If the collaboration proceeds, Soft Bank Robotics will provide an immediate lifeline to Pudu, alleviating its cash flow pressures.
Photo by Fan Jianlei
By LI Biao
After two rounds of financing in the first half of this year, Pudu Technology is still in crisis. Once the star of China's robotics startups, Pudu made 110 million yuan (US$15 million) in revenue in H1 but remains firmly in the red with cash reserves below 70 million yuan.
To rescue itself, Pudu is pushing for an exclusive agency partnership with Soft Bank Robotics, a subsidiary of Soft Bank Group. If the collaboration proceeds, Soft Bank Robotics will provide an immediate lifeline to Pudu, alleviating its cash flow pressures.
In 2016, Pudu entered the market with food delivery robots, and in 2019, the company embarked on rapid expansion after establishing partnerships with domestic restaurant chains.
From July 2020 to September 2021, Pudu completed four rounds of financing in just 14 months. By the time of its Series C funding round in 2021, Pudu had reached a valuation of 10 billion yuan, with its workforce expanding from 300 to 3,000 employees. However, as its valuation soared, losses accumulated.
In July 2021, Pudu began widespread large-scale layoffs, reducing its workforce to 500. Directors resigned one after another, and the Series C financing fell through.
In the first half of this year, Pudu secured two rounds of financing totaling over 200 million yuan, but with numerous conditions, and have not all been received. Moreover, since last year, Pudu’s shareholders have been trying to sell their stock, but there have been no takers.
Pudu places high, if not all, hopes on Soft Bank. Soft Bank already has similar products. For Pudu, this collaboration is akin to a last resort. Pudu plans to sell its entire portfolio to Soft Bank Robotics at a nearly 70 percent discount.
One condition is that Soft Bank becomes Pudu’s exclusive dealer in Japan, necessitating Pudu to terminate existing partnerships with all its current Japanese dealers, including Soft Bank's main competitor, Usen.
In recent years, commercial service robots have seen rapid global growth, with Chinese brands ahead of the field, in terms of sales, if not profit. Very few companies in this sector are making any money. Manufacturers have relied on lowering prices and increasing dealers’ inventories to inflate shipment data, or even exaggerating sales figures to attract investment.