In a landscape marked by rapid technological advancements, disruptive innovation continues to reshape diverse sectors, from automotive to fintech, robotics, and more.

From battery technology that promises more affordable electric vehicle batteries; to the use of cloud computing to replicate supercomputer performance and democratize powerful computing for cutting-edge research; to a video gaming industry set to outpace movies and music; to automation helping optimize energy usage in manufacturing facilities, innovation is thriving across industries, paving the way for a dynamic future.

Sector Specific Updates

Automobile Innovation

General Motors is spearheading a $60 million funding round for Mitra Chem, a California-based startup focused on creating more affordable electric vehicle (EV) batteries. Mitra Chem, founded by former Tesla and Toyota experts, is advancing lithium iron phosphate (LFP) battery technology, which offers cost savings due to the absence of expensive minerals like cobalt and nickel.

LFP batteries are known for their durability but have a lower power density than traditional cells, necessitating more batteries and added weight for comparable range in EVs. Additionally, many current LFP cells are produced by Chinese firms, posing a challenge for U.S. subsidy-eligible EV production.

Mitra Chem aims to overcome these challenges by introducing manganese into LFP batteries, enhancing power density while preserving cost-effectiveness. Mitra is using an AI-powered platform to expedite the experimentation of new battery chemistries. If successful, this innovation could potentially lead to the integration of Mitra Chem’s batteries into GM’s EVs later in the decade, offering a competitive edge in the ever-evolving EV market.1

Cybersecurity

In August, the Biden administration introduced the AI Cyber Challenge, aiming to leverage AI to enhance and safeguard critical U.S. infrastructure from cyber threats using artificial intelligence.

This initiative, run through the Defense Advanced Research Projects Agency (DARPA), offers up to $20 million in prizes. It has garnered support from prominent AI companies such as Anthropic, Google, Microsoft, and OpenAI, which will contribute their technology to the competition.

Qualifiers are set for Spring 2024, followed by semi-finals at DEF CON 2024, where up to five top-scoring teams will each win $2 million and proceed to the final round at DEF CON 2025. The finals include a $4 million top prize for the team that provides the best security solution for essential software. All competitors will be required to open source their systems, promoting widespread use of their solutions.2

Cloud Computing

Harvard researchers have harnessed Google’s public cloud infrastructure to replicate the performance of a supercomputer to aid their research study into heart disease treatments. This innovative use of cloud computing can act as a roadmap to assist other researchers lacking access to supercomputing power and alleviate the processing-related bottlenecks that can develop in cutting-edge research.

The study simulates a minimally invasive approach for unclogging arteries and eliminating blood clots and tumour cells in the circulatory system. The research team’s need for substantial computing power, usually found in supercomputers, exceeded their access. So the researchers collaborated with Citadel Securities and Google to replicate a supercomputer within the public cloud, eliminating access delays.

Source: PWC¬ Fault lines and fractures: Innovation and growth in a new competitive landscapeTransforming cloud infrastructure into a supercomputer requires software, networking, and hardware modifications. To achieve this feat, the team ran thousands of virtual machines on Google Cloud, employing extensively tuned code to reach 80% of the efficiency of dedicated supercomputers.

While cloud platforms like Google Cloud are not inherently designed for such tasks, they are known for their reliability and accessibility. Google Cloud’s high configurability, high-performance computing capabilities in particular simplify and scale complex workloads, accelerating research discoveries.³

E-Gaming

The video gaming industry is on a staggering growth trajectory and is poised to outpace the combined revenues of movies and music by exceeding $320 billion in revenue by 2026, according to PwC.4 Mobile games—both social and casual—are leading this surge. Social gaming (involving interactive games on social media and mobile apps) and casual gaming (easy-to-learn games meant for brief play sessions) are set to contribute $242.7 billion of the projected $321.1 billion total industry revenue.

Integrated advertisements within games are a key revenue source, with the potential for higher growth rates compared to console games. Remarkably, 85% of gaming revenue stems from free-to-play (F2P) games, which are initially free but monetized through ads, in-game transactions, and optional purchases. Notable F2P titles like Dungeon Fighter Online, Fortnite, Pokemon Go, and PUBG rank among the highest-grossing video games.⁵

Genomics

Novo Nordisk A/S announced the $1.075 billion acquisition of Inversago Pharma Inc., a Montreal-based pharmaceutical startup. The move is primarily fueled by Novo Nordisk’s keen interest in adding Inversago’s pioneering research on weight loss drugs to its clinical development pipeline.

The deal includes an initial undisclosed payment, with additional payments contingent on Inversago’s achieving development and commercial milestones.

What makes Inversago an attractive acquisition is its weight loss molecule, INV-202, which differs from the injectable treatments already offered by Novo Nordisk. INV-202, administered as a tablet, targets cannabinoid type 1 receptors (CB1) in the kidneys, liver, pancreas, and lungs. This interaction triggers responses that include appetite suppression, increased metabolism, and enhanced energy expenditure.

Inversago is currently engaged in an efficacy trial in 240 obese patients with diabetic kidney disease, with results expected in 2024. Additionally, a preliminary study involving 37 participants revealed promising outcomes, with INV-202 users experiencing an average weight loss of 3.3% over 28 days, versus a 0.5% weight gain observed in the placebo group.⁶

Fintech

PayPal has expanded its cryptocurrency offerings with the introduction of PayPal USD (PYUSD), making it the first major U.S. financial institution to launch a stablecoin backed by the U.S. dollar.

Unlike conventional cryptocurrencies, stablecoins are anchored to tangible assets, such as commodities or fiat currencies, ensuring price stability. PYUSD is fully backed by U.S. dollar deposits, short-term U.S. Treasuries, and equivalent cash reserves, with a 1:1 redemption rate between dollars and PYUSD.

In a strategic move, PayPal will allow its customers to utilize PYUSD for various purposes, including transfers to compatible external crypto wallets, peer-to-peer transactions, payments, and conversions into other supported cryptocurrencies.

While PayPal’s primary revenue stream involves merchant fees for payment facilitation, this shift toward blockchain technology is indicative of the company’s recognition that public blockchains are poised to reshape the landscape of traditional payment methods. By embracing these advancements, PayPal aims to remain at the forefront of financial technology innovation.⁷

Robotics & Automation

Rockwell Automation (held by the Fund) announced a partnership with CaseiZ, a leader in compressed air solutions, to tackle the challenge of optimizing compressed air systems in manufacturing facilities. These systems can account for a substantial portion of a plant’s energy usage, making efficiency crucial. CaseiZ conducts energy savings audits, often revealing potential energy savings ranging from 25% to 50%.

Using Rockwell Automation’s ThingWorx IIoT platform, CaseiZ developed AirView Cloud, a monitoring system that provides real-time visibility into machine operations, alerts for critical issues, and a more efficient means of responding to problems. CaseiZ relies on Rockwell Automation’s platform to modernize outdated automation platforms and better integrate client systems.

The ThingWorx platform not only helps CaseiZ achieve energy gains through automation but also ensures the maintenance of these gains, making it a valuable asset for energy-conscious manufacturers.⁸

5G

China Broadnet has achieved nationwide 5G coverage using the 700 MHz spectrum, marking a significant milestone just 14 months after its initial launch. The operator has deployed and shares a whopping 578,000 700 MHz base stations with rival provider China Mobile.

During the first half of the year, these carriers jointly added 98,000 5G sites in the 700 MHz band. China Broadnet has already amassed 13 million 5G users and aims to reach 50 million within three years.

The company received its 5G license in June 2019 and, in concert with other Chinese operators, has exceeded their 5G base station construction targets, boasting nearly 3 million by the end of June, six months ahead of schedule.

China’s 5G growth is expected to continue, with projections of 1 billion 5G subscribers by 2025 and 1.6 billion by 2030, adding substantial economic value. In 2022, mobile technologies and services contributed 5.5% of China’s GDP, equivalent to $1.1 trillion, and 5G technology is forecasted to contribute $290 billion to the Chinese economy by 2030, benefiting various industries.⁹

EDGE ETF: Investment in Innovation

The Evolve Innovation Index Fund (EDGE ETF) is an 8-in-1 innovation fund that invests in disruptive innovation themes across a broad range of industries, including: cloud computing, cybersecurity, egaming & esports, automobile innovation, 5G, fintech, genomics, and robotics & automation. For more information on EDGE ETF, visit our website at https://evolveetfs.com/edge/ or click here. Give your portfolio an EDGE.

Portfolio Strategy and Activity

For the month, Global Payments Inc made the largest contribution to the Fund, followed by Broadridge Financial Solutions Inc and VMware Inc. The largest detractors to performance for the month were Evolve Automobile Innovation Index Fund, followed by Adyen N.V. and Evolve E-Gaming Index ETF.

 

Sources

1. Rosevear, J., “General Motors is investing in a startup working on better and cheaper EV batteries,” CNBC, August 16, 2023; https://www.cnbc.com/2023/08/16/gm-investing-in-mitra-chem-startup-building-cheaper-lfp-ev-batteries.html
2. Feiner, L., “Hackers to compete for nearly $20 million in prizes by using A.I. for cybersecurity, Biden administration announces,” CNBC, August 9, 2023; https://www.cnbc.com/2023/08/09/biden-admin-launches-hacking-challenge-to-use-ai-for-cybersecurity.html
3. Wheatley, M., “Harvard researchers clone supercomputer on Google Cloud,” SiliconANGLE, August 17, 2023; https://siliconangle.com/2023/08/17/harvard-researchers-clone-supercomputer-google-cloud/
4. “Perspectives from the Global Entertainment & Media Outlook 2022–2026 – Fault lines and fractures: Innovation and growth in a new competitive landscape,” PwC, 2022; https://www.pwc.com/gx/en/industries/entertainment-media/outlook/downloads/pwc-outlook22-v4.pdf
5. Khan, R., “$300 Billion of Video Gaming Revenue, by Segment (2017-2026F),” Visual Capitalist, August 15, 2023; https://www.visualcapitalist.com/sp/video-games-industry-revenue-growth-visual-capitalist/
6. Silcoff, S. & Pereira, A., “Ozempic maker Novo Nordisk bulks up on weight loss drugs, buying Montreal’s Inversago for $1-billion,” The Globe and Mail, August 10, 2023; https://www.theglobeandmail.com/business/article-ozempic-maker-novo-nordisk-bulks-up-on-weight-loss-drugs-buying/
7. DeVon, C., “PayPal is diving deeper into crypto by launching its own stablecoin—what investors should know,” CNBC, August 10, 2023; https://www.cnbc.com/2023/08/10/paypal-launches-its-own-dollar-backed-stablecoin.html
8. “Rockwell Automation and CaseiZ Help Manufacturers Reduce Energy Costs,” Rockwell Automation, August 09, 2023; https://www.rockwellautomation.com/en-us/company/news/press-releases/Rockwell-Automation-and-CaseiZ-Help-Manufacturers-Reduce-Energy-Costs.html
9. Tomás, J.P., “China Broadnet reaches nationwide 5G coverage: Report,” RCR Wireless News, August 22, 2023; https://www.rcrwireless.com/20230822/5g/china-broadnet-reaches-nationwide-5g-coverage-report

 

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