Can These 3D-Printing Startups Disrupt the Industry?
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Last month, we did an autopsy on metal 3D-printing stocks. Before that, we ditched our investment thesis around distributed manufacturing as the best strategy for betting on 3D printing. Extreme volatility in the 3D-bioprinting stock still in our Nanalyze Disruptive Tech Portfolio has left us underwater. Overall, 3D-printing stocks have performed pretty poorly, aside from an early 2021 spike that was the result of the bull market run that boosted the price of any tech stock with a pulse. You would have earned more money checking the slots of coin-operated lockers at your local museum once a week than if you had invested in 3D-printing stocks over the last five years. The promise of a 3D printer on every corner morphed into distributed manufacturing which seems to be reaching its growth limits, while the proliferation of overvalued metal 3D printing SPACs did investors no favors.
Strangely, the bloodbath in the public markets hasn’t deterred institutional investors in the private markets. Funding to startups was down 35% last year to $415 billion, according to the big brains at data research firm CB Insights. Yet private funding to 3D-printing companies reached $1.5 billion in the first six months of 2022 alone, the most of any year except 2021, when startups raised more than $2 billion, according to PitchBook data.
So, in this article, we’re going to take a step back and look at some of the leading 3D-printing startups that could someday be available to retail investors. Maybe, some exciting companies are coming down the pipeline to reinvigorate our excitement around a technology that’s largely disappointed thus far.
Mass Manufacturing with 3D Printing
We’re actually kicking off the list with a familiar name – vertically integrated Formlabs. The Boston area company has raised more than $250 million since it was founded back in 2011 and later seeded through a Kickstarter campaign. It reached unicorn status in 2018 and is currently valued at about $2 billion. It last raised $150 million from SoftBank back in 2021. It is one of the few highly valued 3D-printing startups that held off from going public through the SPAC rush. The Holy Grail for 3D-printing companies is developing a hardware platform capable of true mass manufacturing. Earlier this year, Formlabs introduced its new Automation Ecosystem that enables its printers to produce parts and prototypes 24/7.
The new platform includes automatic parts removal, software to manage and optimize a fleet of 3D printers, and a high-volume resin system to cut down on manual refills. The company claims the Ecosystem triples productivity while saving up to 80% on labor, lowering cost per part by 40%, and reducing packaging waste by up to 96%. The factory of the future or a future bargain bin 3D-printing stock? If the former, this could be a step in the right direction.
Full-Stack Digital Manufacturing
Another Boston area startup is VulcanForms, which has raised $355 million in funding, including a massive $250 million Series C in July 2022 that vaulted it into the unicorn club. That was enough to earn the 8-year-old startup out of MIT lots of media attention, including a feature article in the New York Times. VulcanForms has developed ginormous metal 3D printers that use 150 separate laser beams to make parts faster and more precisely, ranging from medical implants to aerospace components. The machines are not for sale. Instead, VulcanForms plans to operate its own digital manufacturing factories. The company is investing more than $100 million into its flagship facility, VulcanOne, which will boast a fleet of 100-kilowatt class laser printing systems, representing two megawatts of laser power (but not Death Star-level laser power). The proprietary additive manufacturing tech features “advanced simulation, in-process sensing, and machine learning algorithms.”
VulcanForms is pretty mum on customer names, except that it “supplies over a dozen U.S. Department of Defense programs, including the F35 Joint Strike Fighter and Patriot Air Defense System, has delivered thousands of components for the semiconductor industry, and is enabling innovation in medical implants.” No doubt VulcanForms is also burning through money to build and prove its unproven 3D-printing technologies. It already sounds like a high-risk 3D-printing stock in the making. Can a network of 3D-printing factories, with other machining capabilities, work at scale? It sounds like another version of distributed manufacturing with huge capex spending.
Driving Toward 3D-Printed Cars
On the other coast of the United States is Divergent, a startup based out of the Los Angeles area that has raised $428 million but apparently couldn’t find a few dollars to build out an informative website. The lion’s share ($340 million) came through three different rounds in 2022. Presumably, the roughly 10-year-old company is putting all of that cash toward developing and commercializing its Divergent Adaptive Production System (DAPS), which combines “generative design, additive manufacturing, and automated assembly” to build automotive parts and just about anything else at a “global network of DAPS factories driving distributed innovation across the planet in a circular economy manufacturing system.”
That was pretty much the story when we briefly profiled the startup in 2018 when it had only amassed a total of $88 million, so not sure how much actual progress has been made. Meanwhile, inventor, founder and CEO Kevin Czinger and his son are leveraging the platform to build a line of supercars for their other company Czinger Vehicles. Divergent sounds like a great SPAC target.
Classic 3D-Printing Startup
Just a wee bit north up the coast is Silicon Valley-based Carbon, a 3D-printing startup founded in 2015 that has raised nearly $700 million at a valuation of $2.4 billion. This company appeared in three of the four years we tracked the most well-funded 3D-printing startups, including the 2019 list when the company apparently raised its last big round. Cutting edge and cool back in the day, Carbon’s latest press releases tout innovations around dental aligners and damping elastomers for impact protection in products such as padding, gloves, and helmets. Next …
3D-Printed Food Back on the Menu
In 2019, we profiled a few startups developing 3D-printed food. The concept sounded pretty gimmicky at the time, and an Israeli company called Redefine Meat had raised all of $6 million in disclosed funding to create plant-based foods using additive manufacturing. The startup has since raised $170 million total, including a $135 million round last year. Its flagship product is a 3D-printed steak using plant proteins and fats. We recently exited our position in the leader in plant-based meat, Beyond Meat, with the company reporting declining revenue and unable to reach price parity with real beef. We’ve already had a taste of this nothingburger and doubt adding even more technology is the answer. Next …
Another gimmicky-sound 3D-printing technology involves using additive manufacturing technology to build houses and future homes for human aliens on Mars. We covered ICON a couple of years ago after the Austin, Texas-based startup raised $207 million to fund its technology, which uses robots, software, and a special polymer concrete to build houses in about a week. About six months later, the company raised another $185 million to bring total funding to more than $450 million with a valuation reportedly near $2 billion. While the ESG half of the business is to print affordable housing ($10,000 a pop) quickly, the technology has been used to partly build homes in the company’s hometown at $450,000 each.
There is some speculation that this high-profile 3D-printing company could IPO this year. That should make for an interesting investor deck.
Like virtual reality and other emerging technologies, 3D printing has struggled to find its sweet spot. There is no shortage of interesting and useful applications, but a truly disruptive business case has yet to emerge. Will any of these well-funded 3D-printing startups finally make the grade? Who knows. Right now, we’re happy to let the institutional investors spend their money on the R&D and proofs-of-concept. Risk-averse retail investors like us have learned to be very skeptical of the entire theme.