Should you invest in the real-world Iron Man?

Aadeel Akhtar was seven years old when he encountered a girl in Pakistan that was missing one of her limbs

In the moment, he could nothing to help her condition, but this chance encounter set him on a multi-decade journey to develop a solution to treat limb-loss

Every life decision from that point onward was reduced to a Yes/No question: will this help me achieve my goal of making people who suffer from limb loss whole again?

All this led him to start PSYONIC, a company that is racing to develop world class prosthetics for people with limb-loss

PSYONIC is currently conducting an investment round that is open to the public

I am far less noble than Aadeel, every life decision I make is reduced to a different Yes/No question: will this make me money?

Let’s find out if PSYONIC is a good investment

PSYONIC is more than just a concept - their first product is a bionic hand that is currently in-market

Named the Ability Hand, it’s a remarkable feat of design & technology. The hand weighs 20% less than a natural hand, clocks reaction speeds of 200 milliseconds, and is fairly durable/water-resistant

While it doesn’t shoot energy beams from the palm like Iron Man, the hand can be used to charge your phone on the go - perhaps a more useful super power these days

What worried me the most about PSYONIC is that its initial addressable market is actually rather small

Currently, PSYONIC’s Ability Hand is only purposed for upper-body limb loss, which is much less common than lower-body limb loss

Only 41,000 people in the US have upper-body limb loss - just 3% of all cases

There are also a slew of competitors in the space, meaning that pie is getting split numerous ways

I believe that PSYONIC does maintain some competitive advantages: after researching many of its competitors (Taska, Open Bionics, Bebionic, Unlimited Tomorrow, i-limb), I found that the Ability Hand has a superior range of motion, better aesthetic, and enhanced durability

Competitors may have a slight edge in a specific feature, but in terms of the most complete & advanced hand it seems as if PSYONIC is a clear leader

Additionally, PSYONIC’s Ability Hand is the only prosthetic that has touch/sensory feedback built in throughout the hand. Meaning a user can feel the item they are touching

PSYONIC is also protected by a wall of 4 patents, covering the following:

• flexible finger design

• motor control system, which is key to making it faster

• molding process for touch feedback (patent pending)

• direct bone integration, to attach hand directly to human bone (patent pending)

The only real challenge to PSYONIC’s Ability Hand is Atom Limbs, a company that is attempting to engineer an entire arm to allow for more control & precision

While promising, this product is not yet in market and remains a concept at this point. The company is anticipating to launch some time in 2023

Despite the many competitors, I believe PSYONIC has a superior product in many aspects and is well positioned to corner a decent chunk of the market

Let’s take a look at what that means from a $$ perspective

Each Ability Hand costs $1,800 to make and is sold to clinicians for $15,500, representing an 88% profit margin

WOAH….now we’re talking. 88% profit margins are difficult to come by, and near impossible to achieve when it’s a physical good that needs to be manufactured

Back-of-the-napkin-math reveals that this small industry could be quite the cash cow if PSYONIC can carve out a foothold in the market

Akhtar notes that insurance typically covers a new bionic hand every 2-4 years, so there’s an element of recurring revenue built into their business model

More encouraging, is that the Ability Hand is one of the lower-priced options available to consumers and is covered by Medicare + various private providers

Many of PSYONIC’s competitors are priced out of reach (even with insurance), so this bodes well for their chances to expand

PSYONIC currently has a long ways to go to reach the ideal scenario of $63.5M in revenue - the San Diego startup sold $241,500 worth of product in 2021

Nonetheless, this is a 112% increase over the previous year’s sales tally

Akhtar claims that the issue right now is solely on the supply side of the operation - the company is hamstrung by the speed at which they can build each hand

He hopes to use this most recent round of funding to build out a production facility and ramp up supply

Up until this point, I may have felt compelled to invest in Psyonic

But this is why I am actually investing:

You may think that PSYONIC’s main business will be selling prosthetics to humans

This is wrong.

PSYONIC will be able to unlock real value in its business by selling prosthetic hands for robots

Researchers are already attaching the Ability Hand to humanoid robot prototypes, as you can see below:

I believe that entire fleets of robots will be purchased and eventually used in place of humans to automate tasks & reduce costs

Towards the end of the decade, it’s not unreasonable for PSYONIC to sell 5,000 hands in a single order to Amazon for their warehouse, NASA for its space missions, or to Miso Robotics for their burger-flipping robots

An order of this magnitude could dwarf the entire revenue stream PSYONIC may derive from its human applications

It’s not just me that believes in the humanoid robot takeover - Goldman Sachs estimates that humanoids can explode all the way up to a $154B market by 2035

And for that potential upside, I am willing to invest in PSYONIC (and did!)