Investment

3D printing owes a lot of its development because of family capital

It’s taken forty years, but 3D printing is finally taking off as a serious investment opportunity thanks to family money, dogged persistence and Covid-19. And family offices have played an important role in the technology’s advancement. 

Family offices have backed companies using 3D printing to make food, houses and, most recently, sportswear. Desktop Metal is planning to list on Wall Street through a SPAC (special purpose acquisition company) led by media entrepreneur Leo Hindery to achieve a valuation of $2.5 billion. 

The sector has also been seen as occupying the low end of high tech. But the latest newsflow has encouraged family offices to pay attention

Only last year, Desktop raised $438 million from Koch Disruptive Technologies, Chase Koch’s venture/investment group, Ford Motor Co. and BMW.

Desktop Metal is leading mass production in 3D claiming its equipment can work a hundred times faster than legacy machinery.  

Essentium, a 3D printer backed by BASF, has won a big manufacturing contract with the US Air Force, saying that new technology makes production agile, as well as faster. 

By being able to reprogramme equipment at speed, the industry has played a significant role in the manufacture of PPE to combat Covid-19.

When 3D shares have managed to outperform over the last decade, they have only fallen back later, as a result of disappointment with the implementation of new processes, or the growth of competition.

The sector has also been seen as occupying the low end of high tech. But the latest newsflow has encouraged family offices to pay attention. After lagging the MSCI index since inception in July 2016, Ark’s $51 million 3D printing ETF has returned 14.9% against 10.4% over one year.

 3D printing, also known as additive manufacture, sets out to send computer-aided designs to central, or local, printers which put together the finished product, layer by layer, to precisely suit end-users.

The falling cost of technology has helped venture capital 3D printing businesses steal a march on large competitors, like Hewlett Packard and General Electric.

Technology breakthroughs are helping 3D printing develop in unexpected ways. Analysts say we will see it develop into 4D printing, where objects twist, or change shape, when temperatures change.

Icon has used 3D construction to build housing in Mexico. Icon’s backers include Jody Allen’s Vulcan Capital and Caz Investments, an adviser to wealthy Texan families. A company called Apis Cor claims to cut construction costs by 25% to 40% by using 3D Printing techniques. It recently won a competition to model 3D housing for a future Mars mission, working with Search+.

Redefine Meat, supported by Jeremy Coller’s family office CPT Capital, is using 3D printing techniques to develop meatless meat. In September, CPT and Sino Group’s Ng Family Trust backed a more traditional $70 million fundraising by Green Monday Holdings, dedicated to turning plant material into alternative pork.

3D technology can imitate vision, as well as print goods. Inuitive of Israel, led by serial entrepreneur Shlomo Gadot, uses 3D imaging in robots, drones and virtual reality headsets.  It is backed by 7-Main, the family office of Ruthi Wertheimer, the Horesh family, and Softbank. On 23 November, it captured $106 million in funding from Yinniu Microelectronics of China.

Landa Digital Printing, backed by Susanne Klatten’s Skion family office from Germany, has developed an edge in 3D printing nonography used in printing, packaging and publishing. 

Straumann Group, a family business supplier of dental implants, has profited by using 3D printing to make them for years. The company is 17% owned by Thomas Straumann, the grandson of the founder, Reinhard. 

On 19 November, Saffelberg Investments of Belgium, an investment business started by Jos Sluys agreed to invest $2.4 million in Brikl, which makes, and distributes, customised products through a 3D process. It has developed a niche in top-tier sportswear made for brands like Zoot Sports, Garneau Eliel and Warrix.

Brikl uses technology to configure products at enormous speed. Sluys made his fortune in the software business at Arinso International, bought by Northgate Information Systems in 2007.

Founding families have stayed true to 3D printing during some of its less exciting years. A fascination with 3D R&D has kept these founders involved. Opportunities to cash in via takeovers have been relatively rare over the years. Maybe this will change as excitement builds.

Chuck Hull invented 3D printing after using UV light to harden table tops in 1983.   He co-founded a company called CD Systems in 1986 and he is still its chief technology officer.

ExOne’s rival expertise was developed by Larry Rhoades, a machine tool specialist. 

Following Rhoades’ death, his friend Steven Kent Rockwell took control of the business ExOne through Rockwell Venture Capital. He became chairman and floated the business on the stock market.  He remains chairman to this day.

RVC also retains interests in forest products and mining equipment. The business was started in 1983, developing out of a motor parts business started by Kent’s grandfather. 

In common with the rest of the sector, ExOne has bounced back from the pandemic, with sales of 3D printers more than doubling year on year in the third quarter.

Materialise, a listed Belgian company, started in 1990 by Wilfried Vancraen and his wife Hilde Ingelaere, became a pioneer in the development of body parts. It went on to develop other 3D applications, but stayed true to its medical calling, which accounts for 42% of its revenue. Vancreaen is still chief executive.

SLM Solutions, is a pioneer of 3D laser melting for metal.  The company was spun out of MCP in 2008 by long-standing employee Hans-Joachin Idhe who remains a leading shareholder and member of its supervisory board. 

Scott Crump started US-based Stratasys with his wife Lisa in 1989 and remains its chairman. 

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