Robotics has become one of the most expansive and rapidly growing technological markets in the world. While there are a number of ways to start your robotics investing journey, here we will focus on two main approaches: robotics investing in public equities and robotics investing in privately held robotics companies.
Public equities involve robotics investing in shares of publicly traded robotics companies listed on stock exchanges. These stocks may provide a more diversified investment than individual robotics firms, but they also come with additional risks, such as volatility and potential for lower returns.
Alternatively, investors can put money into privately held robotics companies. These businesses may be earlier in their development cycle, but they can also offer the potential for greater returns if they are successful. Whichever way you choose to start robotics investing, it is important to do your research first to make sure you are comfortable with the risks involved.
What does robotics investing mean?
Robotics refers to the application of technology in order to carry out specific tasks.
As robotics technology advances, more industries are beginning to see the benefits of robotics automation. The automotive industry has been the largest user of industrial robotics thus far, but other sectors are beginning to adopt these technologies as well. For example, the electronics and metals industries are making increasing use of industrial robotics for tasks such as welding and assembly. Additionally, there are a number of other branches in the robotics industry that are growing in popularity, such as unmanned aerial vehicles (UAVs), autonomous cars or self-driving cars, and surgical robots. As robotics technology advances, it is likely that even more industries will begin to adopt these various robotics applications. Consequently, investing in automation and robotics represents a strong investment opportunity for those looking to tap into this growth.
What are my options when investing in robotics?
Robotics investing: Public Robotics stocks
When it comes to robotics investing, there are a few different options available to investors. One option is to invest in public equities of robotics companies.
Public equities are shares of ownership in a company that are traded on a public exchange. This means they are largely easy to assess because information on the company is in the public domain and their shares can be easily bought and sold – because they are publicly traded.
On the negative side, public equities generally have lower chances of an upside that privately held companies, largely because they are at the more mature stage of their development – as opposed to the growth stage.
Major public companies in the robotics sector include: ABB (NYSE:ABB and Cognex (NASDAQ:CGNX
For investors who would rather put their money into the publically robotics sector as a whole rather than a single company, exchange-traded funds (ETFs) may be the way to go. EFTs are publicly traded robotics investment funds that allow robotics investors to access a diversified basket of robotics stocks. Robo Global Robotics & Automation ETF (ARCA:ROBO) is an example.
Investing in robotics: Private Robotics companies
Investing in privately held automation robotics companies is preferable if you are after catching an investment at its earliest stages. The advantage of this is clearly that the potential for massive growth is more possible than with a more mature public robotics company.
That being said, there are several drawbacks to be considered. Robotics investing at an early stage is a much more risky proposition than backing a public company. Often the companies will not be generating significant revenues let alone profits, so the future of the company is contingent on its ability to prove its technology and generate significant growth. The investment will also largely be illiquid meaning it will be hard so get any funds back unless the company gets sold or goes public.
In addition it can be hard for investors to locate prospective robotics investment targets. Unlike publicly traded stocks, you can’t just search for privately held robotics companies – locating these opportunities generally requires a good network and the ability to assess a company on the basis of limited data points.
As such, it can be a good idea, if considering investing in privately held automation robotics companies to invest in a private robotics investment fund. A robotics investment fund investing in private companies is a bit like a private version of an ETF except for private rather than public companies. Of course, the shares in the underlying robotics investment fund will still be illiquid. But investing in these sorts of funds can give an investor access to a mixed basket of private robotics opportunities which might be hard for the private investor to locate. In addition, in the UK case investment schemes such as the SEIS investment scheme can provide healthy tax advantages to qualifying companies – mitigating some of the risks associated with backing start ups at this early stage.