Mujin's Financial Strategy

Mujin, Inc.
Mujin’s financial strategy for early 2019
April 9th, 2019

Table of contents
Mujin’s financial strategy for early 2019
About our business1
About financial strategy2
About recruitment3
Mujin, Inc.

Mujin is an “intelligent” industrial robot controller maker
Corporate Mission
“Automate robots with software systems
to increase worldwide productivity”
Business FinanceAbout our business Recruitment
Mujin, Inc.

Company profile
CTO and co-founder
Dr. Rosen Diankov
Diankov is a robotics engineer from the USA. He studied
computer science and artificial intelligence in high school, and
acquired his PhD with the thesis “Automated Construction of
Robotic Manipulation Programs” from the Robotics Institute at
Carnegie Mellon University. After graduation, he co-founded Mujin
in Japan in 2011.
CEO and co-founder
Issei Takino
Issei was born in 1984 in Osaka, Japan. In 2011, he established
Mujin with the world-famous robot engineering expert Dr. Rosen.
Before establishing Mujin, he worked for ISCAR Co. Ltd, the
world’s most profitable manufacturing company; he has a shining
record of achievements, including many awards for his technical
solution sales activities proposing manufacturing processes.
Corporate Name
Founder
Business
Establishment
Number of Employees
Mujin, Inc.
CEO Issei Takino / CTO Rosen Diankov
Intelligent robot controller development and sales
Robot system integration
6th July 2011
90 (March 2019)
Mujin, Inc.
Founder profile
About our business Business Finance Recruitment

Why intelligent robot controllers
for industrial robots...?
Business Finance Recruitment
Mujin, Inc.
About our business

Japan’s logistics workforce continues to shrink by 1% a year
2010
100
200
300
400
2020 2030 2040 2050 （year）
（x10,000 people）
Gap is widening
Workforce demand
Workforce supply
Source: Estimate by Ports and Harbours Bureau, Ministry of Land Infrastructure, Transport and Tourism, Survey report on securing workforce to match the sophistication of logistics systems. Japan Transport and Tourism Research Institute.
Mujin, Inc.
About our business

Hence, higher productivity must be achieved
with limited workforce.
Advanced industrial robots will become essential in the next era
Mujin, Inc.
About our business

What are industrial robots?
Industrial robots can dramatically improve productivity!!
Robot armController
Teaching
HardwareSoftware
High speed
High precision
24-hour
non-stop operation
Mujin, Inc.
Send Trajectory
About our business

But, the current industrial robot adoption rate is very low…
Why aren't robots more popular?
1 : 100
Average adoption rate:
robots/workers
Mujin, Inc.Source: NIKKAN KOGYO SHIMBUN,LTD. Newswitch https://newswitch.jp/p/10359
About our business

Three major challenges of industrial robot adoption
Business Finance RecruitmentAbout our business

Problem 1: Different interfaces at every robot manufacturers
Mujin, Inc.
A’s programming language
A’s applications
A’s software
B’s programming language
B’s applications
B’s software
C’s programming language
C’s applications
C’s software
Hardware is almost same though...
Manufacturer A Manufacturer B Manufacturer C
A user must learn a new operating method for every manufacturer.
About our business

Problem 2: Robot manipulation is very difficult and complex
X Y Z
X Y Z
0001 001 MOVJ
0002 002 MOVL
X Y Z
X Y Z
X Y Z
X Y Z
X Y Z
X Y Z
0001 001 MOVJ
0002 002 MOVL
0003 ARCOF
0004 003 MOVJ
0005 004 ARCOF
0006 005 MOVJ
X Y Z
X Y Z
X Y Z
X Y Z
0003 ARCOF
0004 003 MOVJ
0005 004 ARCOF
0006 005 MOVJ
Robotic arm movements must be programmed (teaching), movement by movement,
by using a control board that is heavily text-oriented and very difficult to use…
Teaching only can be done by professionals
Mujin, Inc.
About our business

・3D vison
・Torque sensor
・Barcode reader
・Conveyor etc.
Mujin, Inc.
Problem 3: Even harder to achieve advanced sensing and motion
Robot professionals can achieve complex integration with advanced sensing and motion is even more limited...
Simple robot manipulation is already hard to achieve...
Robots must be associated with other devices,
like sensors, which is more difficult…
In order to use robots
in real environment
About our business

Mujin, Inc.
2. Teaching is very difficult and complex Robot controller is difficult to operate
1. Different interfaces at each manufacturer Robot controller is not universal
3. Advanced sensing and motion is difficult Robot controller is difficult to develop intelligence
About our business
Therefore, the common points of the three major problems are as follows;
These problems lie in the robot controllers’ abilities

Mujin, Inc.
Universal & Intelligent robot controller is necessary
All three problems are software problems
Robot arm
Hardware
Controller
Software
About our business
Unfortunately, there are no such products on the market

Easy sensor integrationTeachless(motion planning)Work with any robot
MUJIN Controller
Rise of the intelligent robot controller
Software
Mujin, Inc.
About our business

Unify robot UI/UX
Make robots intelligent
Robot manufacturer s
controller
Motor driver
Robot manufacturer’s
software
MUJIN 3D Vision MUJIN Controller
Mujin, Inc.
First in the industry!
Intelligent Intelligent Intelligent Intelligent Intelligent Intelligent Intelligent
About our business
Under one intelligent controller, no teaching required

Mujin’s technologies make industrial robots intelligent
Motion planning
The Mujin Motion Planning Framework makes it
possible to execute optimal robot motions that
follow complex application-defined constraints like
collision avoidance, motor dynamics, kinematics,
tool orientation, and grasp selection without any
manual teaching.
The first in the world to commercialize motion planning in industrial robotics
Mujin, Inc.
About our business

Mujin's three major focus areas for intelligent controllers
Factory Automation Solutions Logistics Solutions Controller OEM Solutions
MUJIN Controller
Motion Planning
Advanced Intelligence
Mujin, Inc.
About our business

- Delivered dozens of our robot solutions for JD.com, an e-commerce giant in China
- Helped JD.com’s large logistics center to be completely automated
- Realized cutting-edge automation technologies required by JD.com in short-terms
Case study 1
Mujin contributed to create the world's first completely
automated distribution center
Mujin, Inc.
An e-commerce giant in China
About our business

- Employed Mujin’s robot solutions for the next generation logistics center
to resolve lack of labor force
- Realized robot case picking at 600 case/h*, the world fastest figure
- Fully eliminated high workload operation for human by handling
several thousands of items
Mujin, Inc.
Mujin’s four intelligent robot solutions realized
completely automated case picking
Case study 2
One of the largest daily goods wholesale in Japan
About our business
*Source: PALTAC CORPORATION official website

Muijn’s robot solution automated a difficult process
and realized significant labor saving
- Picked complex shaped products placed in a tall box
- Placed picked products on a jig in a designated orientation for the next process
- After introduction, required labor force became about one fourth
Mujin, Inc.
Case study 3
One of the top bulb manufacturers in Japan
About our business

We want to contribute to society
by accelerating this wave of automation by intelligent robots
To achieve our vision, we need major funding!
However, cost of equity is usually high for fast-growing companies
Business FinanceAbout financial strategy Recruitment
Mujin, Inc.

Funding usually comes in two forms
1. Bank loan
(debt)
2. New share offering
(equity)
OR
Mujin, Inc.
About financial strategy

Maintain management rights and lower cost of capital
Low profitability and low equity ratios give start-ups low credit ratings
Start of business Series A Series B Series C IPO
Seed
Market analysis and
prototype development
Early
Prototype improvement
Middle
Product and sales launch
Later
Expanding deficits due to advance
investment in business expantion
Listed
Becoming profitable
and profit growth
*Profit
Venture financing stages and profitability
Deficit
1. Debt
Major debt financing is almost impossible for start-ups
Start-up
Mujin, Inc.

Shareholding ratio
100%
75%
50%
25%
0%
IPO
Series C
Series B
Series A
Management/
Employee
Exchange stocks and money, no need to repay2. Equity
Even though the more investors increase,
the higher risk of equity dilution, decision making for short-term profit, and high cost of capital burden start-ups could
have, it is possible to raise money in exchange with promising stocks.
Equity financing is almost the only option of major funding for start-ups
Mujin, Inc.
Management
Employee Management
Employee Management
Employee Management
Employee Management
Employee

⑤Business/organization
growth①Need funding
④Equity financing
②Low credit rating
Funding system for start-ups
④Equity financing
③Debt financing is
not available
④Equity financing
not available
Series A
Series B
Series C
Equity dilution, decision making based on short-term profitability,and high cost of capital
not available
RecruitmentBusiness Finance Recruitment
Mujin, Inc.

What if we could perform a financial strategy which can satisfy following
Major Funding Lower cost of capitalMaintain management rights
Mujin, Inc.

Mujin executed two major actions
to achieve a capital structure meeting all of our goals
Mujin, Inc.

Management Buyout
Debt Financing of 7.5 billion yen
Mujin, Inc.

Strategy 1
Management Buyout
Mujin, Inc.

Before MBO After MBO
Management Buyout (MBO) is an M&A method used by the management to take unwavering management rights by buying some or all shares.
Management
team
Management
team
Management
team
Asset management
company
33% 33%
100%
2019年2月14日
MBO実施
MBO completed as of
February 14th, 2019
Thanks to UTEC’s cooperation,
Mujin completed a MBO in which the Mujin management team obtained all of UTEC’s shares
Mujin, Inc.

Enhance management rights by the management team
The high management team equity ratio achieved by the MBO provides mid-to-long-term decision making power.
- Created a mid-to-long-term management structure
- Secured stable post-IPO shareholders
- Enhance freedom in future funding strategies development
- Secured structure for faster decision making
Management
team
33%
Management
team
Majority
Mujin, Inc.

UTEC is proud of being a sincere supporter even since Mujin’s foundation.
Mujin has been truly a global company which is making a significant contribution on
social problem like labor shortage by promotion of robot automation. In order to
support Mujin to strengthen its management foundation for further expansion of their
business globally with even bigger and wider vision, UTEC has made a big decision to
agree with this MBO.
We believe this MBO is an unprecedented event that could cause a stir in the history of
venture finance not only in Japan but also abroad.
We are absolutely certain that Mujin will step up to the next stage that makes them
keep growing to be global robot plat former as a UTEC alumnus, and we will
continuously support Mujin in as many strategies as possible.
President
Mr. Tomotaka GOJI
UTEC’s voice
Mujin, Inc.

MBO successfully gives MUJIN enhancement of management rights.
But we also need another capital for corporate growth.
So...
Mujin, Inc.

Mujin, Inc.
Strategy 2
Debt Financing of 7.5 billion yen

Sumitomo Mitsui Banking Corporation (SMBC) highly evaluated Mujin’s business plans and sent up debt facility with extremely low intesterest.
Signed on February 13th, 2019
7.5 billion yen raised
[ Borrowing ]
Form of Lending: Special Overdraft
Credit Limit: 7.5 billion yen
Sumitomo Mitsui
Banking Corporation
What is Special Overdraft?
A form of lending in which a borrower may freely borrow and repay funds up to a pre-set credit limit.
What is the key merit of Special Overdraft?
What is the key demerit of Special Overdraft?
It can quickly meet the borrower’s unforeseen funding needs without undue restrictions on the way the funds are used.
The borrower must clear the lender’s strict loan review standards and receive high credit ratings.
Mujin, Inc.
Realized large scale funding with very low cost via debt financing

Capital gain　　　Amount raised Interest expense
Mujin, Inc.
The cost of capital of debt financing amounts to only a few percent of the cost of equity
Example of equity financing Example of debt financing
Usually, if a tech start-up, whose business has a high risk, gets a debt financing, a bank offers a small amount of debt with a security, a guarantee, and a high interest rate.
Generally speaking, debt’s interest rates are only about a few percent, much lower than equity financing for start-ups, amounting up to 20-50%.
Single year
Cost of capital
1/30
t0 t1 t2 t3
1 1
Interest expense 3
Capital gain
120
1
t0 t1 t2 t3
100
100
100
130
100
169
69
100
220
120
30
3 years total
Cost of capital
1/40
×130%
×130%
×130%
Assumption
Capital raised: 10 billion yen
Expected rate of return: 30% a year (Compound interest)
( Cost of capital )
Assumption
Borrowings: 10 billion yen
Borrowing rate: 1% a year (simple interest)
( Cost of capital )
*For simplification, the above example does not take tax saving into account

Mujin, Inc.
Purpose of this funding
Secure talented human resources
Overseas deployment（China, USA, Europe）
Establish new R&D facility
Improve after support quality
Build robot data center
7.5 billion yen raised

Summary
Mujin, Inc.

Mujin, Inc.
How the new funding method differs from conventional funding strategy used by start-ups.
Difficult for the management team to secure the freedom in future funding strategies development
- High equity dilution if financing is done when market capitalization is low.
- Less corporate management rights with third party funding and increased
number of outside shareholders.
- High (what amounts to 20%-50% interest), although no need to repay.
- High market capitalization funding to minimize equity dilution may present a
risk of facinga strong pressure to avoid down round in the future.
- Hold back on stock options in order to avoid further equity dilution.
General funding strategy for start-ups
Management
Employee
Management
Employee
Management
Employee Management
Employee
Series A
Management
Employee
Series A
Series B Series C
Series A
Series B Series C
IPO
Series A
Series B
Stockholding ratio

Mujin, Inc.
MUJIN
- Held off equity dilution till additional fund raising at the time of IPO,
or no dilution at all if loans are repaid by using future free cash flow.
- Secured high level of management rights by the management team’s
direct governance.
- Lower cost of capital through bank borrowing.
- The management team bears most of the down round risk.
- More stock options can be issued because the high management team
equity ratio makes dilution due to stock options less of an issue.
How the new funding method differs from conventional funding strategy used by start-ups.
Series B Series B Series B
Management
Employee
Management
Employee
Management
Employee
Management
Employee
Management
Employee
Series A
Series A
Stockholding ratio
The management team secure the freedom in future funding strategies development

Mujin, Inc.
Secured
management
rights
Further stock options
Business fund of
7.5 billion yen
Employee
Capital
Management
rights
Leveraging this strong foundation for growth,
Mujin can fully focus on accelerating its business.
Sumitomo Mitsui
Banking Corporation
With this financial strategy,
Mujin has achieved three advantages in catalyzing faster growth

In order to achieve higher corporate value,
Mujin will shift gears into:
Securing more talented team members who share our vision of robot automation
Delivering intelligent robot solutions to increase automation for more industries
Business FinanceAbout recruitment Recruitment
Mujin, Inc.

Building a solid team and
culture to last for 100 years
Mujin, Inc.
About recruitment

Mujin, Inc.
Face the unknown, be a pioneer and challenger.
You only live once; devote your talent and passion to a worthy cause.
The people with a credo of “Only we can do it!” have been the innovators of this world.
Be on the side to change the world.
https://mujin.co.jp/en/recruit.html
link to the recruitment page
About recruitment

Mujin's Financial Strategy

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