Why We Invested in Arch Systems

6 Minute Read   |   Contributors: John O’Donoghue & Jordon Boerchers

In September, we announced a $30 million growth capital investment in Arch Systems, Inc. (“Arch”), the leading agentic AI platform for end-to-end manufacturing operations. Founded by Stanford PhDs Andrew Scheuermann and Tim Burke, Arch connects tens of thousands of physical manufacturing processes, from pick-and-place machines to injection molding presses, to its data management and agentic AI systems.

Championed by John O’Donoghue  and Jordon Boerchers, the investment reflects Vistara’s conviction in backing technical founders with deep domain expertise, and in providing flexible growth capital that enables them to continue building towards their goals while providing more value to their customers which is ultimately the most important attribute we look for. Vistara’s capital is helping Arch productize AI agents across mission critical factory use cases, pursue pilots and expansions across its customer base, extend its platform to OEM brand-owners and enter more end-markets, without the dilution of a large equity raise.

Why are we so excited about the future of Arch? The TL;DR is below.

TL;DR

• Embedded with North America’s Leading Manufacturers. ROI-proven in the demanding environments of North America’s leading electronics, automotive, aerospace & defense, medical and industrial manufacturers.
• A System of Action for the Factory. Arch goes beyond connecting machines and systems: it builds a unified model of the factory that drives action through AI agents.
• AI Built to Be Right. Generative AI paired with deterministic, physics-based tools so agents can deliver answers that consistently deliver accuracy on the factory floor.
• Accelerating Customer Momentum and Multiple Expansion Vectors. New-logo pilots across end-markets are accelerating rapidly, with emerging opportunities across OEM brand-owners.
• Exceptional Founders and Strategic Alignment. Aligned co-founders with deep domain expertise backed by several of the manufacturers that rely on the platform.

Scroll below to explore the full investment thesis.

Capital Structured Around Arch’s Growth

Having previously raised capital from notable venture capital and strategic partners, Arch entered 2026 expecting to raise twice: debt to extend runway and equity to fuel growth. Vistara offered a compelling alternative: a single flexible financing that gave Arch the capital to accelerate while preserving control over the timing and terms of any future equity raise. Every new pilot and deployment at a large manufacturer requires engineers on the ground. The additional capital means Arch can pursue those opportunities in parallel rather than sequentially.

Factories Are Running Out of Experts. Manufacturing Needs AI-Powered Automation.

Manufacturing is one of the world’s largest industries with more than $10 trillion of goods produced across roughly 10 million factories, yet manufacturers spend trillions on labor and only a fraction of that on software.

For decades, automation focused primarily on physical work: robots that pick up a part, move a component or turn a screwdriver. But much of what determines a factory’s performance is knowledge work: understanding why a defect occurred, how to schedule a line or what to do when a machine goes down.

That expertise has traditionally lived with experienced engineers and operators, and it is becoming increasingly scarce. A quarter of the manufacturing workforce is at or approaching retirement age, average employee tenure has fallen significantly, and Deloitte and The Manufacturing Institute project 1.9 million U.S. manufacturing jobs could go unfilled by 2033.

The data needed to make better decisions already exists, but it is fragmented across machines and systems that were never designed to work together. Factories have systems of record and systems of measurement. What they have lacked is a system of action.

Enter Arch.

Building the Self-Improving Factory

Arch’s mission is to advance the self-improving factory: an AI-powered system that can understand why defects happen or schedules slip, determine the appropriate response and increasingly take autonomous action.

The first ingredient is connectivity. Arch integrates directly with a vast library of manufacturing machinery, MES & PLC software and legacy databases. That data is unified into a digital twin that provides the context required to understand all facets of the factory. On top of that foundation, Arch deploys AI agents that act as planners, quality engineers and process engineers, integrated into increasingly autonomous workflows that automate more factory knowledge work over time.

On the factory floor, the complexity becomes simple. An operator can receive an alert explaining why a machine is down and what action to take. When parts begin failing quality checks, an agent can search factory data, identify the component driving the problem and recommend a fix. In the boardroom, the same system rolls that activity up into a benchmarkable view of performance across every line, site and geography, showing executives where gains are compounding, where a plant is lagging, and where the next dollar of capital will do the most work. Some customers have compared the experience to a ServiceNow for manufacturing: a ticketing system that can increasingly open, write and close its own tickets.

Manufacturing has little tolerance for an AI model that is merely probably right. It was the question we pushed hardest on in diligence, and the answer turned out to be architectural. Arch pairs large language models with deterministic, physics-based and statistical tools, using generative AI to help select or build the precise deterministic algorithm or process required for a given task. It is an architecture designed around the standard that matters on a factory floor: getting the answer consistently right.

The results are measurable:

• At HARMAN, Arch helped increase total placements by approximately 30% and improve defect performance by 37%, with the deployment making Arch a finalist for the Automotive News PACE Award.
• Published Arch case studies with major manufacturers cite customer-reported results including a 300% ROI, a four-month payback period and a doubling of overall equipment effectiveness in two months.
• Arch keeps tens of thousands of connected machines running with a lean support team, backed by an AI “software factory” that can build and heal integrations.

From the Factory to the Broader Supply Chain

Manufacturers have historically treated process improvements as trade secrets, rarely publishing case studies or publicly discussing the technology running their factories. That is beginning to change, and we believe it is an important signal. OEMs increasingly want greater visibility and intelligence across their supply chains, creating an incentive for suppliers to demonstrate the sophistication of their operations and feed data back to their end OEM customers.

That shift opens a much larger opportunity: the OEMs themselves. By connecting how a product was designed with how it was actually built (and where failures or defects emerged), Arch can enable a more efficient process for both sides of the manufacturing relationship. As more OEMs and suppliers join the platform, their agents can increasingly work together. The long-term opportunity is to build a manufacturing network intelligence company, one that becomes more valuable as more of the manufacturing ecosystem connects to it.

Every Deployment Makes the Next One Easier

The model is inherently land-and-expand. Customers typically prove ROI in an initial “Lighthouse” deployment, then scale Arch across additional processes, production lines and factories. The remaining headroom within existing customers can be substantial, with many large manufacturers having a global footprint of hundreds of factories, leaving significant room to expand within accounts.

That motion is accelerating, with new-logo pilot activity expanding rapidly in 2026. Arch’s approach to pilots has also evolved: where the ROI case is already clear, some customers have moved forward directly to deployment; where pilots are required, Arch is using them to prove more use cases upfront, creating a larger opportunity at full deployment.

Once embedded, Arch is difficult to replace, with strong net revenue retention and minimal churn across its history. Its direct sales efforts are also increasingly complemented by a growing ecosystem of equipment and software partners.

Exceptional Founders. Customers Who Became Investors.

A handful of major manufacturers, including Jabil (NYSE: JBL), have invested in Arch alongside Two Bear Capital and Uncork Capital. We believe it is a powerful validation when some of the largest operators in an industry choose not only to use a technology platform, but to invest behind it.

At the center are co-founders Andrew Scheuermann (CEO) and Tim Burke (CTO), Stanford PhDs who have spent more than a decade building Arch and combine deep technical expertise with an intimate understanding of manufacturing. Andrew and Tim also embody a customer-first philosophy, with most team members spending some time on customers’ factory floors, as close the actual deployments as possible, to understand firsthand the problems Arch solves and the value it creates.

We are excited to partner with Andrew, Tim and the entire Arch team as they build the intelligence layer for the self-improving factory.