When you have the right product at the right time, the market responds accordingly. Even if that time happens to include a worldwide pandemic. And while it’s true that COVID-19 “definitely presented turbulence,” as Matt Rendall and his team negotiated their way to a successful Series C raise, it’s equally true Rendall’s company, OTTO Motors, a division of Kitchener’s Clearpath Robotics, has the right product at the right time.
“What we're seeing is a very strong [impact] on the demand for our product based on COVID-19, says Rendall, whose firm announced US$29 million in funding Monday – all of it from Canadian investors.
OTTO Motors makes industrial robots, machines that help companies with their manufacturing and operational processes. Even before the pandemic took hold, OTTO Motors’ products were in demand, as companies looked to automation as a solution to labour shortages and to make production more efficient. The company says it installs more than 70 per cent of its AMRs, or autonomous mobile robots, in the manufacturing plants of Fortune Global 500 companies, including GE, Toyota, Nestle and Berry Global.
Now, as those same companies are forced amid the pandemic to renovate processes in order to keep workers safe, OTTO Motors’ solutions are in even greater demand. Robots can’t be infected and don’t mind working in close proximity to human beings.
“We sell to Fortune 500 manufacturers that have five-year automation roadmaps, many of whom are now compressing their automation roadmap into a year,” explains Rendall.
Clearpath Robotics CEO Matt Rendall.
“In one example, where previously a customer would want to start with one plant, prove it out and then go to three plants, prove it out and go to 10 plants, we've got a customer now who is saying I want to start with 10 plants and then I want to go to 100 plants,” he said. “And we’re going to do that all in two years, which is just an unprecedented pace.”
Ultimately that story resonated with Kensington Private Equity Fund, the Toronto-based lead investor on OTTO’s Series C raise (participation also came from Bank of Montreal Capital Partners, Export Development Canada and previous investors iNovia Capital and RRE Ventures).
“Definitely,” says Rendall. “I can’t speak entirely on behalf of Kensington but we had pretty open dialogue through the process. There’s a lot of uncertainty [at the moment in many sectors of the economy].
“Fortunately, in our industry, it’s a pretty straightforward rationalization to say: This compelling event increases demand for the type of product that we produce, and so it helped reinforce the investment thesis for Kensington in spite of the market volatility and the changes in available capital in the overall markets.
“To have Kennsington remain committed to the transaction [and] even more bullish on the transaction than before [COVID-19] unfolded, we feel very fortunate about that.”
Rick Nathan, Senior Managing Director at Kensington, says Clearpath and its OTTO robots have been on its radar for some time.
“We see strong trends favouring the acceleration of industrial automation generally, with Clearpath positioned very strongly to benefit from this rapidly growing sector,” Nathan said in a release. “OTTO’s technology leads the market for core infrastructure for the factory of the future. It is becoming increasingly important for customers across all manufacturing and a compelling opportunity for our investors.”
The injection of new money, Rendall says, will allow OTTO Motors to invest in its autonomous vehicle platform and its core technologies. It also will allow the company, which has a significant presence in the U.S., to push more determinedly on its ambitions internationally, particularly in Asia, Europe and South America.
Given those international ambitions, Rendall was asked if Waterloo Region continues to serve Clearpath, which now has 260 employees, as well as it did when the company started up in 2009. His answer was emphatic.
“You know, that's a really great question. I don’t really know where else you could operate a business like ours anywhere in Canada. So I would say absolutely, Kitchener-Waterloo is an enabler for us. The combination of cutting-edge, advanced technologists coming out of the University of Waterloo – we've got a very strong relationship with the autonomous vehicles lab at the University of Waterloo – combined with the deep heritage in manufacturing and industrial automation [gives Waterloo Region] a unique intersection of skill sets that you’d be really hard-pressed to bring together anywhere else in Canada.”
