22-07-2025
How To Break Through The Stalled Robotics Revolution
Aditya Ranjan is Cofounder & COO, Cardinal Robotics. He has spent over a decade at the Intersection of AI, Robotics and Tech Investing.
We have been watching a troubling pattern emerge across industries. Companies desperately need automation, and labor shortages are forcing their hand, but they keep hitting the same invisible wall when trying to deploy robotics solutions. The problem isn't technology or ROI. It's far more fundamental: They simply can't get financing.
This financing crisis represents the single biggest barrier to robotics adoption today, creating a gap between what companies need and what they can actually access. But I'm also seeing innovative approaches emerge that are starting to crack this code, and the implications for business leaders are profound.
The Perfect Storm Driving Automation Demand
Let me start with why this matters so urgently. The U.S.'s workforce is aging at an unprecedented rate. Prime-age workers have declined from 71.6% in 1994 to just 64% today (as projected in 2015), while workers over 55 have more than doubled to about 40 million. Manufacturing alone faces a projected shortage of 2.1 million workers by 2030.
This isn't just a hiring challenge. It's a productivity crisis threatening entire industries. I've seen hospitals struggling to maintain cleaning standards, hotels cutting services because they can't find housekeeping staff and warehouses turning away business because they lack workers.
The economics are becoming irresistible. While European labor costs rose 5% in the past year, humanoid robot costs dropped 40%. Some models now cost just $16,000 annually. When you factor in benefits, training costs and turnover, robots are often significantly cheaper than human labor.
Yet despite this perfect storm of need and economic viability, adoption remains frustratingly slow. The culprit isn't technology—it's financing.
Why Traditional Equipment Financing Fails Robotics
McKinsey's 2022 Global Industrial Robotics Survey found that 71% of executives cite capital costs as the primary barrier to robotics adoption.
Traditional equipment financing was designed for tractors and manufacturing machinery—assets with established depreciation schedules, active resale markets and predictable specifications. Banks understand these assets and can easily assess collateral value.
Robotics systems break this model completely. Robotic hardware is generally unknown to banks, which means they will not provide financing with the equipment as collateral.
Unlike traditional equipment, robotics systems combine rapidly evolving hardware with sophisticated software layers, creating unpredictable asset values and obsolescence risks that traditional lenders cannot underwrite. A robot that's cutting-edge today might be outdated in 18 months. This is a timeline that often terrifies traditional lenders.
This creates a vicious cycle that constrains the entire industry. Manufacturers need upfront payments to scale operations, but customers can't access traditional financing for cutting-edge robotics systems. Small- and medium-sized businesses are often locked out entirely.
The Capital Structure Solution
Here's where things get interesting. Companies are solving this problem by recognizing a fundamental truth: Equity capital is far more expensive than debt, and asset-backed financing for robotics can cost as little as 5% to 8% annually, according to our data.
One promising approach is robotics-as-a-service (RaaS) models that leverage this cost-of-capital arbitrage. Rather than selling robots as capital equipment, specialized financing companies purchase robots directly from manufacturers using low-cost debt, then lease them to end customers on subscription terms.
ABI Research projects that "the yearly revenue from RaaS providers is expected to increase from $217 million in 2016 to nearly $34 billion in 2026." The RaaS installed base is characterized by a massive 66% compound annual growth rate over the 10-year forecast period.
The math is striking. Consider a robotics company that needs $10 million to deploy 1,000 robots. If they raise this money from equity investors who expect 25% annual returns to justify the valuation, the company must generate $2.5 million in profits each year. But if they finance the same robots through asset-backed debt at 6% interest, they only need $600,000 annually to cover the debt payments. That's $1.9 million more available each year for hiring, R&D and business expansion.
Why This Model Works Where Traditional Financing Fails
What makes RaaS so effective is how it solves the capital efficiency problem plaguing robotics companies. RaaS flips the traditional risk allocation entirely. The service provider retains ownership and assumes technology obsolescence risk, while customers get predictable operating expenses instead of large capital commitments.
As ABI Research explains, "The biggest benefit of RaaS is that end users can now shift their capital expenditure (CAPEX) to an operational expenditure (OPEX), allowing them to deploy solutions without large upfront costs."
I've seen this transformation unlock entirely new markets. Hotels that couldn't justify $100,000 capital expenditures can access cleaning robots for $2,000 monthly. Warehouses can scale robotic fleets based on seasonal demand. Healthcare facilities can deploy specialized robots without competing for scarce capital budget allocations.
Companies using debt-financed RaaS models can deploy more robots with the same equity base, creating network effects and market dominance while competitors are still raising dilutive funding rounds.
What This Means For Business Leaders
If you're considering robotics adoption, this has profound implications for vendor selection and financing decisions. The key is understanding the capital structure behind different offerings.
Look beyond traditional equipment purchases toward subscription models that leverage debt financing. The companies offering RaaS aren't just being customer-friendly; they're solving fundamental capital efficiency problems that make traditional financing nearly impossible.
As McKinsey research shows, 62% of survey respondents agree that customers favor robotics providers offering full-service implementation models. The providers with access to low-cost debt capital can offer better terms and faster deployment.
Consider the total cost of ownership differently. While subscription models might seem more expensive per unit, they often deliver superior outcomes when you factor in reduced technical risk, ongoing support and preserved capital for core business growth.
The Path Forward
The robotics revolution isn't being held back by engineering limitations. It's being constrained by financial innovation that hasn't kept pace with technological advancement. The trends driving automation adoption are irreversible, but the financing gaps remain largely unaddressed by traditional financial institutions.
For leaders: Choose partners who understand the technology and the financing. The robots may all look similar, but the capital behind them determines which solutions can scale and which will remain perpetually constrained by expensive equity financing.
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