Investing in Intralogistics Automation: Why bother?
Over the past decade, venture capital (VC) has poured significant resources into logistics companies and startups, fueling an era of rapid growth and innovation. As the broader logistics sector experienced a sharp contraction in funding in 2023, the intralogistics segment—a niche but critical area within the industry—also saw significant change, but remains notably understudied.
This sharp contraction in funding is happening against a backdrop of low but continuous and robust industry growth. This disconnect between funding availability and the economic reality of the sector creates opportunities for those with the ability to ride out near-term economic headwinds.
Status quo: what does sector funding look like?
According to McKinsey, Global logistics & supply chain startup funding grew to USD 25.6 bn in 2021 before collapsing to USD 2.9 bn in 2023. Those headline swings, however, are heavily distorted by a handful of freight-marketplace startups (e.g., Flexport) that raised multi-billion-dollar rounds in the post-COVID surge.
We looked more closely at funding to intralogistics automation startups alone (automation, robotics, AI-driven warehouse software, etc.) and to the narrower segment of supply chain software companies. A few observations stand out (see Figure 1):
2014-2021 surge, 2022-24 slide: Intralogistics funding expanded sharply from 2014 through the dual peaks of ≈ US USD 3.9 bn 2019 and 2021, fueled by investor enthusiasm for warehouse automation. Since then, funding has fallen to c. US USD 0.83 bn in 2024—an 80 % retreat that tracks the broader LogTech pull-back.
Stable share of intralogistics funding: Intralogistics accounts for about 1/3rd of all logtech funding analyzed, a proportion that has remained largely stable since 2020.
Europe underweight in startup funding: Europe accounts for a very small proportion of overall funding - 8% of funding since 2014; 18% since 2021. The USA garners a much larger share, as is often the case, with European players like SYNAOS and doks.innovation raising only a fraction of what their U.S. counterparts managed.
What holds back European funding?
The European funding landscape for intralogistics companies is particularly constrained for three reasons
The first is structural in nature. Compared to the US, where institutional venture capital plays a significant role, European startups must rely on individual and strategic investors. The hardware-oriented nature of intralogistics innovation makes it less appealing to traditional VC investors, who often prioritize software and scalable digital platforms. This is a challenge as companies seek to raise later stage rounds, where institutional VCs are especially pivotal.
The second is transitory – earlier funding rounds were financed at high valuations, either in anticipation of strong growth or because they were composed of private or strategic investors that typically provide more founder friendly terms. In the absence of high growth, such high valuations now require adjustments; in our experience reviewing transactions, however, existing investors remain reluctant to accept down rounds, creating a challenge for new capital.
The final challenge is the most critical - the sector’s limited growth over recent years has deterred institutional investors, who seek faster returns and clearer exit opportunities. This is, however, a challenge not of the sector, but of unrealistic investor expectations on the pace of technology adoption.
A mismatch between investor expectations and economic reality
Early investors targeted annual growth rates of 30–40%, anticipating a rapid transformation across manufacturing and logistics. In reality, growth in automation has been more moderate with robot density (a measure of number of robots per 10,000 humans) averaging 10–14% per year globally and within the EU; Germany’s growth rate is lower still at around 4.5% CAGR since 2015 (see Table 1).
This slow pace has led some investors to put funding on hold, waiting for a stronger signal of industry-wide acceleration; others seek to exit their holdings as their funds reach end-of-life or have given up entirely on the sector.
Admittedly, growth of logistics automation technologies has been slow, but it remains steady and shows signs of accelerating in the years ahead:
The revenues of a sample of publicly listed small and medium enterprise (SME) intralogistics automation providers grew at a CAGR of 14% from 2019 – 2024, with only a minor drop to 11% in 2024, despite significant headwinds (see Figure 2).
Selected early-stage startups, such as NIMMSTA, have seen ARR grow over 100% in the early adopter phase.
The service robotics segment—particularly in logistics and transport—has seen even more impressive momentum. Installations of service robots such as autonomous mobile robots (AMRs) increased by 35% in 2023, with nearly 113,000 units sold in transportation and logistics.
This acceleration in installation of mobile robots and the stable growth of SME revenue in the sector points to underlying strength in adoption of logistics automation technologies and stands in stark contrast to the drop in funding for those same solutions (see Figure 3).
What is particularly impressive is that this growth happens against a backdrop of severe macroeconomic headwinds.
Eurozone’s Purchasing Managers’ Index (PMI) for manufacturing has remained below the contraction threshold of 50 since July 2022, hitting 48.7 in April 2025. This slowdown has directly impacted automation investments, as companies prioritize cost-cutting over innovation.
The automotive sector, a cornerstone of EU manufacturing and a key driver of automation, is in particularly severe distress and contracted by 6.2% in 2024 due to falling demand for electric vehicles (EVs) and strong competition from Chinese automakers whose share of EU battery-EV sales surged to 29.3 % in 2024.
EU energy-intensive industrial electricity prices remain about 2x those in the United States and China, and roughly 2.5x the US industrial average, disproportionately affecting energy-intensive sectors such as manufacturing.
A profitable pathway to investing in logistics automation
These near-term headwinds are ironically the reason we see automation gathering pace in Europe. As we lay out in this article, companies have a strong imperative to seek operational efficiencies - and automation provides an increasingly attractive return on investment.
The current funding landscape therefore presents an exceptional time for investing in the sector. Short-term oriented investors have fled the scene and valuations are coming down. The sector remains fragmented, with multiple automation providers – many strapped for cash in the face of order delays, while having strong sales pipelines. The accelerating deployment of service robots, combined with resilient SME growth in logistics, indicates that the sector is poised for further expansion. As industry headwinds ease, the groundwork laid by stable adoption rates and innovations in logistics automation will drive the next wave of industry growth.
How should investors approach the sector? The typical VC playbook – pursuit of high growth at all costs in anticipation of a quick trade sale or IPO – will not work.
We favor a Private Equity-style playbook leveraging the attractive funding landscape and what companies really seek:
Conservative and outcome-based valuations: the constrained investment appetite and lower growth than anticipated, has driven valuations lower, creating attractive entry points for those willing to take a long-term view. Valuation expectations between new capital and existing shareholders can be bridged through appropriate outcome-based investment structures.
Recession-proof and profitable growth: Many intralogistics companies have done the hard work of getting vendor approvals from large corporate buyers and have strong pipelines. Examples include Cellumation, NIMMSTA, and Sherpa Robotics. Critical is to ensure such companies are profitable or have the runway to ride out temporarily longer sales cycles. Survivability corporate buyers with higher confidence in placing orders and those companies that survive will succeed.
Consolidation, roll-ups and integration: Investors have an opportunity as well to drive consolidation acquiring capabilities and customers. Industry fragmentation has been a challenge for both customers and system integrators alike. According to McKinsey, 42% of corporates look for an automation vendor that can provide multiple capabilities across geographies. With the vendor landscape fragmented and few OEMs selling across Europe, USA and Asia, customers must select multiple vendors and keep abreast with the latest technology changes. A roll-up platform that can bring together multiple automation solutions and integrate them through software simplifies the purchasing process and accelerates adoption further.
Conclusion: An opportune time to invest
The intralogistics sector represents a dynamic and evolving investment landscape within the broader LogTech ecosystem. While funding has experienced a recent downturn, the underlying drivers for adoption have proven highly resilient with stable growth in the face of a wider industry recession.
The challenge has not been the industry itself, but unrealistic investor expectation of growth. Investing in industrial sectors is generally not a sprint, but a marathon; and success goes to those with the ability to see through periods of slower growth, benefit from consolidation opportunities, and position for the accelerated adoption that follows.
For investors willing to navigate the challenges, the intralogistics space offers the potential for outsized returns in the years to come. They would benefit from lower valuations, a consolidation and adoption wave that will follow, and an eventual uptick in institutional interest.
