Former Tesla Optimus engineer settles trade secret lawsuit and raises $11M to build robot hands Tesla still cannot crack

At a glance:

• Proception, founded by ex-Tesla Optimus engineer Jay Li, settled a trade-secret lawsuit with Tesla and closed an $11 million seed round led by First Round Capital.
• The startup is shipping its first batch of 22-degree-of-freedom robotic hands to researchers and robotics companies, using a sensor-laden glove that doubles as both data-collection tool and robotic "skin."
• Tesla has deployed over 1,000 Optimus Gen 3 units but still treats dexterous hands as its weakest link, leaving an opening for specialist suppliers like Proception.

The lawsuit and the settlement

Tesla filed suit against Jay Li and Proception in June 2025 in the Northern District of California, alleging that Li downloaded confidential files related to robotic hand actuation onto personal devices before resigning and launching his startup six days later. The complaint claimed Proception's hand designs bore "striking similarities" to Tesla's internal work. After months of litigation, the two parties reached a settlement and Tesla dismissed the case earlier this month. Li described the ordeal as a "resilience test" and said he would not be surprised if Tesla eventually turned to Proception for help with its own hand challenges. Tesla declined to comment on the settlement.

A new approach to dexterous manipulation

Dexterous manipulation — the ability to grasp, rotate, and manipulate objects with human-like precision — remains one of robotics' most stubborn unsolved problems. Even Elon Musk has called robot hands one of the biggest engineering challenges yet to be cracked, and Northwestern University's Kevin Lynch predicted last year that it could take a decade before robot hands become functionally useful. Proception's bet is that the bottleneck is not just hardware but data. Most humanoid developers rely on teleoperation, where a human in a VR headset remotely controls a robot, but the operator receives no tactile feedback and the method scales only with the number of robots available.

The sensor glove that learns without a robot

Proception's alternative is a sensor-packed glove that captures rich human hand interaction data without requiring a robot in the loop. The same glove also serves as the sensor-dense "skin" on the robotic hand the company is developing, which features 22 degrees of freedom and multiple joints per finger. Li argues this combination of scalable, tactile data collection and high-dexterity hardware is what the market has been missing. By decoupling data gathering from robot fleets, Proception can amass manipulation datasets far faster than competitors constrained by hardware availability.

A crowded and well-funded market

The dexterous hand space has attracted significant capital in 2025. China's Linkerbot, which claims 80 percent of the global market for high-degree-of-freedom hands, ships more than 1,000 units per month and is targeting a $6 billion valuation. European startup Genesis AI raised $105 million for a wheeled robot equipped with dexterous hands, while Chinese rival Xynova has secured nearly one billion yuan in funding. More than 150 companies are now chasing the humanoid robot market, yet only 23 percent of enterprise buyers report satisfaction with available products.

Tesla's Optimus and the supply-chain question

Tesla has discussed producing Optimus at its Shanghai Gigafactory and has already deployed over 1,000 Gen 3 units across its own facilities. Musk has set a target price of $20,000 to $30,000 per unit and projected production scaling to tens of thousands by 2028. Yet the robot's hands remain its weakest link, raising the question of whether Tesla will continue building them in-house or eventually source them from specialists like Proception. First Round partner Bill Trenchard, who led the seed investment, called dexterous manipulation "the last mile of getting these robots to be truly performant" and praised Li's leadership under the pressure of the Tesla lawsuit.

From seed shipment to category definer

Proception is betting that most humanoid robot companies will buy hands rather than build them, mirroring how the automotive industry treats specialized components. The startup's first batch of hands is now shipping to researchers and robotics firms, with wider orders opening soon. Whether Proception can scale from these initial shipments to a position where it shapes how an entire category of machines uses its hands is the wager First Round Capital just made. In a market where billion-dollar valuations are common but customer satisfaction is low, a company selling the component everyone agrees is the hardest to get right has a clear pitch — even at the seed stage.