AM Investment Strategies: SPACs, Spats, and More in 3D Printing Finance


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The AM Investment Strategies summit from Stifel and SmarTech Analysis went off without a hitch on September 9, 2021, bringing together some of the leading executives and experts from the 3D printing and investment worlds. Rarely are so many CEOs and financial specialists gathered together to discuss private and public capital markets in the additive manufacturing (AM) segment, making for a truly one-of-a-kind event.

Bryan Dow, Managing Director of Stifel’s Global Technology Investment Baking Group, kicked off the second panel by discussing the types of tech company that should perform a SPAC merger. Essentially, for Dow, it all boils down to the strength of the company and technology, as well as the status of the market.

“You need to have a company that’s got strong, fundamental momentum. You’ve got to have a market ripe for disruption, which we think is especially keen in this market, disruptive technologies going after large markets and manufacturing, as well, the largest markets in the global economy. You need a good management team, so you’ve got to make sure you have somebody at the helm that investors can trust and invest in,” Dow said. “And then you have to have a bench behind them to help be able to run the business. And, ultimately, you have to have defendable technology.”

Dow highlighted the mergers and acquisitions (M&A) markets and IPOs as driving a lot of the growth, due to the fact that they generate “more courage from venture funds” to invest in private markets, which leads to more M&A, which means more equity in the private markets. Whereas, when 3D Systems went public decades ago, there were just a couple of deals per year, Dow said, “Now, since Desktop Metal went public, we’ve seen 71 transactions and almost $8.4 billion of capital. We’ve never seen that in this market.”

The panel touched on the idea of narratives, both for individual companies and the industry as a whole. As Dow stressed the strength of an equity story for companies seeking investment, the group debated the exact nature of the narrative that AM has overall. While Stratasys CEO Yoav Zeif and Markforged CFO Mark Schwartz argued that 3D printing is set to disrupt manufacturing on a variety of fronts, Formlabs CEO Max Lobovsky wasn’t sure the trajectory was as obvious and rosy.

Stratasys’s new SAF technology features the use of a counter-rotating roller, which coats powder layers onto the print bed and applies absorber fluid, which images the part layers. These imaged layers are then fused together when an infrared (IR) lamp is passed over the whole print bed. These processing steps are performed in the same direction across the bed in order to ensure uniform consistency and thermal experience for all parts, no matter where they are located in the build. Image courtesy of Dyemansion.

“I definitely think we have a narrative. We are moving manufacturing from analog, long lines of production. This is a revolution and we are doing it step by step by application, where the end goal is distributed manufacturing,” Zeif said. “It’s a network of systems all over the world, where the same company can produce in San Jose—and this is a real example—and in Japan the same component with the same reliability and traceability. This is a revolution. If this is not a revolution, I don’t understand what is a revolution.”

“I would echo what Yoav said. And I think that probably each of the panelists and, and our respective companies are attacking it a little bit differently, but with that same end goal in mind,” Schwartz added. He went on to describe how Markforged’s network of customer systems is allowing for the collection of data that goes onto improve the quality of the technology. This included an update to its composite printers that improved efficiency by over 100 percent by doubling speed. Similarly, the Metal X received an update that increased efficiency and quality.

The ruggedized Markforged X7 FE composites 3D printer. Image courtesy of Markforged.

According to Schwartz, it was these types of advances that were actually revolutionizing the industry and manufacturing at large. However, Lobovsky was able to stir up the pot.

“I like to offer a slightly contrarian position. I think everyone’s in agreement that 3D printing will continue to grow as a as a portion of this large manufacturing market. We’ll make more things with 3D printing over time,” Lobovsky said. “That’s what’s going to drive growth, but I think we’ve built a bigger business with less money than other startups. And, in large part ,that’s been by actually going against the hype. I think the investor community has almost been pulling 3D printing down by getting people focused on the big idea that we’re going to replace injection molding, which we may eventually do, but it’s years away. And the way you build a business is by building a product that people buy next year or the year after. That comes more incrementally.”

Lobovsky pointed to the example of Amazon tackling e-commerce by beginning with books and building the business over the course of 20 years, as well as Apple and its personal computers, before saying, “So I think having the long-term goal is nice. It makes good pitching for investors. It doesn’t actually help you build a product that people buy in a year or two in the future. And that’s what we focused on.”

Shapeways uses tough SLA plastic materials for 3D printing models, prototypes and patterns. Image courtesy of Shapeways.

Shapeways CEO Greg Kress was able to shed light on how service bureaus will be necessary for the transition of 3D printing to a mass production technology.

“Shapeways is very complimentary to the other major players in space. We look to be agnostic to the different hardware technologies and materials, and really lean into what’s really being the most innovative in the space. Working with the hardware manufacturers and the material manufacturers to provide solutions where there may be customers that want to go buy machines and materials and deploy that, and we fully support that, but there’s also opportunity for them to use Shapeways as a strong downsell solution,” Kress said. “We have customers using certain technologies internally to Shapeways that may end up investing in that technology internally, but they usually pick one or two technologies or one or two materials. They don’t typically invest in the full suite of the 90 materials and finishes that Shapeways has to offer.”

Lobovsky went on to generate more interesting debate within the group with regards to SPACs. In discussing the possibility of whether or not Formlabs would go public, he seemed to imply that some companies may be rushing to go public:

“Ultimately, what we concluded is that there’s a lot of downsides to rushing, to be public and not taking your time to set up company and do it correctly, and also not taking the time to have all of the predictability. I think that’s the trade that most of the SPAC companies have done. They’re not quite ready, but it’s worth it for the cheap capital. And we are actually more ready. We have more revenue than any 3D printing company started in the last 20 years or so.”

End-use parts 3D printed from Nylon 12 powder on the Fuse 1 3D printer.

Peels turned the topic to Desktop Metal CEO Ric Fulop, which led the SPAC parade for 3D printing in 2020 and has since used the capital raised to purchase a number of companies, including ExOne and EnvisionTEC. Fulop countered the suggestion of Joris that his firm could be a roll-up business and, instead, said that it was focused on “enabling mass production with additive technology.”

He pointed out his own track record with building businesses, saying, “I spent five years investing in the space and deployed $130 million in capital that today’s worth over $1 billion. We leveraged that record at the early part of the pandemic to sort of flip our business and raise capital so that we could become a consolidator the areas that we focus on. We’ve got three areas we have laid out in our strategy. One is print processes that are focused on high-volume, mass production. So, these are area-wide processes like [digital light processing (DLP)], where there are semiconductor scaling laws that improve the productivity of those systems over time by the diodes having more power every couple of years or the systems having higher resolution, which means more parts per unit area. And on the binder jetting side, where inkjet has been doubling in throughput every 18 to 24 months for the past 20 years. So, it’s now reaching a point where you can build single pass systems that are very high throughput.”

A 3D printed machine bracket made from titanium using the Studio System 2. Image courtesy of Desktop Metal.

A 3D printed machine bracket made from titanium using the Desktop Metal Studio System 2. Image courtesy of Desktop Metal.

He then went on to highlight the strategic importance of each of the other acquisitions by his company. This includes Aerosint, whose multimaterial recoater technology Fulop said will be integrated into future Desktop Metal systems, as well as ExOne, which will increase Desktop Metal’s adoption and portfolio.

Greg Kress, CEO of Shapeways, suggested that a SPAC was actually an ideal vehicle for more quickly achieve the growth opportunities the company has in mind. With the board of Galileo Corp set to vote on the merger with Shapeways on September 28, the firm has been able to shepherd the 3D printing service provider through the process and manage its investor base.

Like Shapeways, Markforged had also been established for some time before going the SPAC route. Mark Schwartz also believed a SPAC to be a suitable method for obtaining more capital more quickly.

“Our view was that access to capital was compellingly sufficient so that we accelerated our timelines to what previously might’ve been an IPO timeline to take advantage of the SPAC market. It gave us an opportunity to focus on a set of long-term investors that we want along for this journey with us,” Schwartz said. “We continue to see our larger shareholders accumulate in the aftermarket and what we saw maybe no different from what others very experienced, but between the process of the PIPE closure and the actual listing, we saw many of our PIPE investors accumulating shares of the SPAC in the market before we had completed the transaction. So, in many ways, it’s solidified an investor base for us and we continue to cultivate good relationships with a relatively modest number of larger investors.”

Other topics touched on included the role of standards in 3D printing investment and the need for sustainability even in these early days of the AM sector. Mohsen Seifi, Director of Global Additive Manufacturing Programs at ASTM International, noted that due to the confidence that standards provide regarding a specific sector may impact how investors look at the technology.

“We’ve seen examples that investors have been turned off due to [a company] not meeting goals where we believe, by defining the right level of expectations, those situations could have been avoided. Some of the key challenges historically, and still today, have been around reliability and consistency of the systems,” Seifi said. “One of our standards, ISO/ASTM 52901, has focused on defining and specifying requirements for purchased parts made by AM. It gives guidelines for the elements that needs to be exchanged between the customer and part provider from A to Z. Clearly investors will be able to more confidently invest in the market by standardization. And that’s where we believe through adoption can start to unfold.”

Tyler Benster, general partner at Asimov Ventures, brought up the potential for 3D printing to make more sustainable the consumption patterns of those in the global north, saying:

“If you look at our global consumption patterns and the massive amounts of waste that our current manufacturing and consumption habits have, it’s really unsustainable over the course of decades or a century more. And if you look at 3D printing, on the other hand, many of our machines already process materials that go through heat cycles. So, what’s quite interesting about that is that these are materials that could conceivably reshape a raw stock into something that is new and functional and has renewed usability. Yet for, I think largely structural and incentive reasons, we have seen very limited amounts of recycling and reshaping of existing parts into new goods. That would be a challenge that I would pose to the panelists that as you think about over the next decade or more of a company’s lifecycles: how can we, as a species, as a world and as an additive manufacturing community do better at being efficient in terms of our raw material usage and the consumption that we can support.”

Stratasys’s Yoav Zeif was able to point out his company’s new sustainability initiative as proof that the firm is highly focused on this issue. However, we quickly realized that one firm’s attention on such a crucial problem was not enough, given that humanity needs to reduce carbon emissions by nearly half by 2030 in order to prevent runaway global warming. In fact, an entire event dedicated to sustainability in 3D printing is likely warranted. Perhaps, as and SmarTech Analysis plans its next event, potentially with participation from a partner like Stifel, we can make sure to address that problem in more depth.

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