From Disney’s lovable trash collector, Wall-E' to The Terminator, robots have captivated the imaginations of their human creators for decades, embodying both hope and fear for the future.
That tomorrow is now today, with robotics a very real and transformative force, reshaping industries and solving some of the world’s greatest challenges. Critical labour shortages, aging populations, falling hardware costs and AI are driving billions of dollars of investment into Robotics. What was once a futuristic fantasy or perceived technological overkill, has become an urgent global necessity, with venture capitalists betting big on the technology poised to redefine how we live, work and interact. This article delves into the industries where robotics is making the biggest impact, revealing just how close we are to encountering these modern marvels in our daily lives.
Written by: Marcus McGrigor
Dynamics & Drivers
The pandemic brought with it both boom and bust for the venture ecosystem. Whilst valuations and capital deployment soared in 2021 and 2022, the market couldn’t sustain itself in 2023; the result of strong economic headwinds, geopolitical uncertainty and bad press. This financial pull-back saw funding pools dry up for start-ups, including those in the robotics sector. However, robotics has proved more resilient than most, especially in Europe, where it fetched over $2Bn in 2023, which is only slightly less than it did during the tech boom years of 2021 ($2.6Bn) and 2022 ($2.4Bn). Due to several factors, including the fact the pandemic actually highlighted a societal need for robots, the sector showed strength where others did not.
Since 2019, $90Bn worth of funding has been invested into the robotics industry, representing roughly 10% of overall investments in technology during that time. In 2023 alone, investors put $12.9Bn into robotics companies, with the average monthly investment being about $1.07Bn.
Historically, robotics has been a tricky area for investors, after all, the field requires a high upfront costs and continued commitment to bring things to market at scale. Until recently, investors were hesitant to move into the realm of robotics due to the high costs of research, development, prototyping and manufacturing, as well as longer iteration cycles compared to software-based ventures. Whilst these concerns are still associated with robotics, recent events have shed a different light on the sector.
The pandemic, geo-political conflicts, aging populations, employment shortages and the arrival of generative AI have changed sentiments towards robotics, not the least among investors. What we have now is an apparent conviction that robots are not just nice to have technologies, but instead, they are a crucial and entirely necessary feature of economic stability going forward. And, the numbers seem to reflect this.
The global robotics market totals $53.2Bn this year and is projected to rise to $178.7Bn by 2033. This represents a robust compound annual growth rate (CAGR) of 16.35%. Expansion is thought to be fueled by advancements in AI and machine learning, a growing need to address labor shortages and rising wages, a surging demand for automation, government-backed initiatives and funding, and an expanding range of applications across industries.
According to an ARK Investment report robotics represents a $24Tn global revenue opportunity for investors thanks to the convergence of AI software and hardware. This is based on the principle of Wright’s Law, which states that the cost of a technology decreases by a consistent percentage each time its global production doubles. Putting this to the test, the average cost of robot manufacture fell from over $68,000 in 2005 to $27,000 in 2017. In 2025, it will cost just $10,800 to build a robot on average.
In 2024, the robotics sector experienced a remarkable funding resurgence, with investment in the first half of the year surpassing the total for all of 2023. It is now on track to approach its 2021 peak of $18.8 billion, reflecting renewed investor confidence as automation continues to prove essential. However, this optimism is somewhat skewed. Most of the funding this year has been raised and invested in mega deals greater than $50M, while early-stage ($2.5M–$15M) and mid-stage ($15M–$50M) robotics investments remain stagnant, failing to exceed 2020 levels.
Logistics & Manufacture
One of the earliest and most successful applications of modern robotics has been in warehouse and logistics automation. Since Amazon’s acquisition of Kiva Systems in 2012, numerous robotics startups have emerged, aiming to close the gap with Amazon and claim a share of this lucrative market. With only 10% of U.S warehouses currently automated, companies like Locus, Fetch, and Berkshire Grey are among the key players disrupting the space and seizing the opportunity. This comes against a backdrop of major job shortages throughout the logistics and manufacturing sectors.
As of Feb 2024 over 300,000 manufacturing and a similar number of warehouse jobs were considered unable to be filled by human workers in the US, according to the Bureau of Labour Statistics. Additionally, more than 1 million jobs in logistics and manufacturing were reported unoccupied in 2024 - twice the amount of six years ago. This is a huge problem and one that is driving investment into robotics at an increasing rate. Out of a total of $4.1Bn invested in robotics last year, 27% was allocated to logistics. Manufacturing received 6% in turn.
Defence & Security
Defence has emerged as a pivotal yet challenging sector within robotics, driven by escalating concerns over national and private security in an increasingly volatile world. The growing complexity of modern threats—ranging from cyberattacks to autonomous warfare—has amplified the demand for cutting-edge solutions that can outpace traditional defence systems. Robotics has become central to this evolution, enabling advancements in surveillance, unmanned vehicles, and tactical decision-making.
According to F-Prime, defence robotics stands out as the second-best performing robotics subsector, commanding 20% of total VC funding in 2023—a testament to its strategic importance and growth potential. Companies like Shield AI, Epirus, and Anduril are leading the charge, securing significant deals to develop AI-powered drones, counter-drone systems, and autonomous defence platforms. These innovations promise to redefine the defence landscape, offering governments and private entities unparalleled capabilities to detect, respond, and neutralize threats. As geopolitical tensions intensify, the convergence of robotics and defence is not just an area of growth but a critical frontier shaping the future of global security.
Farming and AgriTech
Japan, among many other nations, is turning to robotics to tackle its severe agricultural labor shortages caused by an aging and shrinking population. With 43% of farmers over the age of 75 and an average farmer age of 68, the country is looking to robotics to fill the void. A recent experiment, from Kyoto based company, Tmsuk, using a solar powered, robot duck called Raicho 1 to reduce human labor in rice farming by 95% (from 529 to 29 hours) with only a 20% drop in yield, showcasing the potential of automation to transform the sector. Their goal to reach 45% self-sufficiency rating by 2030 looks unlikely without the use of robots in agriculture.
Beyond addressing labor shortages, robotics is also transforming agriculture through precision farming technologies. These systems use advanced sensors, GPS, and AI to optimize resource use, from planting and irrigation to pest control and harvesting. By targeting specific areas of a field with tailored interventions, precision agriculture not only boosts productivity but also reduces waste and environmental impact. For example, robotic weeding machines can distinguish between crops and weeds with remarkable accuracy, cutting down on herbicide usage. This blend of efficiency and sustainability positions agricultural robotics as a key player in feeding a growing global population while mitigating the environmental challenges of traditional farming methods
Automated Vehicles
Automated vehicles (AVs), including driverless cars, trucks, and robotic delivery systems, are a key subsector of robotics aimed at transforming public road transportation. In 2024, AVs attracted the lion's share of robotics funding as companies like Uber, Waymo, and Aurora advanced monetised operations, signaling growing consumer adoption. This marks a significant rebound from 2023, when investment in autonomous vehicles plummeted from over $9.7Bn in 2021 to just $2.2Bn.
While transporting humans garners much attention, the e-commerce boom has driven substantial investment into delivery robots, which dramatically reduce costs. For example, robotic delivery systems used by FedEx and Walmart can operate at just $0.06 per mile—20 times cheaper than human-driven delivery, highlighting their potential to revolutionize last-mile logistics.
Transport of humans is not the only purpose for automated vehicles either. The E-commerce boom of the last decade has drawn huge investment into robotic delivery systems. Robotic rollers used by FedEx, Walmart and other companies could cost as little as $0.06 per mile, 20 times lower than the cost of human delivery.
Humanoids & Household robots
The field of humanoid robotics is a relatively new area, despite numerous pop culture representations in films and books. Humanoids are systems resembling human beings, and thanks to AI, behaving like them. They have broken new ground in 2024 with venture funding hitting an all time high $911M invested across 11 deals to May 31st. These are staggering numbers compared to 2023, which saw a total of $320M invested in humanoids over the whole year. According to some estimates, the market for humanoids could reach upwards of $40Bn in the next 10 years. Given today’s market is estimated at $2.5Bn, this signals a huge growth trajectory and major opportunity for investors.
The reason for such growth is the result of increased demand caused by labour shortages in manufacturing, logistics, healthcare, social services and other areas where work is repetitive or considered dangerous. Goldman Sachs predicted humanoids could reach over a million units by 2031. In a report which it proclaims is a “bullish” analysis they foresee humanoids being the most commonly adopted technology behind electric vehicles (EV’s) and smartphones. Though, this is an ambitious outlook it must be said.
Adoption for humanoids could be driven by demand for household assistance as the ratio of baby boomers to caregiving-age individuals is expected to more than double within the next decade. The nursing staff shortage that intensified in recent years shows little sign of abating, highlighting a critical gap in healthcare systems. Looking ahead, with human resources stretched thin, the need for innovative solutions in health and aging—particularly those that can bridge the caregiving gap—is becoming increasingly urgent. Caregiving robots have the potential to step into this role, offering assistance with daily tasks, monitoring health, and providing companionship to aging populations within the home.
However, household robotics faces unique hurdles, as consumer behavior remains notoriously unpredictable and the home itself represents one of the most unstructured environments imaginable. Despite advances in robotic technologies, this complexity has proven difficult to navigate. Alphabet’s decision to fold its Everyday Robots project underscores the challenges, demonstrating that even vast resources and expertise cannot yet crack the code of home service robotics. While robotic vacuum cleaners have found success by mastering a specific and relatively straightforward task, the broader demands of home life—such as cleaning diverse surfaces, navigating clutter, or assisting with caregiving—present far greater obstacles that current technology struggles to overcome.
Challenges & Exit landscape
Robotics is not without its risks, and especially for investors.
As previously mentioned, consumer behaviour is notoriously hard to predict, and the adoption of robots in the household for example, is for the most part, conjecture at this point. There are also considerable macro headwinds to be aware of. A lack of M&A in recent times underpins a treacherous exit landscape for founders and investors with only six mergers/ acquisitions and zero public offerings reported in 2023; down from 13 and 4 in 2021 respectively. 2024 is on track to deliver even less by the end of the year with just M&A 3 exits.
This trajectory is a worry for investors, who will be aware that the relatively high initial expenditure associated with robotics is not bearing fruit, though current results are not necessarily an indicator of future performance. It’s also worth noting that while VC funding in robotics is impressive this year, the majority of this has come at the later stages, mostly in mega deals worth greater than $50M. Earlier stage ventures have remained at the same level as recent years.
Robotics is no longer a fringe fascination—it’s a rapidly evolving cornerstone of innovation with the potential to address some of the most pressing challenges of our time. From automated warehouses easing supply chain bottlenecks to humanoid robots poised to assist aging populations, the applications are as diverse as they are transformative. Yet, the sector remains a tale of two narratives: soaring investor confidence in high-growth areas like logistics, defence and humanoids, juxtaposed with the risks posed by unstructured environments, high costs, and a challenging exit landscape.
For VCs, the opportunity is both immense and complex. Success requires a long-term perspective and careful navigation of the sector's unique hurdles. As the robotics revolution gathers pace, it’s clear that the next wave of innovation will be defined not just by the technology itself, but by how effectively it integrates into the fabric of our everyday lives.
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