Refraction AI, a robotics startup in Ann Arbor that focuses on last-mile delivery, announced $4.2 million in new seed funding led by Pillar VC, an investment firm in Boston. The capital will be used for customer acquisition, geographic expansion, and product development.
Founded in July 2019, Refraction AI works to solve last-mile delivery logistics with mobile robot technology. The company offers REV-1, a low-cost, lightweight autonomous delivery robot. The COVID-19 pandemic has made home delivery of food, medicine, and other products a necessity for some consumers.
Recent market reports by Allied Market Research and Infiniti Research Ltd. estimate compound annual growth in the last-mile delivery sector over the next 10 years will exceed 14 percent, with the autonomous delivery segment projected to grow at more than 24 percent from $11.9 billion in 2021 to more than $84 billion globally by 2031.
“Last-mile delivery is the quintessential example of a sector that is ripe for innovation, owing to a powerful confluence of advancing technology, demographics, social values, and consumer models,” says Luke Schneider, CEO of Refraction AI. “Conventional approaches have left businesses and consumers with few choices in this new environment as they struggle to keep pace with surging demand, burdened by the costs, regulatory, and logistical challenges of a legacy infrastructure.
“Our platform uses technology that exists today in an innovative way to get people the things they need, when they need them, where they live. And we’re doing so in a way that reduces business’ costs, makes roads less congested, and eliminates carbon emissions.”
Other investors in the round included eLab Ventures, Osage Venture Partners, Trucks Venture Capital, Alumni Ventures Group, Chad Laurans (founder of SimpliSafe), Invest Michigan, and others.
“With a tremendous potential to impact the future of last-mile goods delivery, Refraction AI is incredibly well-positioned because their solution is up and running today,” says Jamie Goldstein, founder and partner of Pillar VC. “We believe Refraction AI will create the de facto standard for this rapidly-expanding category. The combination of technology, momentum, and leadership makes the company poised to break down barriers to AV for any business, which in turn increases access to goods for households that need them.”
Since its inception, Refraction AI has deployed the first application of its technology serving restaurants and grocery stores in the Ann Arbor area. With new capital, the company plans to expand both the geographic and industry reach of its last-mile delivery as a service offering.
The company was founded by roboticists and professors at the University of Michigan.