Deal focus: GPs smile at emotive robots

Charisma goes a long way in the investment business, but this maxim is usually limited to the human beings involved. With the advent of artificial intelligence and the latest generation of advanced robotics, the notion of a winning personality is getting turned on its head.

One of the latest venture investments in the emerging household robot space offers a case in point. Innovation Network Corporation of Japan (INCJ) and Mirai Creation Investment, a fund operated by Sparx Group, have agreed to invest at least JPY6.4 billion ($57 million) in Groove X, a company developing a robot designed to be empathetic with users. Additional contributions from the likes of Shenzhen Capital, Global Catalyst Partners, Line Ventures and SMBC Venture Capital are expected to bring the total capital raising to about JPY8 billion.

"Mirai Creation was fascinated by the idea of making an emotional robot that heals people and is sometimes a little shy," explains Takaki Demichi, executive officer and head of investment for next-generation growth at Sparx. "The fund also respects the uniqueness of Groove X, which knows how to match software and hardware well. [Groove X Founder and CEO Kaname] Hayashi understands what it takes to make a robot, including the most appropriate devices or parts, and how to get them with reasonable costs."

Hayashi made a name for himself as the development leader of Pepper, an emotion recognition robot built by SoftBank that attracted a JPY29 billion commitment from Alibaba Group and Foxconn Technology in 2015. With Groove X, Hayashi has focused his energies on Lovot – a portmanteau of the words love and robot – which is touted by the company as being able to accompany people "at an emotional level and offer feelings of warmth."

Lovot is scheduled for release to the general public in 2019, but Groove X has disclosed few details about its physical design features – the online teaser currently reveals only a pair of sympathetic electric eyes. The fresh capital will be used in part for a marketing blitz during the launch.

The macro thesis behind the product hinges on the idea that demand is growing for solutions to the negative social effects around Japan's aging crisis, including at-home personal assistants and companionship in single-person households. For Sparx, the investment coincides with telling survey work that found 90% of 1,000 Japanese investors are projecting growth in the local robotics market.

"The fund believes that Japanese companies still have an advantage in the area of matching software and hardware, globally," says Demichi, noting that about half of the survey participants expect domestic robots to serve elderly and disabled people. "Sparx is not only sending outside directors to the [Groove X] board, it may also launch new services, including leased robots for towns in Japan that are suffering from aging."

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• Topics
• North Asia
• Technology
• Early-stage
• Japan
• Innovation Network Corp. of Japan (INCJ)
• Shenzhen Capital Group
• SMBC Venture Capital
• Venture