The Next Industrial Revolution is Here: 3 Manufacturing Tech Startups Leading Industry 4.0

Why Does Manufacturing Tech Matter?

There’s been a lot in the news lately about U.S. manufacturing. Since taking office, President Biden has signed several executive orders in an effort to “restore American manufacturing vitality and industrial strength”.

Over half of U.S. output comes from small and medium (SME) manufacturers. In fact, three trillion dollars in goods are produced annually by factories of fewer than 500 employees according to the Bureau of Labor Statistics. Yet, a recent Brookings Institute report on economic growth in Indiana found that many manufacturers in the state were underinvested in technology, which in our view is a great opportunity for strong founders to grow in this region.

At Heartland Ventures, our investors include SME manufacturers in Middle America who are scaling quickly and eager to adopt new technologies. Our model is to bridge technology being built across the country, and the world, to these corporations that are vital to the U.S. economy. We’re searching for founders building companies that will enable them to transform their operations to meet challenges and business goals in the rapidly changing industrial world.

Before we dive into the startups in manufacturing tech we think are well positioned to do this, we wanted to quickly level set on Industry 4.0.

Technologies We’re Seeing in Industry 4.0

Industry 4.0 is widely cited as the fourth revolution in a string of industrial revolutions that have occurred in manufacturing. Artificial Intelligence and Machine Learning (AI & ML) are being leveraged in the industrial setting in the same manner as consumer devices like Nest or Ring. At the core of this technology are sensors and computer vision collecting data and allowing consumers to remotely monitor and control key environmental conditions of the home.

In manufacturing this technology is Industry 4.0 in a few buckets: (1) IoT devices or hardware technology, including sensors, cameras, and wearable devices that are capturing data from things like machine vibrations, temperature, and pressure as well as industrial workers’ movements; (2) software and platform technology that ingest this data and apply ready-made AI & ML algorithms to generate business intelligence and actionable insights for the manufacturer; and (3) a combination of hardware and software technology focused on helping manufacturers capture data and digitize their workflows, or manufacturing execution system (MES). Later on we’ll dive into the last bucket through one of the manufacturing tech startups, Pico MES.

What does this look like in practice? Many of the technologies we’ve evaluated have honed AI & ML models for specific use cases by industry. For example, a steel manufacturer might use these models to understand the optimal steel recipe to reduce the use of expensive raw materials. In the food manufacturing space, process engineers might use them to predict quality and prevent defects in their output, or to control for the optimal humidity and temperature in the factory in order to avoid food waste.

SME Manufactures Are Seeking Manufacturing Tech that Scales Across their Operations & Generates Actionable Insights

We interviewed our LPs and learned that many weren’t completely satisfied with the penetration of sensors and connected devices throughout their factories. They recognized that there is more they could be doing on capturing data, but they were concerned about how to do this in a manner that is financially feasible and operationally scalable.

The owner of a 3,000 employee medical device supplier said, “A perfect fit for us means something that can scale [across the factory] from a cost perspective.”

In the case where our LPs were confident about the data they’ve captured, oftentimes they felt they were missing technology that enabled them to draw business intelligence and actionable insights from their data. Simply put, they were eager to understand the data they had in order to use it to improve their manufacturing processes.

The CEO of a steel processor with over 40 plants domestically and globally said, “There’s a lot of interest internally to get into the next wave of not just capturing data, but executing dynamic improvements.”

We think there is an opportunity for manufacturing tech startups to support SME manufacturers on data collection and digitization of production processes, and to enable them to infuse sophisticated software tools like AI & ML across their operations.

3 Manufacturing Tech Startups that are Leading Industry 4.0

Based on these learnings and insights, we wanted to highlight three manufacturing tech startups that have an exciting and innovative approach to Industry 4.0:

1. Pico MES: This company combines manufacturing process data collection and analytics onto one platform and meets SME manufactures where they are on their Industry 4.0 journey. Their approach is to start workstation by workstation in the plant by digitizing workflows through their software and then opening up access to a device library comprised of hundreds of commonly used industrial devices and machines that customers can add to their digital workflows. By digitizing manufacturing workflows and measuring things like the duration of each step in a process, they can help their customers identify 5–10% in immediate improvements that translate to cost savings. Pico MES is built to be used by anyone on the shop floor regardless of their skill level.

2. Canvass AI: This is a software platform that provides AI-based predictive analytics for the industrial setting. It’s a no-code, machine learning-based software that simplifies the process of building, training, and scaling applied industrial AI for manufacturing operators regardless of their understanding of AI & ML. The company provides data models for the industrial setting that can be leveraged towards various applications including quality assurance, anomaly detection, failure prediction and optimizing fuel / energy costs.

3. Chooch AI: This is a later stage company we’ve evaluated; it’s an AI platform for computer vision on any device. The Chooch AI platform provides both standard AI models and custom AI training and the result is image and video processing in as little as 20 milliseconds. Chooch AI can be used for a wide variety of applications including for workplace safety in an industrial setting. The company’s technology can be deployed in the cloud as well as on edge devices, where data is collected and stored as close to the source as possible.

Get in touch!

At Heartland Ventures, we bring a unique perspective to investing given our access to insights and feedback from actual customers in our target industries, which include manufacturing, construction, supply chain / logistics, and real estate. We’re always looking to meet awesome founders seeking capital and customers as well as other investors in these industries.

If you’d like to follow our work you can sign up for our newsletter here, or to get in touch directly, feel free to reach out at bianca@heartlandvc.com.