Amazon has acquired three founders from Covariant, a Bay Area startup that specializes in developing AI software for robotic picking machines. This deal, announced just before the holiday weekend, includes a non-exclusive license to Covariant’s AI models. The co-founders of Covariant, namely Peter Chen, Pieter Abbeel, and Rocky Duan, along with other team members, will be joining Amazon while the company continues its operations. This strategy of hiring founders of startups and striking licensing deals is similar to what Amazon did when it hired the founders of Adept, another AI startup, back in June.
Tech giants like Microsoft are also following a similar strategy of hiring AI experts from smaller startups, as seen in their hiring of Mustafa Suleyman, co-founder of Inflection AI. These deals are often described as “reverse acquihires,” where the combination of hiring key personnel and licensing deals amounts to an acquisition in disguise. Regulators have begun taking a closer look at AI deals between big tech companies and startups, with Amazon facing questions from the U.S. Federal Trade Commission regarding its deal with Adept.
Covariant, founded in 2017, focuses on AI-powered robotics systems, with a platform known as the “Covariant Brain” that automates warehouse tasks such as order picking and sortation. Some of Covariant’s customers include McKesson, Otto Group, and Radial. Amazon itself has been implementing warehouse robots across its operations to automate processes within its fulfillment and sortation centers. The potential deal between Amazon and Covariant could help centralize Amazon’s fulfillment center automation robots through a single platform.
Amazon has faced criticism over the safety of its warehouse operations, with concerns raised over the higher injury rates at its robotic fulfillment centers compared to older facilities. However, Amazon disputes these claims, stating that incident rates at Amazon Robotics sites are lower than at non-robotics sites. The company is focused on using robotic systems to eliminate tedious and repetitive tasks, making operations safer for employees. The acquisition of Covariant’s technology will further enhance Amazon’s robotics capabilities and improve their delivery operations.
Covariant has secured $222 million in funding, with a Series C round in April 2023 bringing in $75 million led by Radical Ventures and Index Ventures. The company’s valuation after this round was reportedly $625 million. With over 160 employees, Covariant’s technology and expertise will be integrated into Amazon’s Fulfillment Technologies & Robotics team, contributing to new ways of learning and innovation in automation. Amazon sees Covariant’s models as a way to improve how their robotic systems operate and provide dynamic opportunities to enhance operations and customer delivery.
The financial terms of the deal between Amazon and Covariant were not disclosed. Amazon sees Covariant’s AI models as a means to drive innovation in how their robotic systems learn and operate, ultimately benefiting their operations and customer experience. The acquisition of Covariant’s technology and the addition of key team members to Amazon’s workforce signal a strategic move by the company to strengthen its robotics capabilities and remain competitive in the fast-evolving AI and automation space.
