Despite its future acquisition by Salt Lake City, Utah-based Sarcos Technology and Robotics Corp. for $100 million, Lawrenceville-based RE2 Inc. will still have its metaphorical robotic manipulation arms locked on Pittsburgh in the months and years to come as the company looks to continue building out its product and engineering abilities but under new ownership. The deal, which is anticipated to close by the end of April 2022, also leads to prominent exits for Pittsburgh investment groups that have been many years in the making following RE2's initial founding in 2002.
"We are starting the next phase of our journey through this combination, which is going to be both complimentary but additive, and this is going to allow us to really focus on shipping products into the markets we've been serving such as construction, aviation, medical, defense; we're going to continue to target those key markets," Jorgen Pedersen, RE2's founder, president and CEO, said. "Now we have an amazing, expanded team, we have additional talent that we can tap into on both sides. We're looking forward to the cross-pollination that we're going to see by bringing these two worlds together, which should really amplify the impact."
Equally important to that, Pedersen said, is the expanded portfolio of its technology and corresponding products that will come to fruition as a result of the deal.
RE2 develops autonomous and teleoperated mobile robotic systems for varying industries. Its signature product, the Sapien Sea Class system, is able to perform inspection and maintenance tasks across these different industries in shallow and deepwater environments. Similarly, Sarcos's (NASDAQ: STRC) mobile robotic systems are designed to augment human performance and can perform tasks where physically demanding work is required, much like RE2's products.
Pedersen said the combined company will be able to have a more rapid market penetration of its products for the robotic mobility manipulation industry, of which Pedersen said there are only a few companies around the country that directly compete in against Sarcos's offerings.
"Most manipulation companies, for example, are focused inside the factory floor," Pedersen said. "We're focused about outside the factory floor, going outside into all types of weather, all types of conditions; to go where there's dangerous work and help save lives, as well as increase productivity with people utilizing this technology."
And ensuring the building of such technology is done in Pittsburgh as well as in Salt Lake City is important in the months and years to come, Pedersen said, even if it means the RE2 name and branding will fade over time as a result of the acquisition. RE2 employs over 100 workers in Pittsburgh, all of whom are expected to be retained by Sarcos should the employees wish to join the new company. Pedersen will also be among them, taking on the role of Sarcos's chief operating officer following the deal's close.
"We look forward to building from what we have and to continue to grow the combined business across both locations," Pedersen said. "I think we're fortunate here in Pittsburgh to have access to a very strong robotics community as well as the universities, so that will be helpful as we look to expand the business."
Kiva Allgood, Sarcos's president and CEO, agreed with Pedersen and highlighted the talent boost and benefit that will result from the company's acquisition of RE2.
"We're bringing some of the best and brightest together, we're super excited because we now are almost doubling the engineering team, and I can't wait to see how that collaboration tees off," Allgood said. "In my life, I've never seen such a war on talent. I mean, right now you've got people who, if you don't make an offer on the day that you meet them, they've got six others from someplace else, especially in the engineering side of the house. So I'm very, very focused on ensuring that we have a smooth transition with the teams and that they're super excited to continue to work together as a single team."
The deal also stands to be very lucrative for Draper Triangle Ventures, which led RE2’s Series A funding round in summer 2014 that brought in $2.25 million initially. Tom Jones, managing partner of the venture capital firm which is based in downtown Pittsburgh, declined to disclose how much money it will realize from the exit, but said it will likely rank among the three largest in Draper Triangle’s 20-plus year history. Draper Triangle and Riverfront Ventures, a local early stage fund managed by Innovation Works are the only outside investors, Jones said.
“You want to hear a magical tale?” Jones said on Monday morning. “There’s only been one round of funding, slightly less than $4 million with a very small extension to the Series A. It rarely happens, certainly in the robotics industry, where it typically takes $100 million to get to market. It’s the only outside funding Jorgen took.”
Pedersen initially staked RE2 himself. The company has been the recipient of large contracts from the government, including the U.S. Department of Energy, and the military, particularly the U.S. Navy.
Jones credited Pedersen’s leadership for growing the company, which employed about 25 — less than a fourth of its present size — eight years ago.
“The first step in any venture deal is always the CEO,” Jones said. “Jorgen not only had the vision for the technology and where he could take it but he had good market sense and the ability to understand where the technology could go to build something special to make life better for people in environments that were dangerous and to bring efficiencies with the robotic arms he was pioneering. Jorgen created a wonderful culture within his organization. People love to go to work at RE2. And he knows how to really get the most out of his investment money. He’s been very creative on how he’s been able to grow his business and do it in a nondilutive way. It’s been a great run. Hopefully, it’s an inspiration to other young like-minded people continuing to build on the legacy forged by robotics firms here in Pittsburgh who’ll continue to do great work.”
And while Jones can easily sing high praises for Pedersen, it's Pedersen who emphasized that all of RE2's triumph is a result of the very people who work at the robotics company he founded two decades ago.
"The premise that if you take care of people, everything else, just looking at success, product, revenue — that's all a byproduct of the incredible people with this organization," Pedersen said." And these two organizations are bringing together the phenomenal people that are going to have a tremendous impact in the coming years."
