Kiwibot, a robotic last-mile delivery service, has signed a deal worth $10 million, with Swiss-based asset financing group kineo finance to invest in their fleet of autonomous robots. The deal, the first of its type in the sector, will see kineo purchasing Kiwibot’s delivery robots at cost and leasing them back to Kiwibot.
Leasing, which is common in more established sectors, helps Kiwibot manage its working capital more effectively, allowing them to focus on developing and expanding its service beyond its current base. It also marks a milestone for the sector as a whole. Although Swiss-based kineo focus on startups and innovation, they take a long-term view, and the traditional sale-and-lease structure of this deal suggests that the autonomous delivery sector has reached the next stage in its maturity.
Kiwibot’s CEO and founder, Felipe Chavez, told TFN a little more about the deal and what it means for Kiwibot.
Intelligent and efficient delivery robots on demand
Founded in 2017 with a pilot at the University of California, Berkeley, the Starship autonomous delivery robot rival now has a presence at 27 US college campuses and 41 cities worldwide. The service uses high-driving robots that operate at level four on the autonomous driving scale — in other words, within normal operating situations, they are completely autonomous, with human intervention only needed for truly unusual situations.
“Our robots are self-sufficient in most of their operations. They can reach their destination while solving problems in various scenarios,” says Chavez. Kiwibot’s robots will remain on pavements, avoiding pedestrians, animals and obstacles, crossing roads only at safe points. Kiwibot have calculated that their robots can cut delivery costs by upto 65%. “They only need supervision for very specific high-risk moments,” Chavez continued, “we always take efficiency into account, but pedestrian safety is our priority.”
Kiwibot’s robots manage their tasks through a combination of traditional GPS and their own generated maps, allowing them to identify multiple routes to ensure they can reach their delivery point. This is then supplemented by their own onboard software and remote monitoring, meaning that while each Kiwibot is relatively small, it’s also sophisticated. But it’s also expensive.
Freeing capital to focus on delivery of food, not robots
The finance deal reached with kineo helps Kiwibot avoid sinking significant capital upfront in their robots, leaving them more scope to invest in development and expansion. “It is a straightforward sale and leaseback,” Chavez explained. “Once we manufacture them and ship the robots to their final destination, we sell them to kineo at cost.”
Chavez views the partnerships as highly significant. “The partnership is monumental because it is kineo’s first involvement in the delivery-as-a-service industry,” he says. “While the funding scene in the robotics industry has taken a few tumbles, this first-of-its-kind financing deal sets a precedent for other startups.”
Leasing arrangements are common in many industries, allowing businesses to better manage their operating capital by avoiding sinking large amounts into physical assets. Kineo’s deal with Kiwibot is notable because, unlike many other sectors, the asset in question — a delivery robot — may not have the resale value that assets more often involved in leaseback deals would have.
Chavez acknowledges that wider uncertainty is part of the reason Kiwibot’s deal is a first, “the trickier thing for a leasing company wanting to enter the robotics market is understanding the risk and reward balance of the business.” However, he feels that Kiwibot’s offer helped overcome that uncertainty, saying they offered a promising opportunity because of their “positive unit economics, enforced contracts, and high-profile clients.” Kiwibot has established partnerships with several household names, deliveries are available via the Grubhub app, and they have established relationships with major chains like Dunkin’ Donuts, Subway, and Pizza Hut.
Chavez’s view is echoed by kineo themselves. Charles Sellman, kineo finance’s president, commented that, “Kiwibot’s growth in the DaaS sector meant it was a logical choice for us to support its robotic deliveries helping businesses today—and for the future.”
Growing the Kiwibot fleet
Kiwibot hopes that the deal will enable rapid expansion of their service. “In a capital-intensive business, it is paramount to have certainty about the cash available for current and future production,” says Chavez. “kineo’s facility removes this concern from our day-to-day tasks, allowing us to focus on the operational side of the business.”
One of the immediate areas will be enlarging its fleet, allowing them to deliver more food to more people and places. “The facility will allow us to go from 540 robots to thousands in less than 18 months,” says Chavez, “boosting our manufacturing capabilities and supplier relations.”
