Early Investing

3D Printing Has Finally Arrived

3D Printing Has Finally Arrived

Big things are expected from the 3D printing space. Really big things.

But before you begin frantically searching for startups to invest in, there’s something you should know. A lot of people were saying the same thing about 3D printing five years ago. And — ahem — I was one of them.

At the time, 3D printing seemed to be on the verge of widespread adoption. When we issued a recommendation of a promising 3D printing startup — WhiteClouds — in 2017, I thought our timing was spot-on.

Turns out, I was wrong about the 3D printing market. The demand was there. But the technology simply wasn’t ready. It was still expensive, slow and continuously plagued by bugs. It has since slogged along as a novelty technology — mostly used for prototyping and a few industrial and consumer products. 

As for WhiteClouds? Given the flat growth trajectory of the 3D printing market, it’s done better than I had any right to expect. It’s grown into a 40-employee outfit boasting 80% margins and a decent annual run rate of $5.6 million in revenue.  

What Is 3D Printing?

3D printing has another name: “additive manufacturing.” Products are made layer by layer from the bottom up. Thanks to technological advances, layers can now be as thin as a human hair, with some industrial products and parts requiring up to 20,000 layers. 

At the other end of the spectrum is traditional manufacturing — called  “subtractive manufacturing.” It involves casting, forging and cutting. A block of metal (or other material) is cast and then pared down into shape using machinery until the desired shape is reached.

Beyond Prototypes

3D technology has made impressive strides over the past half-decade. Costs have fallen. The technology can now make high-quality and complex industrial products at scale and at a speed that allows 3D printers to outbid traditional manufacturers. For example, when Chevrolet needed a whopping 60,000 seals for its Tahoe SUVs, 3D printers filled the order in just five weeks. Going the injection-molding route would have taken twice as long.

This time, the “experts” are convinced that a commercial breakout for 3D printing is real. The market is expected to grow to anywhere from $35 billion to $45 billion worldwide by 2026 and to a whopping $75 billion to $115 billion by 2030. Venture capital (VC) investors are taking these predictions seriously. According to Crunchbase, they invested more than $600 million in at least 45 startups devoted to 3D printing technology or making products with 3D printers in 2020. 

I’m on board. The evidence indicates that current 3D printing technology is delivering on price, scale, speed and complexity. The last of these — complexity — is fascinating and impossible to ignore. Here’s just one example as reported in The New York Times. AI company Cerebras asked 3D printing company VulcanForms to make a complex part for water-cooling its powerful computer processors. The part incorporated an intricate web of tiny titanium tubes. Traditional manufacturing companies could not have made that part. But VulcanForms delivered a sample in 48 hours. After some refinement, it is now part of Cerebras’ cooling system.

But just because the industry as a whole is gearing up for breakout growth doesn’t mean that early investors can just throw darts at any 3D printing startup and expect to hit a winner. 

The challenges that 3D printing faces are not unusual for the early-stage investing space. Which technologies will win out? It’s always possible that the most sophisticated ones won’t be the ones to catch on. Which business model will prove more successful (and scalable)? The one that sells the printers to customers? Or the one that keeps the printers — and manufacturing process — in-house and delivers the final product to customers? 

Cost also remains a thorny issue. Developing and producing 3D printers requires a lot of money. High-end printers are expensive. HP’s Multi Jet Fusion 3D printers, for example, cost up to $200,000 each. Can costs go down more?

These are not small X factors. Despite being around since the 1980s, the 3D printing industry is still in its incipient stage, where developing an ecosystem, figuring out product/price/market fit and scaling manufacture and sales are works in progress.  

One thing is clear, though. The space is likely to generate a number of big winners in the following decade. Will one of them be VulcanForms, which has already raised hundreds of millions of VC capital? Or will it be an earlier stage company like R3 Printing, which is currently crowdfunding on StartEngine? R3 says it can 3D-print products at prices that are similar to mass-produced ones. And it’s earned an impressive 4.5 score from KingsCrowd (the startup investing data and analytics company that Early Investing belongs to).  

Along with rising expectations, the space is becoming increasingly crowded and competitive. Early investors will see more 3D printing companies raising capital in the coming months and years. It’s a great time to invest. But you’ll need to do your homework. 

No dart throwing allowed. 

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