Publications

- May 1, 2020: Vol. 7, Number 5

The investment opportunity in robotics

by Mike Consol

The robots are coming, and they are not just robo-advisers, driverless vehicles and assembly-line welders. What’s more, there are profits to be made by discerning investors.

Venture capital firms — including Playground Global, FoundersX Ventures, of Y Combinator and GV — are among the more than 40 VCs raising money from high-net-worth individuals and families and bankrolling a rising tide of robotics companies that are designing and manufacturing everything from autonomous drones and warehouse carts to vitamin-size “pill cameras” and surgical assistants.

Peter Barrett of Playground Global pointed out to TechCrunch that one of the challenges with venture investing in the field is that robotics companies take much longer to mature and produce a liquidity event than your average technology play. Still, his firm backed a maker of autonomous warehouse carts that was acquired by Amazon.

Industrial robots or duties such as vehicle and other assembly-line manufacturing have been around for a long time and their development tends to progress rapidly, but the robots of the future will have far more physical dexterity and capabilities, automating tasks currently carried out by human beings and transforming the way we work, travel, recreate and invest.

In several of the most innovative robotics labs around the country, the limits of robot technology are being greatly expanded and entirely new forms of automation are emerging, according to the Robotic Industries Association. The organization points out that some of the new capabilities in development include:

  • Human/robot interaction, an increasingly popular area of development that entails understanding people’s facial expressions, body language and behavior, with applications to self-driving cars and collaborative robotics.
  • Snake-like mobility, robots with snake-like bodies being developed for a number of uses, such as search-and-rescue missions because they are able to travel where humans cannot. Their “bodies” feature many different joints that allow them to bend, swim and climb.
  • Legged mobility — or robots with functional legs — that can travel places where wheeled robots cannot, and offer a more stable platform for activities such as package delivery. Indeed, the future’s self-driving delivery trucks may also feature walking robots to bring packages to recipients’ front doors.
  • Multi-robot coordination, which images the day when a proliferation of robots outside of factory settings will eventually require advanced coordination between each unit. For example, search-and-rescue robots could be working in unison to scan areas more quickly and thoroughly.
  • Aquatic robots, which are typically used for studying the health of oceans. Some feature a suite of onboard sensors that collect data as the robot autonomously glides through the water, even through strong currents.

While those are among the most advanced technologies in development, the Robotic Industries Association notes there are several others, such as robotic intelligence and machine learning.

The value of the global market for all robot types is forecast to spiral by 1,180 percent, from $39 billion in 2017 to $499 billion by 2025. In addition to the more than 40 venture capital firms invested in robotic startups, investors can also buy shares in publicly traded robotic and medical device companies. There is at least one exchange-traded fund containing robotics stocks, the Global X Robotics & Artificial Intelligence ETF, whose share price has traded at a 52-week range of $15 to $23 per share. It is currently trading at about $16 per share.

That ETF tracks the performance of the Indxx Global Robotics & Artificial Intelligence Thematic Index, which is designed to track the performance of companies that are expected to benefit from the increased adoption and utilization of robotics and artificial intelligence. The index’s five largest positions are shares in Nvidia Corp. (10.24 percent), Keyence Corp Ord (7.64 percent), Mitsubishi Electric (6.72 percent), Abb Ltd-reg (6.51 percent), and Intuitive Surgical (6.10 percent).

The index saw a double-digit increase in value during 2019.

Robots are also expected to make a big impact in healthcare. Medical researchers have created microscopic medical robots that can deliver painkillers and cancer drugs to specific locations within the body, or even clear clogged arteries. There are already surgical robots that assist brain and heart surgeons in performing operations more efficiently — or even remotely.

It does not end there. Banyan Hill Publishing — a firm that offers financial advice and is a booster of robotics investing — reports that perhaps the first and most successful robotic medical device is the “PillCam” developed by Medtronic. The vitamin-sized capsule can be swallowed and uses a tiny, wireless camera to take pictures of the intestines as it moves through the digestive tract. It is capable of transmitting thousands of images to medical professionals. The FDA has approved the PillCam as an alternative for patients who cannot tolerate colonoscopies. It can also be used to identify gastrointestinal bleeding, cancer or other intestinal problems.

The Cleveland Clinic reports that minimally invasive robotic procedures are attractive to healthcare professionals, in part because they offer significant savings in terms of pre- and post-operation costs, and reduced length of hospital stays. Most importantly, though, advancements in robotic surgery significantly improve safety and patient outcomes.

Indeed, in sickness and in health, in good markets and bad, robots are destined to play many roles, including as members of investor portfolios.

 

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.

Forgot your username or password?

We use cookies and other tracking technologies to personalize your user experience on our site and perform site analytics. By clicking on “I accept”, you consent to our Privacy Policy.