Silicon Valley investors and business partners invest in a CLIP future
Within a week of GE’s announcement it was spending $1.4B to purchase two major players in the metal printing market, we have more big investment news from the 3D Printing world. This time, the buzz comes from Silicon Valley, and it is Carbon’s announcement that they’ve secured a more than $80M Series C round of financing. So what do we make of this development? Who is Carbon? Why are they getting all this cash? What do they intend to do with it? And what implications does this have for the additive manufacturing market more broadly and Carbon’s competitive set specifically? Below I try to offer a few thoughts on each question.
Who or what is Carbon?
Carbon is an additive manufacturing equipment manufacturer that developed the Continuous Light Interface Process (CLIP). It manufactures the M1 Printer, which utilizes CLIP technology to create custom parts – currently in a handful of urethane materials. With CLIP, a focused UV-light projector is shined on a panel at the bottom of a pool of photo sensitive resin. The image projected on each layer cures that layer of material, then pulls the cured material upward allowing for the next layer of resin to flow into the void to be selectively cured. CLIP technology is similar in many respects to Digital Light Processing (DLP), another “vat photopolymerization” process that utilizes projected light to “grow” parts. The main difference, Carbon highlights, is the panel of oxygen it uses to accelerate the pace at which the resin is cured.
It is that speed which helped Carbon burst onto the scene a year and a half ago. At a Ted Talk, Carbon’s CEO Joseph DeSimone dramatically completed an interview on stage while a latticed ball gradually materialized out of the pool of resin in a nearby M1 Printer. It was a striking moment – one that captured the imagination of many – especially considering DeSimone mentioned Terminator 2’s liquid metal villain as a source of inspiration for the technology.
Why are they getting all this cash?
From that day to now, Carbon has done a solid job of advancing its technologies, developing promising partnerships, and demonstrating great marketing savvy. So part of this investment is rooted in execution to date.
The second leg of this is the promise of a 3D Printed production future.
As it sits, 3D Printing is a metaphorical gnat relative to the elephant that is global manufacturing. As of the latest Wohler’s and Associates estimate, 3D Printing represents around a $5B global market, which is still less than 1% of the $10.5T global manufacturing industry. But while 3D Printing is still small in relative terms, its growth has been meteoric, at a roughly 30% year-over-year clip for the last half decade. It also carries the promise that it will not simply displace existing manufacturing applications like machining, molding, and casting, but create new opportunities. The consensus feeling is that 3D Printing is turning a critical corner from being a prototyping technology to a production technology. I can attest to this transition – 3Diligent was born because engineering grade plastics and metals for heavier duty applications were coming to market and we believed an online platform to access these emerging technologies and materials seamlessly and on-demand would provide huge value to customers and service providers alike.
Carbon is riding – and on some level doing a significant bit in building – this same wave.
Leveraging DeSimone’s experience as a material science professor at the University of North Carolina, Carbon has developed a number of custom urethanes that they believe are superior to competing resins produced by industry incumbents. Carbon runs these materials on their M1 machines using parameter sets developed and refined by Carbon based on every part build. The hope of Carbon and its investors is that combining their speedy hardware, software processing, and material science will roll up into truly functional custom parts that can be built at scale.
This is the same vision being pursued by 3D Systems, Stratasys, HP, and Envisiontec, Carbon’s key competitors in the polymer 3D Printing space. Notably at this weeks International Manufacturing Technology Show (IMTS) in Chicago, both Stratasys and 3D Systems unveiled systems geared toward production rather than prototyping. It remains to be seen whether this investment will get Carbon to true production runs in the tens of thousands of parts first.
What are they going to do with the funding?
An investment in Carbon right now signals that Carbon and its partners believe they are truly onto something, have demonstrated sufficient market traction, and should start investing in a full-fledged build-out of its technology. The first thing this will likely extend to is a ramping up of their manufacturing capability. DeSimone anticipates growing from 50 installed units now to 100 by year end and 500 next year. Scaling up manufacturing – both for M1 hardware and related consumable resins – is a costly endeavor.
Beyond ramping up production, it appears that Carbon also has designs on pursuing global growth. Whereas it has primarily focused its growth in the United States to date, it seems to recognize that companies around the world are looking to position themselves for a 3D Printed future. The extent to which Carbon can be the machine of choice that R&D engineers, designers, and plant managers across the world can become that technology of choice has to be top of mind for DeSimone and his team at Carbon.
Lastly, you can assume that Carbon will push some of that capital toward existing operations. Carbon has offered up a roadmap to extend beyond the five materials they currently offer – that will require material science research funding. And while Carbon has stated with its subscription model that it should be able to simply perform “over-the-air” updates to keep its machines up to date, it stands to reason that Carbon will continue to explore enhancements to its hardware and explore ways to broaden the application of its technology. Currently, Carbon’s printer has a relatively tall and thin build chamber, meaning that there are certain part geometries that isn’t currently well equipped to build (e.g., an iPad) without splitting into pieces for assembly. It’s possible that it will allocate some resources to a future model with a larger build chamber.
What are the implications of this for the industry?
At this time, it’s safe to say that incumbents 3D Systems, Stratasys, and Envisiontec all must recognize that there’s another new kid on the block. Less than a year since HP signaled it’s going all in on 3D Printing as well with its new Multi Jet Fusion technology, Carbon has secured the funding to really go toe-to-toe with the biggest in the industry. This investment values the company at over $1B, which puts it within 70% of the market cap for 3D Systems – the original 3D Printing company and inventor of the stereolithography technology that CLIP builds upon – and nearly the same value as Stratasys, the other major publicly traded polymer 3D Printing company.
Aside from the fact that Stratasys, 3D Systems, and Envisiontec face another credible threat for market share beyond the threat that HP poses, my sense is that this doesn’t necessarily serve as a signal for consolidation in the market. Whereas GE’s deal last week creates a single player in the metal printing market with disproportionate resources, the polymers space remains fragmented with a number of viable players. I think you can expect these companies – plus some others that are also making a push for this market at a global level (e.g., Prodways) – to continue duking it out for a while before any clear winners emerge. It’s possible you could see pairing up in an effort to consolidate the market in the face of these new competitive threats – or potentially another purchase from GE (they’re invested in Carbon) or HP. But because the polymers market is older, the growth is a bit slower, and the battle lines longstanding, the calculus in polymer 3D Printing doesn’t add up in quite the same way as it does in the metals market.
What are the implications of this for you?
If you’re reading this as someone who uses or is interested in using 3D Printing technology, this is good news for you. Whereas GE’s play in the metals market may deter competitive investment, accelerate consolidation, and potentially deter innovation, Carbon and HP being added to the mix has demonstrably pushed market incumbents to take notice and try to innovate at a faster pace. The likelihood that we’ll arrive at true production 3D Printed polymer end-use parts – and distributed mass production of custom goods – has gone up with this announcement.
While we wait for any sort of clear leader to be established – if that day ever truly comes – 3Diligent is the perfect partner to support you with our 3D Printing services. 3Diligent was built on the premise that this sort of tectonic shifting in the market was inevitable and likely to continue for at least the next decade, if not longer…the market opportunity is just too big for us not to see more players pursuing innovation breakthroughs and market share. That’s why we are focused on developing innovative procurement software and developing relationships with service providers that are investing in and developing expertise with these different technologies. We are pleased to offer 3D Printing services across Carbon, 3D Systems, Stratasys, Envisiontec, and more than a half dozen other brands across plastics, metals, and more.
We look forward to supporting you on a project soon – perhaps with a Carbon printer manufactured with the proceeds from this funding round…
Cullen Hilkene is CEO of 3Diligent, “the 3D Printing Partner for Every Business,” an online rapid manufacturing service that supports designers, R&D engineers, and procurement officials across a multitude of industries. He is an alumnus of Princeton University, the UCLA Anderson School of Management, and Deloitte Strategy and Operations Consulting.