Data, machine learning, and semiconductor technology are ushering in a renaissance in automation: machines that historically were precisely controlled are now being “taught.” These machines, like humans, use pattern recognition obtained from data to solve known, and potentially unknown, problems. At Lux, starting over two decades ago, we sought to build and invest in startups that endow superpowers upon people, in a manner similar to the industrial revolution. We funded automation technology startups that collected and analyzed data, built machine-learning software, and created chips that trained and executed on them. More recently, we have funded companies that use the chips, algorithms, and applications created by our prior investments: startups that automate factories and warehouses, as well as new ventures that automate cars, aircraft, and watercraft.
Lux Automation + Tech™ investments have included semiconductors that train advanced AI algorithms by Nervana (acquired by Intel); chips that perform AI inference at the edge by Mythic and Flex Logix; natural language processing (NLP) by Primer.ai and Hugging Face; AI-enabled 3D scanning by Matterport and OpenSpace; AI-interpreted medical images by Braid; robotaxis by Zoox (acquired by Amazon); “eyes’’ and perception for those robotaxis from Aeva (NYSE: AEVA); unmanned surface vehicles from Saildrone; machine learning extracting signals from pixels by Planet and Orbital Insight; and factory robots who learn by observing humans from Covariant.
We recognize that the companies leading the charge in automation are not limited to the cohort of start-ups Lux builds and seeks to fund. In fact, the state of the art is being pushed by small and large companies alike. That’s why we’re also excited to unveil today the Lux Automation + Tech Index™(Bloomberg: LUXAT), composed of 49 publicly-listed companies. The Index represents young venture-funded startups that have recently gone public, as well as industrial-revolution-era incumbents enabling the next generation of automation. Index members span the gamut of automation and include areas such as industrial system integrators all the way down to fabless chip designers.
Index Criteria
For inclusion, an issuer must have a market cap greater than $500M (USD) and be involved at the intersection of automation 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.
Q1 2021 Index
Several companies in the Index started more than almost a century ago as novel ideas before blossoming into global generational companies, like Daifuku ($119 billion market cap) and ABB ($67 billion market cap). While others are incredibly innovative and more recent IPOs, like Aeva ($1.7 billion market cap) and UiPath ($48 billion market cap).
A new “golden age” of automation is upon us: a new software paradigm layered on top of ever-improving electronics that have already found their place from our wrists to package-sorting robots in fulfillment centers. We expect startups and public companies alike to cultivate talent that harnesses this resource. As a result, they will further improve manufacturing and logistics, making them more efficient and resilient to weather unexpected shocks. They will enable new product categories and add features to existing products that make people more efficient, and ultimately lead to more jobs and greater prosperity for humanity.
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Disclaimer
The information set forth in the Lux Automation + 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 Automation + 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 Automation + Tech Index™.
