The Bugatti of Robotics

Luxury cars and the market for surgical robotics

If you read ABP weekly, you know I’m decently far down the rabbit hole on robotics. Last week, I wrote about the ‘Toyota’ strategy for commercializing humanoids. Dirt cheap, targeted capability, large production volumes. This week I’m covering the ‘Bugatti’ strategy. High end, significant margins, longer times to take to market. I’m talking about surgical robotics, the hair on fire application enabled by advances in AI, hardware, and vision that isn’t getting the attention it deserves.

If you’re going to talk about surgical robotics, one has to start with the $140B market cap gorilla, Intuitive Surgical. Intuitive’s breakthrough with their Da Vinci platform enabled a dramatic acceleration in the adoption and efficacy of minimally invasive surgery. In 2021, Da Vinci crossed the 10M procedure mark, completed by its trained base of over 60,000 surgeons. And this has led the way for broader market growth. According to Bain:

“Promising improved precision and visualization for surgeons, and better experiences and outcomes for patients, investments in surgical robotics have swelled over the past 10 years. It’s now a $3 to $3.5 billion global market, up from around $800 million in 2015.”

With a massive success like this in a clearly growing market, it’s no wonder top investors are getting behind the category:

• Last year, NVIDIA and Soffinova co-led a $55M round in Moon, the developer of Maestro, a surgical assistant that offers two flexible arms that lend a hand to surgeons throughout a procedure by holding probes, cameras and other instruments in place. This was less than a year after a $31M Series A.

• Fidelity led a $110M Series C in Deerfield and RA Capital-backed Medical Microinstruments, a pioneer in microsurgery (i.e. tiny robotic manipulators), with core tech that provides motion scaling and tremor reduction.

• Lux Capital led a $24M Series A financing in Mendaera, with participation from Founders Fund, Allen & Co., and Operator Partners. The funding will be used to commercialize a collaborative robotic system that merges real-time imaging, AI and robotics to help providers make "precise and consistent intervention more accessible."

One of the big challenges facing the non-medical robotics category today is clarity and consensus on the scale of potential outcomes. Surgical robotics doesn’t suffer from this problem. Look no further than J&J’s $3.4B acquisition of Auris Health for proof, along with the increasingly acquisitive stance of competitors like Medtronic, Stryker, and Zimmer Biomet.

Despite this opportunity, commercializing medical devices isn’t easy. There are bumps on the road to FDA clearance, business model evolutions, and years of (pre-revenue) clinical development needed to successfully take a platform to market. But if it were easy to do, the exit values would be far smaller. The Intuitive playbook provides a roadmap for how to build a generational business in this category, and I think the next five years will see a wave of new applications enabled by key enabling innovations in robotics more broadly.