Berkshire Grey (BG), a developer of integrated artificial intelligence (AI) and robotic solutions for e-commerce, retail replenishment, and logistics, has entered into a definitive agreement with Revolution Acceleration Acquisition Corp. (RAAC), a special purpose acquisition company, to create a leading publicly listed robotics and automation solutions company.
Founded in 2013 by the current CEO Tom Wagner, Ph.D., the former chief technology officer at iRobot, BG is a pure-play robotics company offering fully integrated, AI-based software and hardware solutions to automate business operations in warehouses and logistics fulfillment centers. The company’s solutions help retailers and logistics companies meet the exponential growth of e-commerce and ever-increasing consumer demands.
BG’s offerings bring together proprietary AI with differentiated hardware to create robotic picking systems and multiple types of robotic mobility systems, which are combined in an orchestrated fashion to drive operational efficiencies. Differentiated hardware includes full robots, sensing systems, gripping systems and machine vision systems. Operational efficiencies achieved by BG customers typically result in a return on their investment in as little as two to three years, according to the company. BG intends to grow its commercial organization to meet increasing demand for its services, deepen its relationships in key industry sectors, and build out new, value-added services.
John Delaney, the Chief Executive Officer of RAAC, will remain on the Board of Directors of the combined company upon completion of the transaction.
“Berkshire Grey was founded to help our customers compete even more favorably in the rapidly evolving worlds of retail and logistics,” said Tom Wagner, Founder and Chief Executive Officer of BG. “Consumer expectations have changed, putting more pressure on supply chain operations to get the right goods to the right places at the right times, as efficiently as possible. Over the last 12 months the pandemic amplified the already high pressure to transform, so today it is no longer a question of if companies might transform but how quickly. We are incredibly excited about this transaction, which will enable Berkshire Grey to accelerate growth and provide new and existing customers with our leading robotics solutions,” Wagner concluded.
“Today’s consumers expect a better selection of goods, at lower prices, with shipping that is immediate,” said John Delaney, the Chief Executive Officer of RAAC. “In our judgment, Berkshire Grey’s best-in-class technology and uniquely integrated solutions provide a critical pathway for companies to adapt to these changing needs. The Company’s strong relationships with an installed base of blue-chip clients is a testament to its ability to deliver tangible and measurable results that empower companies to compete even more effectively. Steve Case and I are honored to partner with Tom and the rest of Berkshire Grey’s talented team and investors to realize this singular opportunity to revolutionize how businesses operate. I look forward to joining their Board of Directors.”
The transaction is expected to provide up to $413 million in cash proceeds, including a fully committed private investment in public equity (PIPE) of $165 million, with current BG shareholders Khosla Ventures, New Enterprise Associates, Canaan Partners and SoftBank Group Corp. rolling 100% of their equity into the combined company. The PIPE is anchored by Chamath Palihapitiya, Founder and CEO of Social Capital, Hedosophia and funds and accounts managed by BlackRock.
At closing, BG expects to have approximately $507 million cash, which will be used to fund operations and support new and existing growth initiatives, and no debt on its balance sheet. All references to available cash from the trust account and retained transaction proceeds are subject to any redemptions by the public shareholders of RAAC and payment of transaction expenses. The transaction, which has been unanimously approved by RAAC’s Board of Directors and BG’s Board of Directors, is expected to close during the second quarter of 2021 and is subject to approval by RAAC’s stockholders and other customary closing conditions.
Wagner spoke with Modern about the agreement announcement with RAAC, and explains the move has three main areas of benefit: additional financial strength; a means of bringing BG forward as a public company; and additional expertise on the board from RAAC.
“When it comes to the financial aspects, this [agreement] is a great thing for us,” said Wagner. “It enables us to deliver more for current and for new customers.”
Some of added resources will go into further market expansion into geographies including Europe and Asia Pacific regions, where BG is already present, but wants to expand further, said Wagner. The funding influx will also help provide resources needed for BG’s growing robotics-as-a-service (RaaS) option, as well as more generally, add people with skills in software, robotics design and manufacturing, and research and development, as well as needed roles in areas like support and services.
“This investment means that we can add features and capabilities to existing solutions and existing robots, and it also means that we can develop more new technology, some of which will come forward as additional features [for existing solutions], and some which will come forward as new solutions,” said Wagner.
In terms of being able to offer more value-added services, Wagner said the business combination with RAAC will give BG more resources to put into options like running robotics solutions on behalf of customers, as well as more resources to grow maintenance services. Wagner added that the “jury is still out” on whether most end-user companies want a robotics vendor to run robotics solutions for them, but that the added finances will help BG expand on such services should demand for them take off.
Wagner explained the BG has several types of robotics products, such as picking arms and picking robotics, autonomous mobile robots (AMRs) and mobile robotic shuttles for transport, as well as software to orchestrate robotics with, so it has always taken a wholistic approach to solutions. “The underlying technologies are complicated, so what we do is to offer customers a solution which incorporates picking, incorporates mobility, and then orchestrates all of that,” he said.
As for going public, Wagner said it adds financial strength and better long-term access to capital markets, while also instilling confidence in BG’s independence. “Our goal has always been to be a publicly traded, standalone company,” he said. “This helps our customers to understand that we are independent, and we are going to be independent. Otherwise, when it comes to technology companies, people can be fearful of acquisitions that might take technology off the table for them. So for us, being public is partly about independence, and partly about finances.”
BG had $35 million in revenue last year, and expects to generate $59 million in revenue in 2021. Another figure the company is sharing is that since its inception, its order total is $114 million.