- Will we still be locked out of promising opportunities?
- Robots are appearing in the workplace…
- “I highly recommend Starlink…”
Dear Reader,
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology.
Today, I’ll do my best to answer them.
If you have a question you’d like answered next week, be sure you submit it right here.
The kinds of “day one” opportunities we’ll see…
Let’s begin with a question on “day one” investments:
Hey, Jeff, thank you for working so hard and bringing this investment opportunity to us. I can’t think of anything more exciting than private investing.
While this is very exciting, I have some major doubts. What makes investing in private companies exciting to me is not just being able to give them the capital needed to prosper, but providing capital to companies I find exciting and will become the future. It seems we will still be locked out of the exciting opportunities.
I feel like the people with the deepest pockets will be able to keep existing companies out of our hands. A lot of companies you write about in the daily Bleeding Edge sound very exciting.
So I guess it begs the question… What are the real true chances of us being able to invest in nuclear fusion like Helion or Commonwealth, biotech like Editas or Beam, or AI/ML (artificial intelligence/machine learning) like Recursion or Schrödinger? It feels like companies like that won’t be raising money via Reg A or CF. Thoughts?
– Jeremy T.
Hello Jeremy – thanks for bringing this topic up. In many ways, the point that you bring up has been a key motivator for me working so hard to bring Day One Investor to life. I believe that we are going to have a profound and very material impact on the crowdfunding market.
We are going to have the opportunity to invest in private companies building great products and therapies in the industries you mentioned that are similar to those companies.
Of course, Editas and Beam are already publicly traded companies. Both have delivered great returns for Exponential Tech investors over the last few years, and the best returns are still ahead of both companies.
Helion, Commonwealth, and Recursion are still private, so who knows? We might have a shot if they are willing to go down the Reg. A/A+ path for raising capital. I’m willing to try…
But I know your question wasn’t meant literally regarding those companies. After all, we want to invest in companies “like” those players at the earliest stages.
And yes, we are going to be able to do just that. We are going to find private biotechnology companies working on genetic editing, AI/ML companies, and perhaps even an early stage nuclear fusion company willing to hold a Reg CF raise.
I already have some ideas in that area that I will be pursuing.
Nuclear fusion is something that I’m very passionate about as a means of providing clean, sustainable, baseload energy production that has little to no waste. I intend to have at least one private company in our Day One Investor portfolio that is doing work in some way with the nuclear fusion industry.
Over the years, I’ve actually made six crowdfunding recommendations. Those raises were all extremely successful. We have companies coming to us now as a result, and with each successful raise, the “field” will get even wider. The reason is that we’re solving a major problem in the industry.
Exciting, private early stage companies always struggled to find a way to successfully market their crowdfunding raises, and they didn’t want to pay 7–10% of everything that they raised to a marketing firm.
And investors have struggled to understand the crowdfunding space, attain direct access to the founders and scientists, and develop the background to perform due diligence on the deals so that they can assess the underlying technology or therapeutic approach.
And these are the problems that Day One Investor solves. I’m able to leverage my network in technology, biotechnology, and the venture capital (VC) community to find these companies. I expect that the sweet spot for $5 million Reg CF raises will be at the pre-seed and seed rounds.
And occasionally, we’ll be able to find a promising company that has been around for two to three years that needs that extra growth capital to get things back on track.
Reg A/A+ deals will be a little later, but still early in the life cycle of a private company. The companies will likely already have a strong product market fit, existing revenues, and a good business model. They are now ready to scale… and that takes larger amounts of capital.
Through my discussions with executives and founders, many things have resonated. Most of them don’t want to work with venture capitalists if they don’t have to. “It’s too hard, they don’t add much value, the terms aren’t what we want, too much dilution, and too much control” – that’s what I’ve been told.
And they love the idea of having thousands of investors who have a vested interest in their success. They want the raise to be inclusive of all investors. They see the value in having potential customers, evangelists, partners, distributors, etc. That’s smart, and that’s exactly where the value is for founders looking to crowdfund.
I know my answer is a bit long, but the context is really important here. The dynamics in early stage capital formation are shifting, and we’re a major part of that shift. Our success will result in more success. And I’m absolutely thrilled to have my Day One Investors along for the ride.
Robots are filling the labor shortage…
Next, a reader wants to know more about the growth of robotics:
Hello, Jeff, I’m a subscriber to two of your publications, and as such, I’m hoping you’ll address something that seems a certainty to me: a great increase in the use of robotic labor in the near future.
With increased difficulty in finding workers and increased costs for labor, an increase in the use of robots seems guaranteed to happen. Do you have any companies you’d recommend in this space?
– Al R.
Hello, Al, and thanks for being a subscriber. You’re spot-on with this assessment.
More and more companies are turning to automation to fill roles that people are reluctant or unwilling to do. The current labor shortage has accelerated this shift immensely. I estimate we’re five years ahead in development than where we would be otherwise.
We’ve seen record sales of industrial robotics in North America this year. By the end of the third quarter, industrial robotics sales had already reached $1.48 billion. They’re on track to exceed $2 billion this year.
And we’re seeing many different industries being affected…
There’s Fabric, a startup providing automation technology to fulfillment centers. Its robots can pick, sort, and scan goods to prepare them for delivery. This technology can eliminate the need for human laborers when it comes to the fulfillment of online orders. That’s why companies like Instacart and Walmart are flocking to Fabric right now.
Or look at Rapid Robotics, which designs robotic arms that can be preprogrammed with industrial skillsets. This gives the arm the ability to grab small items on an assembly line and perform tasks like injection molding, assembly, and other repetitive tasks.
Rapid Machine Operator by Rapid Robotics
Source: Rapid Robotics
Even the agricultural industry is being influenced by the rise of robotics and automation technology.
Iron Ox is just one company developing robotic farms. It uses hydroponic growing environments with robots that plant and care for the vegetables. When the plants are mature, the growing beds can be automatically delivered to a robotic arm for harvesting. No humans are involved.
These are just a few of the many examples we see of robotics changing the world we live in. And we’ll no doubt see more use cases crop up in 2022.
As for companies we can invest in… the ones I mentioned above are still in their early stages of growth. They aren’t yet public. We’ll keep an eye on them as they progress to see if any become excellent candidates for the future.
You might have a look at Teledyne (TDY), which has a large robotics division that came through an acquisition of Universal Robotics a few years back. This is not a formal recommendation, and I haven’t recently analyzed its valuation to determine if it is a good buy or not. I’m just mentioning it as a publicly traded company that has a robotics division I’ve been tracking.
In the meantime, I have put together a report on the booming age of automation for my Near Future Report research service. There, I cover several public companies that can help us profit from this transition. Any paid-up subscribers can find that here.
And if any readers would like to join us, then simply go right here for more information.
Starlink is making a difference…
Let’s conclude with some feedback on Starlink:
Jeff, you have asked before for feedback on how Starlink is working. I live in a rural area in West Central Minnesota with very limited internet service – there’s only one provider in our area.
My son ordered Starlink early this summer and received a dish in September, and he increased his download speed 10–20 times and upload speed by 30 times.
I ordered one month after he did and received my dish in the middle of October. And I have speed increases faster than my son, as I am farther away from a fiber-optic connection, so my speeds were slower than his.
The phone company said they were not going to put in fiber-optic to us in the future, so Starlink seemed our only option, and we are glad we are in the early beta test area here.
I have a business with a retail store, and this time of year, we are very busy. We’ve had no problem with all the point-of-sales using the cloud and credit card machines going.
Before Starlink, we had problems this time of year going slow at terminals. If my wife used our voice-over-internet line, it would cause us to have no connection in the store before.
Now we have enough bandwidth to do it all at the same time. I highly recommend Starlink, Jeff. Love your viewpoints on the market. Keep up the good work. Next time you do a road trip, stop in and see us in Minnesota.
– Lowell D.
Hi, Lowell – thank you for sending in your experience. It’s great to hear from readers who are actually experiencing the benefits of this technology for themselves.
And it’s fantastic that your internet speeds have increased so dramatically. I’m not at all surprised to hear this based on my own research on Starlink. There’s nothing like boots on the ground research. Thank you again for sending along your experience.
For new readers, Starlink is a division of SpaceX, and it is currently the most promising satellite internet service provider available. That’s because its service is capable of operating in the higher V-band frequencies, unlike other satellite services.
In the V-band, there is more bandwidth and better performance. The downside is that the physics of delivering a service in the V-band is much more complex. However, Musk and his team excel at solving complex problems and making them look easy.
SpaceX has already launched 1,800 satellites to support the Starlink project. And it’s filed with the Federal Communications Commission (FCC) to launch as many as 30,000 satellites over the long term.
I’m still on Starlink’s beta test waitlist, but I’m very glad to hear it’s doing just what it’s supposed to do. When consumers apply for the beta, it says, “Starlink is designed to deliver high-speed broadband internet in places where access has been unreliable, expensive, or completely unavailable.”
That means Starlink is filling an important niche… and helping many people and businesses that otherwise might be left in the cold by the legacy internet service providers (ISP).
While these speeds won’t match those available from fiber-optics-based internet providers, they clearly make a difference to those who currently have limited options for internet access.
If anyone else has had the opportunity to test out Starlink’s service, I’d love to hear more from users in the field. You can share your experience at [email protected].
And I hope to get back to Minnesota sometime in the near future.
True story, but I almost accepted a great corporate tech job with a company based in Minneapolis. I would have started off as the President of their Japan business and then returned to a very senior role at their headquarters in Minnesota.
It was a great offer and an interesting company. And it was either that job or beginning my work building my investment research franchise. Well, we know which one worked out.
That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.
Have a good weekend.
Regards,
Jeff Brown
Editor, The Bleeding Edge
Like what you’re reading? Send your thoughts to [email protected].