After Pulling Its SPAC Deal, Startup Bright Machines Raises $100 Million On Factory-Reshoring Trend – Forbes

by admin on October 30, 2022

Bright Machines microfactories automate electronics manufacturing.

Manolo Lopez, Formidable

Lior Susan figures snarled supply chains, Covid lockdowns in China and geopolitical pressures give U.S. manufacturers a new push to set up factories closer to home. “It suddenly became extremely attractive because we can move fast, and we can help customers build something in Cincinnati and Salt Lake,” says Susan, founder of Eclipse Ventures and CEO of microfactory firm Bright Machines. “It sounds crazy—who builds electronics in Cincinnati in the last 40 years?”

Ten months ago, San Francisco-based Bright Machines pulled its $1.6 billion deal to go public via SPAC as the market turned. The firm told Forbes Monday that it had raised $100 million in venture funding led by Eclipse Ventures (plus an additional $32 million in debt financing) to fund its next stage of growth. The new investment values Bright Machines, whose microfactories automate electronics production lines with robotics, powered by intelligent software, at $938 million.

The lower, below-$1-billion valuation aside, abandoning the SPAC now looks like the right move for Bright Machines. The SPAC trend hasn’t shaken out well for many companies that went through with their deals. Numerous tech companies have seen their valuations fall, while a number of industrial firms that have gone public have seen their shares collapse. Warehouse robotics firm Berkshire Grey, which went public via SPAC in a $2.7 billion deal, is now worth just $337 million, while 3D-printing company Desktop Metal, once valued at $2.5 billion, now sports a shrunken market cap of $827 million. With the new private-market funding, Bright Machines has the cash to expand without the pressures from public investors.

“We got together as a board and said, ‘We’re not ready to be a SPAC company,” says Susan, who became CEO at the same time. “We didn’t feel the environment was in the right place and in hindsight we were right. It was too early as a company to do quarterly earnings.”

A serial tech entrepreneur in Tel Aviv before founding Eclipse, Susan took over from Amar Hanspal, the former co-CEO of AutodeskADSK. Since then, he says that he’s restructured the business, consolidating R&D operations in San Francisco, Guadalajara, Mexico, and Yakum, Israel, on the outskirts of Tel Aviv, and shrinking its Austin location, while refocusing on engineering. As a VC-CEO, he’s doing double-duty, but figures long term he’ll find someone else to take over the top slot. “There are only five billion people way more capable than me,” he says. “I’m sure I’ll find someone to hand off to, but not anytime soon.”

Bright Machines is building modular microfactories in smaller U.S. cities that include Charlotte and Cinicinnati.

In 2018, Bright Machines launched with a lot of fanfare and a plan to bring robotics and software to manufacturing, helped by a whopping $179 million in Series A funding led by Eclipse. The company was put together “to really tackle this big underserved environment by bringing more automation and software to the factory floor,” Hanspal said at the time. It was one of a number of venture-backed startups, including Parsable, Tulip and Vention, that aimed to use technology to change the way manufacturers operate.

Bright Machines gained rapidly during the pandemic when manufacturers saw their supply chains in China shut down, Susan says. “Even before the trade wars, the biggest change I saw was in the first quarter of 2020,” he says. “It started with everything being reset.”

Eclipse Ventures’ Lior Susan took over as CEO of Bright Machines last December.

Courtesy of Bright Machines

The company’s revenue reached $83 million last year, up 145% from $34 million in 2020. Since its launch, it has deployed more than 100 microfactories in 132 countries, including smaller U.S. cities like Charlotte, Cincinnati and Salt Lake City. It serves more than 40 global manufacturing companies through its suppliers and partners.

The automation and modular design allows companies to set up factories at a reduced cost in the U.S., where salaries and wages are higher. In a recent poll by Forbes, Xometry and Zogby, 28% of manufacturing executives said they were reshoring their factories and another 29% said they were nearshoring, or bringing their factories closer to home markets.

Susan argues that while manufacturing domestically is roughly 30% more expensive on an apples-to-apples comparison, “there is actually an orange on the table here.” What he means is that once you add in all the other costs from shipping to quality inspections in Asia, as well as the risks associated with not having the product where it needs to be on time, making stuff in America can look pretty good.

Then, too, the Biden administration has jump-started electronics manufacturing with the Chips Act, with both IntelINTC and Micron announcing multibillion-dollar factories since its passage. “Without getting into politics, I was in some ways surprised that this administration is doing more for onshoring manufacturing and figuring out how to revamp manufacturing than the previous administration,” Susan says. “Regardless of who is in the White House, that trend is not going to change in the U.S.”

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