It’s pretty clear that the last five or so years has seen tremendous growth in the robotics industry, and along with that growth comes money. Lots of money. And money attracts investments, whether it’s Wall Street types looking to invest in public industrial automation companies, or private venture capital firms looking to spot the next big startup.
But today, any investor can get into the game, through index funds such as the ROBO Global Robotics & Automation ETF, which invests in companies not only in robotics makers, but across the entire robotics value chain as well (components, chipmakers, etc.). Jeremie Capron, director of research at ROBO Global, will be discussing the trends around investing in automation at a RoboBusiness 2019 session, “Investing in Innovation: Future-Proofing Your Portfolio in the Age of Robotics & Automation.”
Robotics Business Review chatted with Capron ahead of the show about some of the latest investment trends within the automation space. Since 2013, the index has brought a comprehensive investment strategy across the robotics, automation, and AI ecosystem.
A tremendous opportunity
“The main points I’d like to convey in my session is that we are in the early stages of the robotics & AI revolution and this is the right time to be investing in this set of general purpose technologies, that’s what the market is telling us” said Capron. “In addition, it’s not just about factory automation anymore, and that’s where the true potential of robotics and AI is going to become increasingly apparent.”
Beyond industrial automation, markets such as healthcare and logistics are likely to see significant growth in the coming years, Capron said. In healthcare, he said the growth of surgical robotics, lab and pharmacy automation, and the boom in genomics are all pulling a lot of demand for automation. “You can only do genomics using fully automated facilities,” said Capron. “So that’s been a very sweet spot.”
In addition, Capron said he wants to give attendees knowledge about opportunities beyond traditional investment strategies. “In my experience of attending trade shows and robotics conferences is that most people think investing in robotics is just venture capital or big corporate M&A – the big boys coming in and acquiring startups,” said Capron. “But no, the average investor can now access and invest in this revolution. I think it’s could be the opportunity of our generation, just like the Internet was in the past two decades.”
Capron said the ROBO Global index is a good reflection of how the overall robotics industry and ecosystem around the industry is doing. For the most part of the index’s lifespan, robotics has been good, but since 2018 things have been fluctuating a bit. “2017 was an incredible year for the world of robotics, because the industry was firing on all cylinders – factory automation was booming in all major regions of the world,” said Capron. “Surgical robotics was really taking off – you’ve seen a number of acquisitions in the last 12 months or so – Mazor Robotics was acquired, Auris was acquired, and Corindus Vascular was just acquired a few weeks ago. Then you had the clear inflection in logistics – we had a real acceleration in terms of automating distribution centers– the big boys like FedEx, UPS, etc., really spending aggressively there. So it was phenomenal.
“Then in 2018, manufacturing activity peaked around February, and since then, we’ve been in a down cycle in terms of factory automation,” he added. Compounding the issue was the China-U.S. trade war, and the cautious nature of the Chinese manufacturers.
“The good news is that history tells us that down cycles typically last 18 months, and we’ve been writing about how we believe we’re probably near the bottom of that cycle,” Capron said. “Of course, if we go into a full-blown consumer recession that’ll be a different story. But otherwise, in 2018 and 2019 we continued to see strong performance in logistics, healthcare, food and agriculture in terms of adoption. The surgical robotics market is growing at more than 20% a year.”
But despite some of the uncertainties, Capron said the overall message for investors, and what he wants to tell RoboBusiness attendees, is a positive one. “At the end of the day, I want to send out a very positive message, and tell people they’re in the right space,” he said. “Even though we’ve had this softening industrial market, those cycles have happened throughout history, and created opportunities.”