Delivery startup Refraction AI raises $4.2M to expand service areas

Refraction AI, a company developing semi-autonomous delivery robots, today announced that it raised $4.2 million in seed funding led by Pillar VC. Refraction says that the proceeds will be used for customer acquisition, geographic expansion, and product development well into the next year.

The worsening COVID-19 health crisis in much of the U.S. seems likely to hasten the adoption of self-guided robots and drones for goods transportation. They require disinfection, which companies like Kiwibot, Starship Technologies, and Postmates are conducting manually with sanitation teams. But in some cases, delivery rovers like Refraction’s could minimize the risk of spreading disease. Recent market reports from Allied Market Research and Infiniti  estimate that annual growth in the last-mile delivery sector over the next 10 years will exceed 14%, with the autonomous delivery segment projected to grow at over 24%, from $11.9 billion in 2021 to more than $84 billion globally by 2031.

Launched in July 2019, Refraction was cofounded by Matt Johnson-Roberson and Ram Vasudevan, both professors at the University of Michigan. Working alongside several retail partners, people within a few-mile radius can have orders delivered by Refraction’s REV-1 robot. After customers order through a dedicated website, Refraction’s employees load the vehicles at the store, and recipients receive text message updates, along with a code to open the robot’s storage compartment when it arrives.

REV-1, which is approximately the size of an electric bicycle and is legally categorized as an ebike, weighs approximately 100 pounds and stands roughly 4 feet tall, including its three wheels. It travels an average 10 to 15 miles per hour with a very short stopping distance, and the compartment holds about six bags of groceries.

REV-1’s perception system comprises 12 cameras, in addition to redundant radar and ultrasound sensors — a package the company claims costs a fraction of the lidar sensors used in rival rovers. The robot can navigate in inclement weather, including rain and snow, and it doesn’t depend on high-definition maps for navigation.

Prior to a partnership with Ann Arbor, Michigan-based Produce Station, REV-1 had been delivering exclusively from Ann Arbor restaurants, including Miss Kim and Tio’s Mexican Cafe, during lunchtime as part of a three-month pilot. The company charges the restaurant a flat $7.50, and Refraction’s over 500 customers pay a portion of that fee if the business chooses. (Tips go directly to Refraction’s partners.)

As of May 2020, Refraction had eight robots running in Ann Arbor, and it expects to have over 20 within the next few weeks. The latest investment brings its total raised to date to over $10 million.

“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. 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,” Refraction CEO Luke Schneider, who took the helm in fall 2020, said in a press release. “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.”