Antler Investor Memo Series: Factory AI is solving one of manufacturing's biggest problems: unplanned downtime

Early stage investment company Antler Australia recently backed a new cohort of startups as part of its ongoing program to build great local tech companies.

Startup Daily is sharing the details of each venture in the “Antler Investor Memos” series, which is designed to give you a quick, sharp understanding of the startups and people involved, with many seeking follow up capital following Antler’s initial pre-seed investment.

Company: Factory AI

Founded: January 2023

Stage of business: Pre-Seed

Founders: Tim Cheung (CTO) and Jean-Phillipe Picard (CEO)

Investors: Antler

Currently raising: Yes

The business

The manufacturing industry faces significant challenges due to unplanned downtime, costing companies hundreds of thousands annually. This issue is not isolated but pervasive across various sectors, with recent data from ABB Group indicating that 69% of industrial businesses come up against unplanned outages at least once a month.

The report also determines that the average loss caused by this downtime is costing Australian businesses a median value of $349,000 per hour.

Reasons for such outages stem from outdated maintenance or condition monitoring strategies and complex, pigeon-holed solutions that fail to address the needs of the majority of manufacturers. The existing solutions are either too specialised or costly, creating a gap in the market for a more accessible and universally applicable tool.

Factory AI solves this unplanned downtime pain by answering the critical question; What particular component of an asset will fail, and when?

Founded by Jean-Phillipe Picard (CEO) and Tim Cheung (CTO), Factory AI’s predictive maintenance platform uses AI combined with operational and sensor data to power anomaly detection, in-depth monitoring, and real-time risk notifications. This allows manufacturers to plan ahead, stop run-to-fail maintenance, and ultimately avoid foreseeable breakdowns or faults by proactively flagging weak points and alleviating workloads.

Jean-Phillipe says: “We decided to build this company when Tim was working with a manufacturer in the UK that experienced this pain. Subsequently, we found in our discussions with hundreds of reliability engineers that this was a pervasive problem across industries. The existing solutions are far too complex, niche, and costly for most manufacturers, so we decided it was time to offer innovation to all manufacturers.”

Factory AI has cemented its MVP as hardware agnostic, elevating its competitive advantage in a space typically saturated by these fragmented and overly niche product offerings.

By removing their reliance on any particular hardware and being natively built for non-technical customers, Factory AI significantly widens their use cases and target market and also offers the benefit to customers that all their data lives in one single application.

Antler Investment Thesis

Factory AI’s focus on developing a product with low barriers to entry and in collaboration with their customers supports Antler’s belief that the startup is positioned to find product-market fit swiftly and become more responsive than competitors.

Antler also acknowledges that Tim and Jean-Phillipe harbour deep domain expertise and direct experience with the manufacturing industry’s challenges.

“Combined with a proactive approach in engaging with hundreds of reliability engineers, Tim and Jean-Phillipe’s Founder DNA highlight their unique and ideal positioning to address a pervasive market need,” says James McClure, partner at Antler in Australia.

“Their ability to identify and act on a significant gap in the manufacturing market for a user-friendly, universally applicable maintenance solution is commendable. This effort has already been noticed by three major enterprises. Such high-quality customer engagement so early on in their journey underlines Factory AI’s potential to become a pivotal player in the manufacturing sector, aligning with Antler’s vision of supporting startups that are poised for significant impact and growth.”

Traction/milestones

Before designing their MVP, Tim and Jean-Phillipe conducted hundreds of conversations with reliability engineers to identify the market need and where their competitive advantage was most applicable.

These engineers mentioned they had tried similar products but complained they had been unable to extract the value out of them as it was difficult to understand the fragmented results; reading diagnostics required an advanced understanding of condition monitoring.

“Our product is built for the average engineer, and requires no technical expertise,” says Tim.

The company’s focus on the food production sector as an initial target segment demonstrates a strategic approach to scaling, with a projection of reaching 1,000 customers and $100M in ARR in Australia alone. In the meantime, they are aiming to achieve the $10M ARR milestone by 2028.

Factory AI has now onboarded major enterprise customers, including Bega and other well known brands, and plan to co-develop a unique business case with these corporations to best serve their individual needs and manufacturing pain points.

Tim adds that their customers “lose hundreds of thousands yearly on unplanned downtime and, for many, this number is in the millions.”

He admits Factory AI won’t be able to completely remove this with its software, but he believes the platform can reduce it by 10%- 50%.

Factory AI’s major enterprise customers have already indicated they are willing to pay for a solution that will release this burden for them.

Considering the 10-50% range above, Factory AI’s latest calculations evaluate that these savings could be realised at $100K yearly for SMB and $500K+ yearly per site for Enterprise.

Latest funding

Pre-Seed from Antler

Use of funds

The Antler investment will be used to ship Factory AI’s MVP. This MVP will be co-designed with their three enterprise customers over three months involving rigorous testing and iterations.

Once the MVP is complete, Factory AI expects these customers to convert into paying customers.

The founders say

“Antler has been amazing to us at Factory AI,” says Jean-Phillipe.

“Without the program, Tim and I would not have met; therefore Factory AI would not exist today. We’ve received a lot of value from the coaching sessions with Matt Browne, one of Antler’s venture partners and a VC at Black Nova Venture Capital. Matt provided us with the right advice when we needed it most; he helped us narrow our focus areas significantly. This is allowing us to make progress faster.

“The Antler team has made some extremely valuable introductions to manufacturers in their network, and this introduction has since resulted in a pilot. We are deeply grateful for Antler’s support and guidance.

“Our purpose at Factory AI is to make innovation accessible to everyone in manufacturing. We want to become the company most known for accelerating the pace of innovation in a notoriously slow-moving industry – manufacturing – and we will do this by developing a product with our customers, for our customers.”

What’s next?

Antler, a global early-stage VC, is revealing its latest investments in ambitious Australian founders and startups. With over 100 investments in early-stage companies, Factory AI is one of its most recent portfolio companies.