SPAC In Focus: Berkshire Grey Ready For Its Debut

For many warehouse automation companies, the time is now to enter the public markets, and that is true for Berkshire Grey, which will likely go public later this month through a reverse merger with special purpose acquisition company (SPAC) Revolution Acceleration Acquisition Corp. (RAAC).

A vote on approval by RAAC RAAC shareholders has been set for July 20. If approved, Berkshire Grey will be valued at $2.7 billion and the company will net $413 million in cash, including $165 million in PIPE (private investment in public equity) financing anchored by Chamath Palihapitiya, founder and CEO of Social Capital, Hedosophia and funds and accounts managed by BlackRock.

Current shareholders Khosla Ventures, New Enterprise Associates, Canaan Partners and SoftBank Group Corp. will convert their equity into the combined company.

Berkshire Grey is a warehouse robotics company founded in 2013 by Tom Wagner, the former chief technology officer of iRobot. This morning, the company announced a $23 million contract with a global retailer to deploy its intelligence enterprise robotics solutions to fulfill same-day online grocery orders. 

"Ordering groceries online became a habit for many during COVID-19.  Driven by this and the convenience of online ordering, our customers need rapid fulfillment of online orders done in an efficient way to meet a range of consumer demands – at the same time our customers need to ensure that the right goods are always on the right shelves at the right times in the store," said Pete Allen, general manager of grocery and convenience at Berkshire Grey. "Berkshire Grey's IER grocery picking solutions provide the grocery industry with the speed and scalability that customers demand while positioning grocers to boost margins and capitalize on the continued changes in the market."

The road to the SPAC has been slower than others, but according to Steve Johnson, president and COO, Berkshire Grey represents a different type of SPAC company – one that is generating revenue. Many SPACs, especially in the supply chain, are pre-revenue companies.

"The reason for the SPAC was we were [planning] to go public," he told Modern Shipper in an interview last month. "It was all about [how] we'll be here for the long run … and when the SPAC came through, it was a really interesting opportunity."

RAAC was founded by AOL co-founder Steve Case. Johnson said the benefits of the SPAC versus a traditional IPO is "you know exactly how much money you are going to raise."

The Wall Street Journal reported in February that Berkshire Grey had $35 million in revenue in 2020 and was expecting $59 million in revenue this year. Customers include Walmart, Target and FedEx.

Berkshire Grey has expanded its footprint, hoping to take advantage of an automation market still in its infancy. The company has said that only about 5% of warehouses are automated today, representing a large opportunity as e-commerce takes greater hold in the economy. Johnson said that it is the software that ultimately makes robotics work.

"We would talk and say we do holistic robots in the enterprise supply chain, but what does that mean?" he said. For intelligence enterprise robotics, "you need to have artificial intelligence enable picking and mobility."

The company offers automation solutions across several "families" of products, including pick robotics, mobile robots and software platforms. Its verticals include retail, e-commerce, third-party logistics, grocery, parcels and mobile applications.

Among its robotics systems are solutions offering various weight capacities and capabilities. The robots typically operate on grids that allow movement at high speeds within inches of each other. A robotic product sortation system can pick and load totes in the warehouse and autonomously deliver those totes to waiting vehicles.

Warehouse automation can dramatically speed the picking and packing process but Johnson said customers need to ask questions about the speed companies claim. He compared it to owning a Porsche in a city – the car might be able to travel at 180 miles per hour, but it's not going to be able to do that on New York City streets.

"It depends on what you are picking. Is it fragile? Is it in different shapes?" he said. "With many of our cases, we don't know what is coming in the bin, so we [have] to identify it" first.

Johnson said the speed is important, but for many warehouse operators, it's the stock-keeping unit coverage that is more important. How many items can the automation system handle?

"It's almost like the industry term [for speed] is meaningless," he said. "You could be picking 1,200 tennis balls in an hour, but how many are selling? You may be done in two hours. … We've seen competitors rip through it, but it's mispicked. Our solutions are about accuracy; it's about damage [control] – you want to have no damage, and then the speed ties into all of those."

Berkshire Grey has a number of competitors in the space, but money keeps flowing and market opportunity seems to be plentiful. In June 2020, Geek+ announced the closing of a $200 million Series C investment round led by GGV Capital, D1 Capital Partners along with Warburg Pincus. Total funding in the company is $439.4 million across six rounds, according to Crunchbase.

On July 1, Zebra Technologies announced it was acquiring Fetch Robotics, an on-demand warehouse automation provider, for $290 million in cash. 

Click for more Modern Shipper articles by Brian Straight.

You may also like:

Social Auto Transport raises $1.5M in seed funding to expand gig economy auto-moving business

Bringg's collaboration with Uber opens new doors for e-commerce

Walmart to begin drone delivery pilot this summer

Image by Jens P. Raak from Pixabay