Bright Machines SPAC Merger Bolsters Shift to Software Defined Manufacturing

California-based Bright Machines has entered into a definitive agreement to become a public company through a merger with SCVX, a special purpose acquisition company (SPAC). Bright Machines provides a combination of proprietary software and adaptive hardware that automate repetitive tasks to enable manufacturers to quickly deploy flexible, autonomous production lines that can be scaled based on market demand. The transaction is set to close in the second half of 2021 and represents the building momentum behind the nascent yet critical arena for software-defined manufacturing solutions.

Bright Machines has grown to more than 500 employees, including about 150 software engineers, and counts 25 global, blue-chip customers that span industries such as network infrastructure, data centers, automotive, consumer products, medical devices, and industrial equipment. Bright Machines has doubled revenue each year since its inception in 2018 and projects a 5-year CAGR of 84% from 2020 to 2025. The transaction gives the company a post-transaction equity value of US$1.6 billion.

The company’s current crop of solutions aims to stand up smart production lines, though it eventually sees a role in supporting “fully programmable factories.” It achieves this through a combination of computer vision, machine learning, 3D simulation, and adaptive robotics. The focus is enabling customers to intelligently automate complex assembly processes that were previously done by hand. The new business combination is expected to provide up to US$435 million in gross cash proceeds, which will be used to accelerate growth, including expansion into new vertical and geographic markets, and development of additional value-added software in areas such as production analytics and quality inspection.

Industrial automation represents an approximate US$250 billion market. At the same time, demand for manufactured goods continues to skyrocket amid ever shortening product cycles that challenge factories to produce new and more varied products at an even larger scale. The result is a newfound push for brands and original equipment manufacturers to re-shore manufacturing and produce products closer to where they are sold, used, and consumed. The hypothesis is that this shift will require significant investment in factory automation over the coming years to be profitable given the relatively high cost of labor in North America and Europe. This is the trend that companies like Bright Machines are capitalizing on. But to get to this point, manufacturers must strike a delicate balance between scalability and flexibility: companies must be able to adjust what, where, and how much they build at any given time.

Industrial automation has historically taken a long time, required a significant amount of capital investment, and resulted in efficient production systems that lacked the flexibility demanded by today’s manufacturing economy. Bright Machines combats some of this by tackling “the most manual, least automated part of most factories—the final assembly line”. Its first product, the Bright Machines Microfactory, launched in 2019 and is a module assembly line that can be programmed, connected, and configured to handle almost any assembly process previously done by hand. Bright Machines’ focus is on developing the AI-enabled software that drives these machines.

The main go-to-market strategy is a land-and-expand approach. So far, the startup has achieved 60 deployments across its 25-customer base. The idea is that once a customer signs on and tests the Bright Machines solution in one product line, it can be quickly replicated on other lines and facilities. Unlike traditional industrial automation, which may involve programming a robot based on the geometric position of a part, Bright Machines’ solution uses computer vision to identify features of a product rather than a fixed geometric location. This is significant because fixed geometric programming can lead to all sorts of issues if upstream process isn’t perfect (e.g., if a part is misaligned on the assembly line due to vibration), plus it is much faster to set up and deploy. One example is the assembly of an inner component of a coffee maker. Bright Machines would configure one assembly line to replace human labor as a first step. From there, adding capacity is simply a matter of adding new hardware. The software is copied over.

The next set of factory automation capabilities will focus on quality and inspection, continuous improvement, and production planning. ABI Research refers to this broader category of solutions as manufacturing optimization. Ultimately, this expansion strategy is what Bright Machines expects will fuel revenue growth from an expected US$54 million in 2021 to US$727 million in 2025, which represents a market share of 2-4% of the US$30 billion global assembly automation market.