Koch Disruptive Technologies Invests $160M in Desktop Metal; Signals Impending Arrival of Mass Production Metal Additive

Koch Disruptive Technologies Invests $160M in Desktop Metal; Signals Impending Arrival of Mass Production Metal Additive

So the big news today is that Desktop Metal has secured more financing. Koch Disruptive Technologies led a round of 160 million USD, which brings total funding funding since 2015 to 438 million USD. The implications of this are various. Over the course of this blog post we will unpack them.

Desktop Metal Funding Will Support Production System Coming to Market

The first key implication is tactical. Desktop Metal, a company that has developed metal 3D Printing technologies, is now preparing to push its products into market in a meaningful way. The first product, it's Studio System, leverages an extrusion technology, similar to the plastic extrusion tech popularized by brands like MakerBot. The key difference is that the input material here is largely composed of metal. Once deposited onto the build tray in the desired shape, the metal is then fired in a furnace to remove any non metallic particles and sinter the remaining parts. This technology was introduced last year and its launch was partially marred by various patent battles between Desktop Metal's founder and the founder of Markforged, another metal 3D Printing OEM with extrusion 3D Printing technologies.

In our opinion, however, this round focuses less on the Studio System and more on the binder jetting system that will supposedly enter the market in 2020. The binder jetting system should operate at decidedly faster speeds in the extrusion ecosystem for large production runs. This process involves dispensing an adhesive into a bed of metal powder to construct shapes and then moving these "green parts" into a furnace for the final sintering step. In summation, we can all assume that the funding speaks to Desktop Metal's desire to fund both the manufacturing of its Production System and also its Studio System.

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Koch Investment Signals Bright Future for Metal Additive in Industrial Products

The second key take away from this announcement is its strategic implication for the entire metal 3D Printing market. The core expectation around Koch Disruptive Industries' investment is a rising faith in the legitimacy behind the Production System and binder jetting's ability to produce large-scale production runs in metal. Koch, a company in-the-know when it comes to industrial fabrication, has clearly come out to support this tech in a big way. This signals not only an important step in advancing adoption of metal additive beyond the well-established niche of medical and aerospace markets, but rather a broader penetration of more price-sensitive and volume-dependent industrial markets. In the same breath, it signals a shot across the bow to Hewlett-Packard who has made significant investments in promoting its own binder jetting technology. These two companies have been teasing their offerings repeatedly at trade shows over the last few years with HP offering parts built on their system today via select partners in a limited capacity. Strategically we recognize that metal 3D Printing for mass-market fabrication is seemingly an inevitability with both HP and Desktop Metal, not to mention the other players that have introduced production-grade metal binder jetting systems.

Desktop Metal Valuation Growth Implies Progress But Still a Good Bit of Work to Do

That brings us to the financial and market implications of this announcement. As we alluded to previously, there are a handful of binder jetting OEM's already in the market. Some of these operate from a service or design standpoint. Others sell machines. Clearly the impending entry of Desktop Metal's Production System will add another competitor to the market. It bears mentioning that Desktop Metal was late in shipment of its Studio System, and it may stand to reason that the Koch investment ties to their experience bringing industrial products to market. Additionally, the valuation's increase of 50% over the last fundraiser two years ago may not necessarily be the kind of valuation uptick that you might expect from a story like this. You can point to companies like Uber that watched far more meteoric rises in valuation. This makes sense given that Desktop Metal is still getting its footing with the Studio System and the Production System.

In Summation

There are a number of key takeaways from this announcement. The biggest being that production metal 3D Printing for the industry - not just aerospace and medical - is rapidly becoming a reality. While the true impact of this investment will not be felt until 2020 or beyond, we are nonetheless seeing the gradual maturation of the metal 3D Printing industry.