Why 3D printer manufacturers keep going broke
The Atomic Layers: S9E28 (00265)
Atomic Layer of the Day:
Two weeks ago, I published an article where I shared my thoughts on why large corporations fail in the 3D printing business. It was very well received, for which I am very grateful.
At the same time, today on LinkedIn I posted another article, commenting on the impunity and lack of any accountability among the managers of leading — until recently — AM startups for their collapses or dire financial situations. That article also received a very positive response.
Therefore, I decided to continue this thread and write a few words about the reasons behind the problems faced by most companies producing industrial 3D printers. I don't want to dwell any longer on Desktop Metal, Markforged, or Velo3D, as everything that needed to be said and written about them has already been covered.
Today, I want to talk about those second- and third-tier companies you read about once a year in AM media (when they unexpectedly announce something), see two or three times a year at trade shows or conferences, and occasionally like their LinkedIn posts once or twice a quarter.
While co-creating market reports for VoxelMatters, I am still often surprised by the sheer number of micro-niche companies producing highly specialized 3D printing systems — companies I had either never heard of or needed to research their social media profiles just to find out if they are still active.
These companies share one common trait — most of them are broke.
They survive thanks to initial investments from venture capital funds and grants for research and development projects, often tied to universities or government programs (including EU grants). As for their own commercial activities — they barely cover even a fraction of their operating costs.
And even if they do manage that, their revenues are so modest that the company simply drifts along the market, occasionally selling a single system, which allows them to stay afloat and pay the salaries of the 5-6 people who keep it alive.
Where does this low sales volume come from? Oh, it's very simple...
Generally, there are only a handful of AM processes, and they have been around for 30–40 years. You all know them: SLA/DLP, FDM/FFF, PolyJet, SLS/MJF, metal PBF, Binder Jetting. Some of these technologies are developed by just a few companies (PolyJet, SLS/MJF, Binder Jetting), while others are pursued by hundreds (SLA/DLP, FFF).
Yet, a huge number of companies decide to create something of their own — an "original" technology. On one hand, this is a very noble initiative — after all, similar motivations once drove the pioneers of each of the legacy AM technologies listed above — but on the other hand, these innovations are often highly artificial and address extremely niche problems.
Forgive me for not providing specific examples — but I'm sure you will have your own fitting associations.
Why do companies create these artificial innovations? For two main reasons:
First, the inventor’s ego — "only my solution is the best," "only my method is the most efficient," "only my approach solves the 'biggest problem' in an existing AM technology" (even if that problem affects only 5% of users).
Second, convincing investors and extracting funding from them; and to do that, a "regular" 3D printer is not enough — you need a "revolutionary AM system solving a critical barrier to industrial adoption" — and this system ends up being the new 3D printer invented by the creator and their team.
In reality, the new 3D printer solves the problem for a minuscule fraction of users. Realistically, there are about 1,000 potential users worldwide. Given the lack of willingness or resources to invest in paid marketing — as described in the article “We Will Love You for Free” — only about 10% of those potential users will even hear about the new system, which means around 100 people. Of those, no more than 10% will have the actual financial means.
Thus, the real customer base is about 10 companies.
Even if such a machine costs $2 million (which is about the most a small company can reasonably charge), that translates to a maximum of $20 million in potential revenue.
And with $20 million in historical revenue, it is impossible to sustainably grow a manufacturing company — hence, such a company remains dependent on venture capital funds or becomes a slave to government projects and grants.
You cannot truly live like that — you can only exist.
Atomic Layer from the Past:
04-28-2020: Velo3D raised an additional $28M in a Series D funding round.
News & Gossip:
Slate, a Jeff Bezos-backed EV startup, has unveiled the Slate Truck — an affordable, highly customizable electric pickup. Featuring 100+ attachment points and open-source 3D printable accessories, it lets users transform the two-seat truck into a five-seat SUV. Slate Truck is in preproduction and expected to retail for $20,000.
Slant 3D has raised $1.5 million in a Series A round to expand its on-demand 3D printing platform, Teleport, and build new printing farms, including one in Louisville, Kentucky. Teleport connects online stores directly to production, enabling flexible, warehouse-free manufacturing and faster delivery across North America.
Firehawk Aerospace has secured a $1.25 million Phase II SBIR award from AFWERX to advance its additive manufacturing-based solid propellant technologies. The project aims to develop safer, scalable, and shelf-stable propulsion solutions for air-to-air weapon systems, supporting U.S. defense needs with faster, more resilient energetic systems.
One of the biggest hurdles in running a 3D Printer manufacturer in US is the cost of talent. If you are hiring experienced technical folks from the other big players like SSYS/HP they have inflated expectations. Imagine running a tight ship to get 4-5MM in sales in the first year(e.g. Nexa,Carbon,Markforged )however your talent spread is barely covered with that revenue! So you have to dilute and infuse more capital leading to a spiral like a ponzi. OTH you can hire the same talent offshore in India/China for 1/5th of the cost. My friend in China who produces high temp printers that also provided 'kits' to a now defunct US based high temp printer brand and studied their operations, swore to me that "he would never ever be able to run such a high cost mechanical engineering cost operation here and survive!"