Investment Notes: Ripe Robotics

Read why AfterWork Ventures invested in Ripe Robotics, Australia's first fruit picking robots.

Have you ever wondered how that big, juicy apple made its way into your hands? Chances are, it passed through a lot of other hands. In the future, it might pass through the ‘trunk’ of a friendly, fruit-picking robot called Eve:

Ripe Robotics is a Shepparton-based startup building computer-vision enabled, modular robots that can help farmers to pick fruit, faster and with better precision than humans.

The fruit-picking market a big one: In Australian, the industry is worth $5.5 billion; 1 trillion apples, oranges, and stone-fruit are picked every year. The industry is hugely reliant on backpackers who act as itinerant farm labourers, including those incentivised by Australia’s iconic working holiday visa, which offers extensions if the traveller completes three months of farm work.

The global pandemic, and our associated international border closures, threw this precarious industry into disarray. As the New York Times reported, without backpackers to pick them, crops rot by the tonne in Australia: “the pandemic has exposed the shaky labor foundation of the country’s agriculture industry”. Farmers across Australia were left helpless, and racing against the clock: “just a couple of extra days on the tree, and apples can be relegated to low-profit juice”.

Enter Ripe Robotics, co-founded by Hunter Jay and Leopold Lucas, who have a big vision to empower farmers and reduce waste… with robots!

What we loved about the opportunity

A visionary team, kicking goals on a shoestring budget

Hunter and Leo have been friends since University. Hunter is an Engineer, while Leo has worked across law, business development and sales, and was most recently a strategy consultant at Accenture. This team is seriously scrappy; they combined their engineering and business nous, and on a $70k budget, built three robot prototypes, secured a provisional patent, and signed three early customers with average contract values exceeding $1 million.

The team have also unlocked strategic relationships through accelerators and cohort programs, in both the agriculture and technology ecosystem. Ripe Robotics took part in the inaugural Western Growers’ Global Harvest Automation Initiative, and is today graduating from Startmate - ANZ’s most prestigious startup accelerator.

Solving an endemic painpoint; exacerbated by the pandemic

Farmers rely on itinerant fruit pickers; but hiring, training, and managing this itinerant workforce is difficult and costly - representing 40% of a farmer’s cost base. Moreover, those inexperienced in fruit-picking take time to skill up - during the ramp up, they’re wont to pick fruit before it’s ripe, or damage fruit with rough handling.

Add in a pandemic and international border closures to the mix, and you have farmers tearing their hair out; in February 2021, there were 7,000 fruitpicking vacancies in Australia, and millions of dollars of fruit rotting on trees.

Ripe Robotics addresses this pressing pain-point; Ripe’s robots can pick fruit and change bins at a similar speed to humans, but can work under more conditions, including at night, and needs less downtime. Ripe’s computer-vision enabled sensors ensures it only picks fruit that is ripe, and fruit is picked in a manner which results in less spoilt fruit from rough handling (in our due diligence we learnt that a bruised apple can only fetch 10% of the price of a good apple).

Capital efficient, scalable hardware

AfterWork loves to back capital efficient companies. As we discuss in our investment principles: capital efficient companies are able to make swift and iterative changes in their product development, business model, and go-to-market strategies with limited resources. Generally, capital efficient companies are able to grow much faster than companies that are capital intensive, and are able to experiment and course correct where needed.

As a hardware company, it’s sometimes difficult to be capital efficient. However, with their resourcefulness and ingenuity, the Ripe team have pulled off this feat. Ripe’s robots are modular: constructed from off-the-shelf components, which can be swapped out and upgraded as computer vision and sensor technology improves. This modular approach has allowed Ripe to execute at pace; Ripe can manufacture fully-functioning robots in two weeks, and 10% of the cost of some of its direct competitors.

In leveraging mass-produced, widely-available component parts, Ripe can also establish local presences in major fruit growing regions across the world, as most of these component parts are readily available in all developed markets. Supported by lean assembly and maintenance teams, Ripe is able to deploy its machines in new markets without having to build costly production facilities in each new geography.

Moreover, the modularity of Ripe’s robots allows them to be rejigged to perform other tasks - such as pruning, thinning, and pre-sorting. This means the machines can be used year-round and deployed against many tasks, drastically expanding the addressable market opportunity.

The challenges we saw

Will farmers be open to adopting a new piece of technology?

Historically, farming has been an industry that has lagged in technological adoption. We questioned whether farmers would be willing to entrust their precious fruit to robots, manufactured by a startup.

Ripe are doing a few things to de-risk the purchasing decision for farmers, including operating a robotics-as-a-service business model. Rather than charge a hefty upfront fee for a robot, Ripe leases the robot to farmers and charges per bin of fruit picked. Similar to product-led SaaS companies, farmers can trial the service risk-free, and scale up their usage as their need grows. This model aligns Ripe’s incentives’ with the farmers - Ripe will only get paid if it delivers outcomes.

The pandemic has also created a wedge opportunity, as farmers are willing to try new solutions that can help them with their biggest headache. In the last 6 months, Ripe has built a pipeline of over $100 million, and have pilots live with three major growers.

Ripe Robotics prototype 'Clive' visits Griffith orange orchard | Good Fruit  & Vegetables | Australia
The Ripe team and their first prototype ‘Clive’, with a grower in Orange

Well-funded competitors have tried and failed to tackle this challenge

Globally, Ripe is not the first team to build fruit-picking robots. For example, California-based Abundant Robotics, which raised $14 million USD to build its apple picking robots, shut down earlier this year. Abundant Robotics built a complex robot optimised for large-scale commercial picking; but its unit was expensive, non-modular, and difficult to transport. We are hoping that Ripe’s modularised robots will be less costly to produce, easier to sell into smaller farms, and set up to ship faster and scale more rapidly.

The questions we had for the team

How do you evolve your current prototypes into a replicable, scalable fleet of robots?

From the outset, the Ripe team have utilised an iterative development process, which produces fully-functional robots in eight weeks, right at their customer’s farm. The process involves six weeks of development, one week of integration, and one week of deployment and testing. This tight loop allows for iterative and incremental improvements. At the end of eight weeks - all issues are logged. If there are no major issues, the team will highlight the biggest obstacles they encountered, and work on pre-empting these obstacles in the next development cycle. By trialling under real-world conditions at their customers’ farm, the customers context and perspective is incorporated into the development process throughout.

How we built conviction

Dave Insull, who co-led this deal, lives in New Zealand’s Hawkes Bay - the fruit-bowl of New Zealand. During the pandemic, farmers in the Hawkes Bay were confronted with the spectre of millions of dollars worth of fruit rotting on trees due to labour shortages. Although the pandemic may be a ‘black swan’ event, it highlighted the precarity of the fruit-growing industry, and the need for a more reliable, scalable solutions.

After all, as our population grows, not only do we need more food, we need smarter ways to feed the planet. We’re delighted to invest in Ripe Robotics alongside co-investors such as Vow’s Head of Engineering Soroush Pour and the Angel Investors of Marlborough.

Since our investment, we’ve loved watching the Ripe team grow and go from strength to strength. Today the team graduated from Startmate’s Winter 2021 cohort at Demo Day, and blew our socks off! We’re so excited to back this team - and we for one, welcome our new robot overlords.