If Dmitry Grishin, founder of the Grishin Robotics fund, needed reassurance that consumer interest in drones was flying, it came during his recent visit to Fry’s Electronics in the San Francisco Bay Area.
At his first ever visit recently to Fry’s, known for its warehouse setting for computers and accessories, Grishin saw multiple shelves of drones for sale. Some as cheap as $50. Others retailing for thousands.
The Russian-born Grishin, who launched the robotics-focused fund in 2012 with $25 million of his own capital, says he found shopping at Fry’s comforting. Consumer and investor attitudes toward drones and robotics have clearly turned from skeptical to favorable in the past couple of years.
“When you see that amount of retail space devoted to a consumer product, you know interest is for real,” said Grishin, who is also co-founder and chief executive of the Moscow-based Internet company Mail.Ru Group.
“People were skeptical of a robotics-only fund when we launched,” he said. “But we’ve seen a thousand-plus companies in the general hardware space in the last few years, and the market is growing.”
Grishin talked about robotics and his fund while visiting San Francisco in April.
After he raised $100 million for Grishin Robotics Fund II, one of the five largest U.S.-based funds raised in April, Grishin came to the United States for a month. There, he visited portfolio companies, met with investors and scouted for an office location in the San Francisco area. Grishin’s current headquarters are listed in New York.
Grishin wouldn’t identify the funds’ limited partners, but the second fund was raised from institutional and individual investors from Europe and the United States.
With the new fund, the firm will expand its sector focus to include not just robotics but hardware and the Internet of Things, as well as 3D printing and home automation.
The second fund, which will focus on U.S. and European startups, has already jumped into its first deal, backing Ring, a Santa Monica, California, home-automation and -security company that in March raised a $61.2 million Series C round.
Ring has now raised more than $100 million in funding from Grishin Robotics, CRV, First Round, Kleiner Perkins Caufield & Byers, Sir Richard Branson, True Ventures and Upfront Ventures, among others.
Fund I was an early player in the hardware and robotics space. Although incubators like Lemnos Labs and Highway 1 are similarly focused on hardware and robotics, Grishin’s debut fund was unique in that it went all in on robotics and related tech.
Fund I backed 12 companies, all U.S.-based, including Double Robotics, maker of a mobile telepresence robot that was featured on episodes of “Modern Family” and “Community.”
Grishin has numerous photos on his iPhone that he took while visiting Double Robotics, that show how people are interfacing with it, such as dressing the upright robotics hardware to bring personality to each device.
Grishin’s other investments include Petnet, an automatic pet feeder, and Spire, which operates a network of microsatellites to provide ocean data for mariners.
Perhaps the most notable company in the firm’s portfolio is Boulder, Colorado-based Sphero, which makes smartphone-controlled robots, including the BB-8 droid toy that was in “Star Wars: The Force Awakens.” Sphero has raised more than $90 million from Grishin, Foundry Group, Techstars, Walt Disney Co and others.
Grishin said Sphero is developing new products, including the Force Band, a wearable that debuted at the Consumer Electronics Show and which allows users to mimic a Jedi as they control the BB-8.
Grishin, who is 37 years old, says he’s learning more about what it takes to be a venture capitalist. Someone recently called him an “emerging manager,” a term that often describes a young firm that has raised only a first or second fund.
He’s not yet realized any exits with Fund I, and Grishin emphasizes that his LPs have not pressured him about it. But he says he feels the “clock is ticking” for the fund to achieve a return.
“I now know this term ‘emerging manager’ and what it means,” said Grishin, who added that the focus on exits is the main difference between angels and institutional-backed investors.
“VCs have more concerns over timing, and I’m thinking about exits more now,” he said. “As an angel, it’s different. I can invest in a deal and if I have a result in five years, I will be in good shape.”
The second fund is four times larger than the first and he’s hired partner Verdi Israelyan to scout out more deals in Europe and the United States.
But Grishin said the firm will maintain the same pace as it did with the prior fund. That means making about one deal a quarter. The larger fund will also help him fund existing companies again in later rounds, the pro-rata issue he’s learning more about as a VC.
Grishin tells VCJ that since he closed Fund II, he’s seeing more inbound interest from entrepreneurs as well as from other VCs. He said investors are looking to get educated about the IoT, 3D tech, robotics, drones and virtual reality.
“The key is to use the hardware and software in combination to enable new products,” he said. “And if we can brand the end result in a retail format, like the drones for sale at Fry’s, then this will be super exciting.”
Photo of Dmitry Groshin, founder of Grishin Robotics, courtesy of the firm