The Financing Environment and Current Trends in Robotics

As we head into the second half of 2025, the prospects for innovation in robotics and artificial intelligence (AI) seem limitless. It is difficult to find an industry that hasn’t touted the potential for robotics and AI to bring significant growth and advancement: from agriculture to warehousing and logistics. Key sectors, including healthcare, financial services, retail, and manufacturing, are integrating robotics into their physical processes and attempting to optimize other aspects of their businesses through the use of AI, including the use of surgical robotics to enhance precision and efficiency in medical procedures and the adoption of robotics to increase safety, productivity and quality in manufacturing and logistics.

Nevertheless, despite exciting advancements and the potential for rapid growth and innovation, the robotics industry—and early-stage robotics companies, in particular—continues to face practical challenges, including the high cost of research and development, engineering, talent, and material costs, which can lead to a lack of suitable financing opportunities (as well as shorter capital runways and the potential for disagreements between founders and investors). While investment in robotics reached a high-water mark in 2021, with aggregate worldwide investment exceeding $19 billion, investment was down in 2022 and 2023.¹ Even though there has been a rebound in investment in 2024 (investment reached $18.5 billion), much of that financing activity was concentrated in approximately 50 companies closing financings of $50 million or more.²

In addition, constantly changing regulatory landscapes pose unique obstacles for early-stage and established robotics companies utilizing AI, seeking foreign direct investment, and those subject to evolving product safety standards, data privacy and cybersecurity regimes, and other compliance requirements, including the recent DEI executive orders in the United States.

Securing Financing

Despite the inherent challenges in financing a robotics company, as well as broader economic factors affecting financial markets, there continues to be significant interest in robotics from a wide variety of investors and funding sources. Securing funding is crucial for robotics companies and there are a number of ways that companies, particularly early-stage robotics companies, pursue such financing, each with unique legal and practical considerations.

Traditional Financing

Traditionally, start-ups and other early-stage companies seek funding from friends and family, angel investors (i.e., individuals or small firms that are willing to invest in very young companies, often because of a personal interest in the mission of the company or the founder team), or family offices. Such investments tend to range from a few thousand dollars to a few million dollars and can take the form of equity securities, convertible debt or SAFEs.

Another common source of funding for robotics companies is venture capital (VC) investment. The primary difference between angel investors and VC firms is that angels typically invest their own funds, while VCs primarily invest on behalf of their limited partners. Such investments tend to be in larger amounts than angel investor financings. In addition to funding, VCs also often support the company by providing strategic guidance based on industry experience, credibility, and access to KOLs, other investors and commercial partners.

While the surge in financing activity in 2024 and early 2025 has been very promising for the robotics sector, most of the invested capital has been in large, often late-stage financings, at companies focused on autonomous vehicles, defense and humanoid robots.³ According to F-Prime, fundraising at early-stage companies is down year-over-year and comparable with 2020 levels.⁴ Furthermore, a lack of successful M&A exits or public offerings among robotics companies has caused investors to be skeptical about the likelihood of positive returns from the sector. Such uncertainty has resulted in a concentration of value in a few high-profile robotics companies but has contributed to the continuing challenge for smaller or earlier stage robotics companies to obtain meaningful financing. As a result, some robotics companies are seeking alternative avenues of investment.

Alternative Financings

In addition to the more traditional sources of financing outlined above, many founders and entrepreneurs in the robotics space have sought financing from other sources, including non-dilutive financing, such as government grants, venture debt, strategic partnerships and retail financing or crowd funding.

Government grants can be a valuable, non-dilutive source of funds for robotics startups. These grants provide capital without requiring the issuance of equity, allowing founders to maintain their existing ownership percentage of the company. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs offer grants for innovative companies in the technology sector. Applying for government grants can be a competitive and work intensive process (in which the company must demonstrate that the company meets the grant application’s objectives), but offer significant financial reward, if earned, as well as boosting the business’s credibility and future opportunities, all without dilution to the founders’ equity. These grant programs are not suitable for all companies – trying to secure a grant for a project outside a company’s area of focus can be a distraction from the company’s core mission. There are also strict eligibility requirements, including majority equity ownership by U.S. persons and no more than 500 employees.

Strategic investors—i.e., firms or businesses that invest in companies because they are interested in the long-term strategic benefits of partnering with such companies—can be another source of funding for growing robotics companies. Those long-term benefits can include commercial agreements between the company and the investor, other collaborations or a future acquisition by the strategic investor. Strategic investors typically invest in growing business after initial funding has been secured, and offer many of the benefits of VCs, including access to industry experts, credibility, and expertise, with the additional benefits of recurring revenue streams through commercial agreements or a potential exit partner. For commercial stage companies, a strategic investor may offer sales and distribution channels that can help scale the company’s business and bring credibility to its products. Care should be taken when considering a strategic investment to protect the company’s IP and other confidential information that could allow the investor to build its own competitive product. Finding the right partner is also important because having a strategic investor could make other potential business partners less likely to pursue a relationship or potential acquisition.

Regulation CF (Crowdfunding) and Reg A+ offerings are financing pathways introduced as part of the Jobs Act in 2015 designed to help smaller companies access capital more efficiently than under a traditional IPO or private placement. Importantly, both crowdfunding and Reg A+ offerings are accessible to non-accredited investors, which greatly enhances the available pool of capital. Crowdfunding offerings must take place online through a broker-dealer or funding portal and permit a company to raise up to $5 million through crowdfunding offerings in any 12-month period. If companies need to raise more than that, Reg A+ allows companies to raise up to $75 million in any 12-month period. Both crowdfunding and Reg A+ offerings require disclosure of information in filings to be made with the SEC, though the filing requirements are generally much less burdensome than those associated with a traditional IPO. Investors in crowdfunding and Reg A+ offerings are likely to be passive investors and not seek the type of governance controls that would accompany a VC investment. Retail investors may also be less valuation-sensitive than professional VC investors so it may be possible to raise modest sums of money through crowdfunding and Reg A+ with less dilution.

Hot Topics for Robotics Companies Seeking Financing

While each company has its own unique story and considerations that will drive the diligence process of potential investors, founders and management teams should be aware of certain trends we are seeing in the current volatile investment climate, including focus on ownership of intellectual property, supply chain matters and financial forecasting (including reliance on single source suppliers and exposure to tariffs), and legal and regulatory compliance.

Intellectual Property and Artificial Intelligence (AI)

With the rapid pace of technological advancement in robotics, companies must navigate a complex IP landscape to protect their innovations, attract investments, collaborate effectively, and remain competitive. Determining IP ownership in robotics can be challenging, but essential for commercialization and investment. Without clear IP ownership from the start, companies risk losing control over core technology. Ownership disputes may arise when IP is created by autonomous system or AI tools, collaborations between internal teams and external vendors, and join development contributors. Best practice is to require robust IP assignments and well-defined roles in contracts both for internal and external contributors.

Robotics companies are increasingly incorporating AI and machine learning tools to perform tasks or assist in autonomous decision making leading to novel IP ownership questions. Since AI cannot be an inventor, companies should be weary to have their IP rely too heavily on AI output without clear human authorship or oversight to avoid investors questioning the defensibility of the IP. Companies should document and track which parts of a system are developed by a human versus AI. Similarly, companies should audit training datasets in any proprietary machine learning models and document all third-party data sources that may be incorporated including license terms and usage rights to avoid the data’s legal status from affecting IP rights.

Open-source software is another tool that robotics companies use to accelerate development, lower costs, and provide for broader collaboration, but it can introduce risks if mismanaged. Open-source software can vary by license, with some requiring disclosure of source code if incorporated into proprietary software and license compliance issues can lead to forced release of such proprietary software. Companies should maintain open-source software policies with license guidelines for developers and use software bills of materials tools to track these software components.

Patents are a primary tool for protecting robotic innovations including hardware components, sensors, and control systems. A proactive patent filing strategy can both build credibility with investors and help block competitors. Robotics companies should consider freedom-to-operate analyses and patent landscapes to assist in avoiding infringement and identifying white space for innovation. With robotics innovations often incorporating both hardware and software, companies should also rely on trade secrets to protect proprietary algorithms, manufacturing processes, or system architecture. Effective trade secret protection depends on internal safeguards and without active trade secret programs, companies risk being unable to recover damages if a misappropriation occurs. Therefore, companies should have formal policies around data access and information handling (for external contributors and internal employees) to avoid accidental disclosure, including via investor presentations, demonstrations or similar activities.

Intellectual Property is a business asset that can help drive valuation and partnership and robotics companies should secure IP assignments early, file both offensive and defensive patents, be aware of open-source software incorporations, and be AI-literate in developing a robust IP strategy.

Supply Chain Matters and Tariffs

Logistics and supply chains are sectors that are benefitting greatly from innovation and the advancement of AI and robotics, but robotics companies themselves also need to be mindful of macro market factors and how those aspects of their business are being managed. Supply chain management, vendor relationships, and tax diligence are some of the items that investors will review as part of their commercial due diligence. In particular, robotics companies should take care to avoid single source suppliers, where possible, and consider the effect that changes in tariffs will have on their financial modeling. As demonstrated by recent events, higher tariffs imposed by the United States can lead to economic uncertainty, which can raise the costs of the raw materials or components relied upon by robotics companies. As a result, robotics companies may need to revise operating budgets, adjust project timelines, or alter business plans, all of which can make fundraising more challenging. Management teams at robotics companies will need to be prepared to address how changes in tariffs can be mitigated or addressed to investors’ satisfaction.

CFIUS and Other Regulatory Matters

Robotics companies are subject to many of the same regulations and compliance standards as companies in other industries, but as leaders in innovation and technology, robotics companies can face additional scrutiny in certain contexts, including national security in the United States and elsewhere. For example, the Committee on Foreign Investment in the United States (CFIUS) is tasked with reviewing certain investments into U.S. companies by non-U.S. investors. CFIUS focuses on companies with novel or advanced technologies, which includes robotics. The White House has identified certain technologies of particular relevance to national security, including autonomous vehicles and industrial robots, and their related hardware and software components. When applicable, the CFIUS review process can add weeks or months to transaction timing; therefore, companies seeking investment from non-U.S. investors should seek the advice of counsel early on how CFIUS or other regulations could affect their fundraising efforts.

In addition, President Trump issued executive orders aimed at curtailing “illegal” DEI programs and policies. One such order, Executive Order 14173 (Ending Illegal Discrimination and Restoring Merit-Based Opportunity) (the “Executive Order”) directs the federal government to end all internal discriminatory DEI programs and policies, while putting private sector employers on notice and pushing them to proactively modify, narrow or even end their DEI initiatives. The Executive Order further mandates that all Federal agency contracts and grants must include language requiring the contractor or grant recipient to certify as a material term for payment purposes that it is in compliance with all applicable federal anti-discrimination laws and that it does not operate any programs “promoting DEI that violate any applicable federal anti-discrimination laws.” The consequences for false certifications could be severe; the Executive Order establishes False Claims Act liability for false certifications. As noted above, many robotics companies benefit from federal contracts or grants and, as such, they should review future contracts and grants to determine the extent of the certifications that may be required and what sort of DEI efforts employers can engage in while accurately attesting to such certifications.

Conclusion

While the current fundraising environment is volatile, the robotics industry is receiving a tremendous amount of attention in media and from investment professionals, and there are financing opportunities for innovate robotics companies. It is critical for early-stage robotics companies seeking funding, whether to bring new technologies to market or finance growth, to understand the different types and sources of investment to effectively meet their immediate needs and long-term vision. Even before a particular path is chosen, care should be taken to position the company to seize opportunities quickly by following current developments and being aware of potential pitfalls that can undermine a business case.

ENDNOTES

[1] F-Prime Capital, State of Robotics: Investment trends 2020-2024 (the “F-Prime State of Robotics Study”)  
[2] F-Prime State of Robotics Study.  
[3] F-Prime State of Robotics Study.  
[4] F-Prime State of Robotics Study.

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