Manufacturing is going through yet another revolution, on a global scale. Advanced manufacturing companies are using digital technologies throughout the entire product lifecycle, from design, engineering, and production to recycling and end-of-life disposal. Innovative manufacturing technology companies are using advanced materials, modeling and simulation software, additive manufacturing, distributed sensors, and more. The future of manufacturing is agile, highly distributed, automated, environmentally responsible–and now built with software.
At Lux, we’ve seen this future coming and have been investing at the intersection of Manufacturing + Tech for many years. The drumbeat of innovation has been steadily increasing, and many success stories look more obvious now than when we first invested. Our Manufacturing + Tech investments include ultrafast and precise sensor and control systems like those used by Veo Robotics for collaborative industrial robots; 3D-printing technologies across various materials by Desktop Metal; automated PCB assembly for multiple industries by Tempo Automation; advanced scanning systems by Meter Parts; automated microfactories by Bright Machines; software-driven additive manufacturing from Shapeways; space-related manufacturing companies like Hadrian and Varda; and others. In these innovation-based companies, a modern hardware and software stack delights consumers with superior products, results in better unit economics, enables building more resilient supply chains, and eventually leads to more environmentally beneficial outcomes.
When coupled with human insight and intuition, manufacturing technologies can be positive forces in society, and, according to the World Bank, make it possible for billions of people to join the global economy. The nature of work, jobs, and how machines + humans work together is changing rapidly, and we will be better off if we anticipate–and prepare for–such shifts by investing in companies that are busy manufacturing the future.
The Lux Manufacturing + Tech Index™
Looking across the manufacturing tech sector, it is clear that the rapid pace of innovation is not limited to companies that are still private. There is a cohort of entrepreneurs and innovative technology leaders operating inside publicly listed enterprises, pushing the boundaries of what is possible and bringing about a new manufacturing revolution. That’s why today we’re also unveiling the Lux Manufacturing + Tech IndexTM [BLOOMBERG: LUXMT Index], composed of 49 publicly-listed global companies that reflect various manufacturing innovation themes we are tracking. The Index represents the public companies that are leaders in:
- Next-generation manufacturing, including additive techniques to transform approaches to industrial production for the creation of lighter, stronger, and faster parts and systems
- Increasing efficiency, speed, and overall performance of existing factories via the use of automation and robotics (i.e., Industry 4.0)
- Validation and verification of product designs via AI-enabled software systems to simulate intended function and manufacturability of a product before development
- Products and services focused on real-world simulation including 3-D representations and future next-frontier manufacturing efforts
Index Criteria
For inclusion, an issuer must have a market cap greater than $500M (USD) and be involved at the intersection of manufacturing and technology. Historical revenue growth was also considered for inclusion, with some discretion allowed if revenue growth is outweighed by qualitative factors. Specifically, issuers with revenue growth greater than 5% in two of the past three years are included, unless the company has priced its initial public offering (IPO) within two years of constitution and only has two years of financials available. In this case, only one year of annual growth above 5% is required. For a company to stay in the Index, it must have grown annual revenue at least 5% in at least one of the last two calendar years.
The Index is rebalanced quarterly on the second Friday of January, April, July and October. Moving forward, the Security Eligibility Criteria are applied using market data on the first Friday of the aforementioned months, which serve as the quarterly index selection dates. The results of the index selection will be applied on the index rebalancing date and shares are fixed on the selection date. The Index is disseminated publicly in real time (every 15 seconds). Standard tax withholding rates are implemented where dividends are reinvested back into the dividend paying security. The timing of the dividend adjustment is on the open of the effective date of the dividend. Late dividend treatment is not applied.
Q2 2021 Index
Several companies in the Index started more than 100 years ago as novel ideas before blossoming into global generational companies, like Siemens ($137 billion market cap) and Honeywell ($149 billion market cap). While others are incredibly innovative and more recent IPOs, like Desktop Metal ($2.6 billion market cap) and Fortive ($18.1 billion market cap).
The COVID pandemic and its impact on global supply chains challenged the previous practices of simply outsourcing manufacturing to cheaper cost nations. Many countries are once again investing in the resiliency of national supply chains to provide more certainty to business operations. The next generation of manufacturing has the potential to impact everything from how goods are made and transported, to how consumers purchase, to how healthcare is delivered, to how human labor is valued.
_____
Disclaimer
The information set forth in the Lux Manufacturing + Tech Index™ is provided for informational and discussion purposes only and is not intended to be, and shall not be regarded or construed as, a recommendation for a transaction or investment or financial, tax, investment or other advice of any kind by Lux Capital. Lux Capital makes no warranty or representation regarding any such information or the data presented in such materials. Lux Capital and/or pooled investment vehicles which it manages, and individuals and entities affiliated with such vehicles, may purchase, sell or hold securities of issuers that are constituents of the Lux Manufacturing + Tech Index™ from time to time and at any time, including in advance of or following an issuer being added to or removed from the Lux Manufacturing + Tech Index™.
