I’ve come to believe that with startups, timing is everything. It’s particularly true in the case of SIERA.AI, an Austin-based company that has created and is now commercializing autonomy software solutions for materials handling in the manufacturing and logistics industries. Though SIERA.AI is a young company, they’re building an impressive book of business with Fortune 500 companies. I recently sat down with SIERA.AI CEO Saurav Agarwal who will be presenting during our February Road Show, on just how well his company’s positioned for the market and the opportunities this affords. Here’s our conversation.
BP: What are the trends within the materials handling space that made you believe you could solve the industry’s challenges?
SA: In short, it’s explosive growth and the growing pains that have come with it. Over the last five years, there’s been a boom in the logistics industry, due in part to the transformation that’s taken place in the retail industry. These numbers are a bit dated, but from 2014 to 2016, 833 million square feet of warehouse space came online in the U.S. alone. You can look at Indiana’s I-65 corridor and see expansion is still occurring.
In response, manufacturing and logistics companies are adding about a million forklifts to their operations each year. At the same time, there’s a shortage of 43,000 certified operators. It’s not an easy job. Drivers operate 10,000-pound machines in tight spaces. There’s no room for error. Sometimes drivers get careless. According to OSHA, there are 96,000 forklift-related accidents a year, with losses of upwards of $9.5 billion a year and lost wages of $3o billion. And that’s just the U.S. The opportunity for disruption was obvious.
BP: Explain your solutions.
SA: SIERA.AI builds autonomy software for forklifts. We have two primary offerings: a basic version, for accident prevention, and a pro version, for full automation. The SIERA Safety System (S3) is added to existing driver-operated forklifts to sense and prevent accidents before they happen. The system constantly tracks driver behavior and streams real-time data to the cloud for deep analytics. The monitoring has a distinct impact on driver behavior and that coupled with S3’s ability to prevent accidents has a profound impact on safety, productivity and loss due to accidents. Driven by SIERA.AI is our autonomous mobile robot technology; forklift robots if you will. The robots map and navigate in the customer’s facility on their own, interface using Wi-Fi with the MES/ERP systems and industrial controls, and get the job done safely and reliably. Both options can be added to existing forklift fleets or can be licensed by OEMs.
BP: What’s your revenue model? Is it an initial purchase and then monthly licensing?
SA: Yes, there are unit sales and annual recurring revenue from licensing our software.
BP: What market traction do you have to date?
SA: We have five active pilots, two flagship clients converting to full adoption, and over $6 million in deals we’re currently negotiating. One of our clients is Tyson Foods; our SIERA.AI Safety Solution is in their beef processing plant in Dakota City, South Dakota. One of their biggest problems is forklift manufacturers don’t include safety technology, and they wanted to eliminate accidents. In their pilot, which took place over three months, more than 5,000 miles were driven with no accidents or near misses. Management also noted a significant change – for the better – in driver behavior. Tyson Foods has 8,000 forklifts in its fleet and could potentially license 3,000 of them with SIERA-AI, a nice amount of recurring revenue.
BP: What are the barriers to adoption?
SA: With the labor shortage and high cost of accidents and lost wages, the SIERA Safety System and our autonomous robots are both very attractive to companies that need to move goods safely and avoid costs. The beauty of SIERA.AI’s solutions is companies can use both the enhanced safety solution and robotics side-by-side for human-robot collaboration.
BP: What’s your competitive advantage?
SA: First, we have a great product market fit; SIERA.AI has the only available forklift brand agnostic safety and automation product on the market. Second is our speed to market and accelerating traction. Finally, our solutions will be well protected. We’ve filed four utility patents and four provisional patents and hope to finalize those by Q1 2021.
BP: How much money are you raising and what will the funds be used for?
SA: We’re currently raising a bridge round of $500,000-600,000 and have $175,000 in soft commitments. The capital will be used to fulfill current orders – we’ve signed orders (recurring revenue, 5-year contracts) worth $400,000 in mid-January. We also need to hire an additional engineer, deployment manager, and sales and marketing team members so we continue to grow.
BP: Why should VisionTech Angels invest in SIERA.AI?
SA: The most compelling reason to invest is the market wants our solution; we’re solving huge industry problems. We’ve booked significant sales and our pipeline includes Fortune 500 companies that recognize our value. We’ve come extremely far in two years with very little capital and with VisionTech Angels’ investment, we can move that much faster.
To learn more about SIERA.AI visit their website. To RSVP for the VisionTech Angels’ February Road Show, visit our events calendar. Accredited investors interested in learning more about joining our group should contact Ben Pidgeon, bpidgeon@visiontech-partners.com.