Desktop Metal Raises $438 Million Total With Additional $160 Million Round – What Does It Mean?
Desktop Metal is becoming quite the VC darling. The Massachusetts based metal printing firm has now raised a total of $438 million by virtue of its latest funding round of $160 million. This round led by Koch Industries’ Disruptive Technologies investor gives the company a valuation of over $1.5 billion.
Desktop Metal CEO Rik Fulop said that,
“We are at a critical juncture in the advancement of metal 3D printing and additive manufacturing. We are excited about Koch being an investor, customer and capability provider in this round. This new funding will fuel the continued development of our metal 3D printing technology and rich product roadmap, the scaling of operations to meet a growing demand of orders, and the financing of major new research and development initiatives. Combined, this will set us on a trajectory to become a global leader in metal 3D printing, a key pillar of Industry 4.0.”
While Chase Koch of Koch Disruptive Technologies stated that,
“Desktop Metal’s 3D printing solutions can redefine prototyping and mass production of metal products, which has profound disruptive implications for manufacturers like Koch Industries. We are very bullish about the prospects of Desktop Metal, not just as an investor, but also as a customer and partner.”
What is significant about this?
KDT’s investment is notable in size but also notable in that other firms such as Ford and GE have invested in the firm as well. Especially in 3D printing, we are starting to see an outsized impact from manufacturing/industrial companies and their venturing arms. Companies such as Stanley Black and Decker are even collaborating on funding series of firms. That 3D printing will be a disruptive force in industry is well understood by us inside the industry but is becoming more commonplace outside of it also.
Many believed that the mighty Desktop Metal engine was running on fumes so this investment is timely, to say the least. It propels Desktop Metal to new heights. If they can unlock all of this capital then they can easily outspend much larger established 3D printing companies in R&D for example.
HP is a behemoth and one could easily assume that they would have the reach and resources to be outspending everyone in the metal printing race. This investment clouds this for the near term and could give Desktop Metal edge.
This kind of investment should also mean that Markforged could seek more capital if it wants to engage in an arms race with Desktop Metal.
Will companies such as Xjet and Exone also increasingly target more desktop machines in order to not have a kind of Innovator’s Dilemma problem and be surpassed from below?
Rik Fulop’s mastery in obtaining cash could give the company a huge war chest to see of new competition in inkjet while keeping established firms at bay.
What does this not change?
Binder jetting metal or FDM combined with wax/polymer metal is not a race that is run. It is also not a filter for my phone pictures or a social network. We’re talking about very difficult hardware, materials and software challenges that have yet to be solved.
Acceptance is key in 3D printing and people are buying machines to help them in an organized way manufacture. Hype will fan the flames but peter out if the performance is not there.
So in adoption, there will be challenges in scaling the Desktop Metal service offering and the quality, output, and yield of machines over time. A lot of capital will have to be deployed there or partners will have to pick up the slack in service at least.
The MIM industry has been trying to solve shrinkage rates on injection molded metal parts for decades. They have not been able to do so successfully. In testing parts I’ve always remained skeptical of binder jetting metals or in wax/polymer FDM for metals. I predict that shrinkage differences in part size, across wall thicknesses and geometries, will continue to be problematic for users.
Distortion on parts, stringing, misprints in the FDM step are also potential issues with the Desktop Metal process.
This well-capitalized company with a lot of candle power is also up against Xjet (which has a wealth of inkjet knowledge) and up against one of the global homes of Inkjet prowess: HP. Meanwhile, Markforged continues to grow hard making this binder jetting metals space a very competitive one.
There are however other inkjet patent heavy firms that may see this investment as an enticement to also make a similar system. It also may deter them.
GE will join this space, but who else will as well?
As well as companies that are working with similar technologies we have Digital Alloys and other new entrants that are also playing in this space.
People often forget that DLP and SLA machines make tens of millions of metal cast parts as well per year. Could increased automation make these systems competitive for many types of shapes as well?
Will Fused Deposition Modeling companies look more towards looking to metalized filaments for creating similar parts than Desktop Metal can make?
We will need to verify part densities, repeatability and how these parts function in the real world to really know how productive either Studio or larger production units can be for firms.
Will many companies continue to bet on HP because they have an established name? Or will Desktop Metal be able to parlay this move into inertia and inevitability?
The company has repeatedly missed launch deadlines and implementation dates with customers.
Experience with part production by others is very limited with Desktop Metal systems. There are few verifiable metal printed parts available at client sites and there is little data on the real world performance of Desktop Metal systems.
Investors seem to believe that the inexpensive metal printing opportunity is huge and that it may be winner takes all. Is it though? It is far too early to tell but I would assume that many tens of thousands of factories and design firms worldwide would profit from having on-site tooling and parts in metals. In prototyping, bridge manufacturing, tooling, and unique parts this could mean that we have thousands of machines as an opportunity. How many of those firms want the staff to do the debinding and sintering in house? If we add the labor cost, and the trouble will we really all have machines on site? Companies now don’t do their own HR and IT but Bob is going to get a room to print parts in on site?
This in my mind is a real unknown and would really depend on what the local metal printing service offering is and what parts people need when. How many have the right volume in parts to warrant this specific system? Yes, pizzas are the future but where and when will I opt for Dominos and when to make my own pizza? I’m confident that inexpensive metal parts for industry is a huge potential segment but what will be the form factor and throughput of machines in this area?
All in all I think that the hype in this particular area is over-optimistic money wanting desperately to plant a flag somewhere. There is an opportunity but this opportunity is not as self-fulfilling as it is in online video or social networks. There are fundamental complexities with binder jetting metals/extrusion with polymer metal filaments that will continue to be challenging. Desktop Metal has not demonstrated that they meet these challenges in real-world production. At the same time, many FDM (material extrusion, FFF) firms could attempt something much less expensive that does work for a certain set of customers. I’m not convinced that Desktop Metal has the crown planted firmly on its own head at the moment. If the team continues to outperform and executes well in the year to come however then they could turn themselves into the company in pole position in metals.
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