Investors Eye Humanoid Robotics Amid Concerns of Speculative Bubble

Investment in humanoid robotics is surging, reflecting a broader trend within the artificial intelligence (AI) sector. Recent data indicates that while investor enthusiasm is high, many venture capitalists caution that this growth may be more about hype than actual market readiness. This situation raises the possibility that humanoid robotics could become a speculative bubble akin to the dotcom era.

Reports from KPMG and PitchBook reveal that AI investments accounted for over half of all capital funding in 2023. Data from CB Insights further highlights that industrial humanoid robotics is rapidly gaining traction, capturing the highest number of deals in the last quarter—specifically, 17 transactions, surpassing other categories like coding AI agents, which saw 14 deals, and end-to-end software development AI agents with 12.

The surge in investment raises concerns among experts, notably from the Chinese economic planning sector, which has cautioned about the need to balance rapid growth with the risks associated with speculative bubbles. According to Daiva Rakauskaitė, a partner at Aneli Capital, there are notable similarities between the current AI investment climate and the dotcom bubble of the early 2000s. She predicts a potential bubble burst within the next 2-3 years, stating, “Many AI startups that can’t yet generate revenue will fail. While the same risks persist in humanoid robotics, many investors tend to overlook this.”

Rakauskaitė emphasizes the distinction between general robotics and humanoid robotics. While industrial and logistics robots already demonstrate revenue-generating capabilities, humanoid robots have yet to prove their commercial viability. Despite developments showcasing humanoid prototypes performing various tasks—from running to boxing—Rakauskaitė observes a lack of practical applications in commercial settings.

Challenges such as inference capabilities, dexterity, reliability, and cost restrict the initial use cases of humanoid robotics primarily to factories and warehouses. Rakauskaitė advocates for a “revenue-first philosophy” among investors, stressing the importance of focusing on economic fundamentals rather than succumbing to hype. “Investments in robotics and AI are crucial for future development. But investors should back companies with realistic goals based on economics, not hype,” she explains.

Despite the bubble concerns, Rakauskaitė expresses optimism regarding the broader robotics sector. She believes that advancements in AI and decreasing hardware costs are paving the way for real-world applications. Central and Eastern Europe, in particular, presents promising opportunities for startups. The region’s proximity to Germany, Europe’s largest industrial robotics market, alongside its hidden talent pool, positions it strategically for growth.

Rakauskaitė notes that her fund is dedicated to supporting talented founders in this region, emphasizing the need for venture capitalists to assist innovators throughout their journey. “Many hype-driven investors pull back once the hype fades. Yet to create real innovators, VCs must support them through their full journey,” she concludes.

As the investment landscape continues to evolve, the question remains: will humanoid robotics deliver on its promises, or will it succumb to the pitfalls of overvaluation? The coming years will be critical in determining the future of this promising yet precarious field.