(Yicai) March 26 -- Unitree Robotics, whose humanoid robots enthralled an audience in the hundreds of millions by dancing on China’s new year’s eve television show, could create an ecosystem similar to that developed by home electronics giant Xiaomi, according to an early investor in the robotics startup.

"Unitree has the opportunity to become an ecosystem company like Xiaomi," Zhao Nan, founder of early-stage investment firm SevenUp Capital, said in a recent interview with Yicai.

Just as Xiaomi has built a large ecosystem that encompasses smartphones, smart home devices, electric vehicles, and other areas, Hangzhou-based Unitree can also develop an ecosystem based on its two-legged and four-legged robots, Zhao said.

Xiaomi’s success partly stems from its ecosystem-based business model that started with mobile phones and expanded to include home electronics and much more, all working seamlessly together thanks to partnerships and big investments in the Internet of Things, and thereby engendering customer loyalty and driving earnings growth.

Unitree’s name reflects founder Wang Xingxing's ambition for the business, according to Zhao. “He hopes that Unitree will become a world-class tech company rooted in core technology, with branches connecting ecological partners, and eventually growing into a ‘forest’ covering many ecological scenarios,” the venture capitalist said.

“When Wang talks about technology and robots, his eyes light up,” Zhao revealed. “He deeply believes in technology and is very persistent in that belief.”

As artificial intelligence becomes more specialized and industry-specific, robots are following suit. Zhao predicts a future where different companies developing vertical AI applications will continuously enhance the ability of robots to understand and respond to complex scenarios.

"Perhaps in the future, Unitree will launch an AI operating system for robots,” he noted. “Based on this OS, more interfaces will become available to ecosystem companies.”

Hardware Prowess

SevenUp Capital led Unitree’s pre-A series fundraiser in 2020. Though just three years old at the time, the company had already released three robot dogs: Laikago, AlienGo, and Unitree A1.

Some of the factors that motivated Zhao to invest in Unitree were the startup's self-developed core technology, its ability to independently develop and mass-produce non-standard components, and its progress in commercial validation.

Moreover, by that time, Unitree had already secured a significant number of self-developed patents. It also had small workshops for the development and production of non-standard parts. About 70 percent of Unitree's customers were overseas laboratories and tech giants such as Nvidia, Google, and Meta Platforms, which used its products for secondary development or AI training. Roughly one-fifth of these clients used the products in industrial scenarios, including safety inspections.

"These customers prove that Unitree is not a toy company," Zhao said.

In his view, the firm's key asset is its reliable hardware, and its product iteration is also very fast. “Unitree is a platform-level company with ecosystem and collaboration capabilities,” Zhao said, adding that “if you look at Unitree as a technological base, you will find its potential to be very high.”

Early Profitability

Demand for Unitree’s products is strong. Staff at its booth at this year's CES in Las Vegas told Yicai that the firm’s four-legged robots have a global market share of 60 percent to 70 percent.

Zhao said Wang did not initially focus on making humanoid robots because he believed they were not yet mature enough in terms of technology and commercialization. But after OpenAI released ChatGPT in 2022, Wang changed his mind. Unitree launched its first android project in February 2023, and about seven months later, the general-purpose human-like H1 was unveiled.

Unitree has been profitable since 2020, Zhao pointed out. In a recent conversation with Wang, he learned that the founder is not anticipating a new round of financing anytime soon.

It is rare for a startup to break even so quickly. Zhao attributed Unitree’s cost advantage to China’s vast industrial supply chain and the startup's self-reliance on research and development for core components.

In addition to reducing costs, in-house design also accelerates product improvements. Zhao gave the example of high-torque density joint motors and joint force sensors, key components for humanoid robots to perform complex actions such as somersaults. 

If these parts were to break during training, it would be both costly and time-consuming to ask a supplier to address the issue, but Unitree’s own team can quickly diagnose and resolve any problems in-house, he pointed out.

Editors: Tang Shihua, Emmi Laine