While many venture-backed 3D printing companies approach fundraising with careful consideration towards overvaluation and future “down round” risks, two high profile 3D printing companies have taken these risks to a new level. Carbon and Desktop Metal have raised nine-figure funding rounds, ultimately attaining unicorn status (at least a $1 billion valuation for a private company), which helps separate them as up and coming leaders in additive manufacturing. With this level of fundraising comes inherent risks; the technology must live up to its potential across multiple applications to achieve expected growth. This technical risk is partially mitigated by extensive financial support for product development, and partnership opportunities through industry interest in such well-funded startups.
Although Carbon and Desktop Metal are overvalued based on estimated sales, their unicorn status through fundraising is based on technical differentiation from competitors and promised product value. Carbon’s digital light synthesis (formerly continuous liquid interface production) technology is primarily compared with photopolymer-based stereolithography (SLA) 3D printing technologies, but allows for continuous printing with UV and heat curable resins that result in fewer mechanical limitations. Desktop Metal’s technology based on metal injection molding (MIM) can be compared to direct metal laser sintering (DMLS) technologies, but at lower cost, higher production rates, and with a support structure release feature. Both companies are establishing their technology as a manufacturing platform applicable across industries, and have filed extensive intellectual property to help protect their differentiation. Additionally, strong academic foundations, product demonstrations, and marketing campaigns alongside experienced executive teams and advisors all support the value and delivery of a new manufacturing solution. Both companies are already seeing the benefits of these differentiators; Desktop Metal has already taken orders for several hundred studio systems and over 100 production systems and Carbon has successfully established a partnership with Adidas for production scale printing of midsoles. Looking forward, Carbon and Desktop Metal will benefit directly and indirectly from their unicorn status because demonstrated investor interest will likely attract new customers, and the acquired funding will fuel rapid product development and talent acquisition to meet investor expectations.
Carbon and Desktop Metal’s approach to drive rapid growth through funding is unique in the 3D printing space. Other 3D printing start-ups have taken a more traditional approach to growth, identifying select markets to focus on, and acquiring funding to support their growth in those markets. Formlabs, Markforged, and Oxford Performance Materials are successful examples of this approach, offering desktop professional SLA printers, carbon fiber-reinforced composite 3D printers, and high performance polyetherketoneketone (PEKK) parts, respectively. As evidence of their success, Formlabs has more than $60 million in revenue, Markforged has sold thousands of fused-filament fabrication (FFF) printers, and Oxford Performance Materials claims $10 million per year in revenue from sales of custom medical implants and parts for the aerospace industry.
In contrast to the success of 3D printing start-ups like Formlabs and the abundant venture backing in Carbon and Desktop Metal, established players in the 3D printing space, like 3D Systems and Stratasys, have shown uninspiring stock performance in recent months and a lack of growth in revenue over the past three years. Start-ups in this space therefore appear to have successfully separated themselves from the minimal growth large 3D printing companies are experiencing. This separation has been achieved through the development of novel offerings at a compelling price point that better addresses underserved market segments, as was the case for Formlabs with their desktop professional SLA printer. Carbon and Desktop Metal’s approach is riskier with a potentially high payoff. The success of this second approach remains to be seen, but 3D Printing’s two hardware unicorns are moving as fast as possible with a platform technology behind them, and a plan to revitalize manufacturing interest in 3D printing in a way that established players have failed to do in recent years.Despite differing approaches, leading 3D printing startups indicate strong growth for the market as whole, and an ever increasing risk tolerance for the financial and strategic partners involved.
By: Olivia Hentz and Dayton Horvath