round alongside Goldman Sachs Asset Management. There are many reasons we invested in Locus, but our core thesis was driven by the company’s (i) attractive customer value proposition; (ii) stellar business model and commercial metrics; and (iii) seasoned, purpose-built team.
[1] Attractive customer value proposition
- As part of diligence, we spoke to 13 blue-chip customers who provided remarkably consistent perspectives on Locus’s value proposition.
- Multiple customers told us that Locus increased worker productivity by 2–3x on average, resulting in material labor savings and higher throughput within existing facilities.
- Customers quoted us a 12–18 month payback period for the Locus system, with faster and faster payback periods as the system learned and initial install costs were recouped. For these types of systems, a 2–3 year payback is typically sufficient for adoption.
- In terms of soft benefits, we learned that warehouses with Locus had greater employee satisfaction and retention. End-users love the simplicity of the Locus user interface, which gives them a much smoother experience when completing picking tasks. Locus also results in fewer injuries as workers no longer have to walk miles throughout the warehouse to complete their tasks. Lastly, Locus results in greater pick accuracy and fewer mispicks, which increases customer satisfaction levels.
[2] Stellar business model and commercial traction
- Locus is one of the very few robotics players that has been able to deploy a Robot-as-a-Service (RaaS) model at scale. The RaaS subscription model has streamlined customer adoption by minimizing upfront investment while creating predictable and recurring revenue streams for Locus.
- While still early days, the sheer scale of Locus’ operation is unprecedented in the broader AI-powered robotics industry. Today, Locus has hundreds of customers including DHL, Geodis, and others, many with multiple sites under contract and some sites having as many as 500 bots in one warehouse!
- Lastly, Locus has fundamentally attractive site-level unit economics underpinned by impressive expansion rates.
[3] Seasoned and purpose-built team
- We have known CEO Rick Faulk and the Locus team for more than three years. Over that time frame, we have witnessed a degree of consistency and execution that we rarely see in growth-stage companies.
- Rick, formerly CEO of 3PL, Quiet Logistics, has built a veteran leadership team with the average executive having more than 30 years of experience in relevant fields including logistics, tech, manufacturing, and sales.
There is a lot more we can say about Locus and the potential for warehouse automation, but we’ll leave it here! G2 is proud to back Rick and the entire Locus team on the next phases of its exciting journey.
Investment team: Zach Barasz & Neel Mehta
¹Morgan Stanley Research (June 2022)
