Deal focus: Guochen looks to the future

For many, it is only a matter of time before the people operating assembly lines in factories across China are replaced by robots. For Hangzhou Guochen Robotic Technology, it can’t come too soon.  

“Labor costs are rising every year and few people want to work in some toxic industrial environments any more. Therefore, we wanted to develop intelligent robots and equipment targeting industries that are unpopular with human workers due to the hazardous conditions,” says Xiang Pei, the company’s chairman. 

Guochen, which was founded in 2015 by a research team spun out from Zhejiang University, specializes in intelligent industrial robots, but its business doesn’t stop there. As befitting a company engaged in the disruption of a traditional industry, Guochen also keeps an eye on the future by incubating start-ups and making direct investments in established companies. 

The primary target for the robotics business is textiles – unsurprising given this is a pillar industry of Zhejiang province, where the company is based. One of Guochen’s major products is a robot that moves pieces of fabric between different operating platforms within factories, each one able to handle the workload of three or four people. Guochen started to sell the robot in late 2017 and revenue hit RMB20 million ($3 million) last year, according to Pei. 

The company manufacturers other robots that perform a range of functions, from carrying out surveillance to spray painting walls. Overall revenue from the robotics division is expected to reach approximately RMB100 million in 2019.

Early-stage investment differentiates Guochen from many of its peers, but bearing in mind the company’s origins, Yuan sees it as a natural evolution. “The founding research team included professionals that studied different sciences, including healthcare. From the very beginning, Guochen harbored ambitions of becoming an incubator to cover more verticals,” he explains. 

The company has so far incubated 12 companies with a combined valuation of RMB1 billion. The goal is to build an industry ecosystem comprising around 30 robotics developers in the next five years. Guochen recently secured RMB100 million in Series A funding from Chinese venture capital firms Yingshi Jijin and Hongcheng Capital – and they were motivated as much by the chance to invest in start-ups emerging from the incubator as in Guochen itself. 

Guochen received an angel round from GSR Ventures in 2015 and is now valued at around RMB600 million. The next funding round is already in process and Yuan wants to raise RMB150 million. 

Finally, the direct investment program has seen Guochen back companies such as Yizhi Intelligent Technology, a natural language processing start-up, and Zheng Yu, a developer of robotics for industrial, medical and commercial usage. Yuan is keen to enter more verticals, with smart domestic appliances high on his hit list.   

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• Topics
• Greater China
• Industrials
• Technology
• Early-stage
• China
• TMT
• manufacturing