“It’s important to investors that we launched the project despite the war”: interview with Deus Robotics
The Ukrainian startup Deus Robotics, which develops robots for working in warehouses, had an eventful year. Because of the war, it failed to receive promised investment funding of $5 million and had to move the business to another city. However, it managed to launch a major project and then found a new investor. AIN.Capital talked to the startup’s co-founder Pavlo Pikulin about how the team survived in 2022 and raised money.
You were supposed to get $5 million from BGV Trident Capital, but you didn’t get. Why did that happen?
It was a classic force majeure situation. We concluded and signed an agreement and should have received the money on March 1, 2022. But a full-scale war broke out. It was a very understandable reason for not fulfilling such an agreement. The investor explained his decision by saying that with the outbreak of the war, there were problems needed to be solved. So, they paused the investment.
We had to survive at that time, so we evacuated, started working on the new projects, and looking for a new investor.
How have you been surviving? How was it for you to be in the middle of a war?
We weren’t actually prepared for it. I spoke to my team a few days before the invasion: “A war could not reach Kyiv. It is nonsense because if they would attack, we will fight them back. They do not have enough troops to take Kyiv. Russia will have terrible losses.” I thought then that Russians had some clue in their heads. I was sure that Russia would never do such a stupid thing. But unfortunately, it appeared I was wrong. The luck became a bad joke, and I had to organize people and business relocation in a rush.
On the first day of the war, we did not think about business — all thoughts were about ensuring the safety of colleagues, family, and friends. We returned to trying to save the company only the next day.
Your company is a hardware startup. How difficult was it to transport all the equipment and robots?
If Nova Poshta hadn’t worked, it would be practically impossible. Those days, everybody was evacuating, and all trucks were fully loaded. They gave us trucks and drivers for free. At the time, it was unclear where Russian troops were, in fact. There was news that their paratroopers landed next to the capital. However, the information was constantly changing. It seemed possible to face invaders everywhere you might have come.
Finally, we decided to move when we were assured that Nova Poshta will provide us with a test facility in Mukachevo for the project we were working on in Bila Tserkva. The demounting, loading, and transportation to Mukachevo took only a day.
By the way, it was more difficult to relocate not the equipment but the people. There was no accommodation at all. It was impossible to place our team together, so our employees moved to different cities in western Ukraine. Some of them had to drive 2-3 hours to the office.
Housing prices were also unbelievable: you had to pay for a 2-bedroom apartment in Mukachevo like you would pay for 3-4 apartments in Kyiv. But there were no options.
Could you share some details on the Bila Tserkva project for Nova Poshta? Was it the same you had to evacuate?
Before the full-scale Russian invasion of Ukraine, we performed robot tests there but didn’t start production yet (so the clients and staff hadn’t used the robots).
After relocating to Mukachevo, we continued with tests to guarantee a smooth launch. After Russian forces ran out of the Kyiv region in April, we returned with all the hardware in May and launched our robots in August, as they should be.
How did you become acquainted with SMRK and raise investment during the war?
We have known Vlad Tislenko (Editor’s note: SMRK partner) since 2017. Back then, I told him about my dream: to create industrial robots. We kept in touch, and even before the war, were communicating with his investment fund, but at that time, we had no projects under development to show them. Besides, before the war, as we said, we had attracted other investments (which we have never received).
The fact that we could launch a commercial project despite such difficult conditions: the war, lack of funds, and having to relocate, was the crucial criterion for the investors, which ultimately affected their positive decision. After all, most hardware projects do not even reach the market in peacetime. Developing hardware is hard — that is true. Of course, the war affects investors’ decisions and startup evaluations. Business is business, and any evaluation considers risks, which are high for Ukrainian businesses right now.
You had previously negotiated a $5 million round, but this time you only raised $1.5 million. Was the war the reason for that?
We could have raised even more. The sum was affected not by the war itself, but by the fact that we changed our plans because of the war. We were supposed to spend $5 million on building a robot factory in Kyiv. But we decided it was too risky to build it now and started manufacturing robots in the existing factory under contract. So we needed less money.
I would not say that investors have less money now. They are simply investing less frequently because of the fall in the global market and the financial crisis. Investment companies have money, but startups just need to work harder now.
How do your robots look now, and what can they do? Do you plan to expand the line?
The production line remains the same, but we made some improvements, for example, for the sorting robot. Sorting is an essential process in a warehouse. Postal companies need to sort thousands of packages in various directions every day. In big companies, thousands of employees work with costly, many-million-euro worth sorting lines, like in airports.
However, every line requires human operators who put and take packages off the line. Our robots can triple (if there are no sorting lines in use) or double (if there are) warehouse human work efficiency.
We have another robot that transports racks. It would be proficient in fulfillment centers that process online shop orders. For instance, there is an order with 10 articles. Either it’s a guy running from one point to another to get all the stuff or a robot approaching a standing operator with racks. In the latter case, the human order processing effectiveness is multiplied by five.
If you visit any warehouse, you will notice that employees there run a lot. On average, an employee of a warehouse can run up to 10 kilometers per workday. Our task is to transport goods by robots from point A to point B, so that warehouse employees run less. If robots do all the moving of goods around the warehouse, the efficiency of such a warehouse increases significantly.
It is too early to talk about new robot models. For that, we will need to increase the team and raise more funds. Some new work is possible next year.
A core of your technology is artificial intelligence. Could you explain what data it processes?
I think a robot, by default, is a physical incarnation of artificial intelligence. We apply AI in different areas. First is obstacles and people recognition during the movement. Our robots are safe. The AI can recognize close objects and decide whether the robot should take a detour or stop. Second, robots analyze the space with their sensors to calculate the current location. And third, we use AI to plan robot routes. Our system can operate 100 or 5,000 robots, and they must not interrupt each other movement.
The system plans an optimal way and even can forecast robots’ whereabouts in the future. That’s how we avoid jams in the storage.
What are you going to spend your raised funds on? Marketing, finding clients abroad, new people in the team?
We will spend most of the money on marketing and promotion in the US. We plan to open a sales office. So we are already looking for people who will deal with sales and business development there.
Now we are also looking for robotics engineers to join the Ukrainian team.
Who do you see as clients? Big postal companies, maybe Amazon (but is has its own robots, I suppose)?
We are particularly interested in postal operators. As for Amazon — why not? The fact is that there are no robots yet that will cover 100% of the processes in warehouses. So there are logistical complexities and challenges in every company’s warehouses, and that’s where we see an opportunity for us.
After a year of the war, are there any other occasions that affected the function of your robots?
For instance, the highest load of our hardware is during air alarms when employees must leave their workplaces. This is where robots can show their usefulness because they are not afraid of an air alarm and continue operation.
They also make it possible to work in the settlements and towns close to the front line where people can’t risk their lives. Our robots could be great in military storage.