Investing In The End-To-End Value That 3D Printing Creates, Not In The Technology Itself

The 3D printing industry offers great investment potential. At the same time investing in 3D carries the same risks as investing in other industries that focus on technology creation first and value creation as a secondary thought.

The rise of 3D printing can be compared to the dot-com boom, an era in which using the word ‘internet’ in a business plan resulted in easy money. Many new technologies are launched with the same ‘boom’ of investment opportunities on the table long before the lasting value, earning model and end applications are defined, from virtual reality to blockchain. A particular condition can create a similar boom; we expect to see countless companies entering the market with COVID-19-relevant product offerings in the months and years to come. In my opinion, as with all ‘boom’ products, only those that carve out their own niche and create long lasting value in the space will stand a chance.

At the end of last year I started analyzing the investment landscape of the 3D printing industry. I spoke with two dozen investors who have made investments in 3D printing. Our discussions focused on where they believe the technology is heading, which attributes they look for when investing, how they validate their investments, how they measure the success of their investments and beyond.

Paolo Bavaj, Head of Corporate Venturing at Henkel Adhesive Technologies on investing in 3D printing: “Be careful”. 

The industry is getting more and more crowded and investors are starting to get smarter, asking the right questions to ascertain the true potential of investments. It’s not interesting to invest in incremental technology anymore because the space is moving so quickly; what you see in the news today may be outperformed by a competitor tomorrow. As a result, the interest is shifting away from investing in technology, to investing in the end-to-end value that a technology creates.

What we see is that the chain is broken in most 3D printing manufacturing applications; the margins just aren’t there, or great innovation is quashed by procurement and purchasing. To give an example, weight reduction and part consolidation are attributes that everyone talks about in the 3D printing industry. The reality is that during procurement and purchasing, most large company systems are setup for processing only simple data; they are interested in improvements, which incrementally improve the function of a particular part in their system. These replacements need to be better in all respects including cost. Weight reduction and part consolidation may be the engineers’ holy grail, and the marketing department may be on board, but the finance department struggles to create scalable models to support the use of 3D printing. Most companies simply aren’t structured to see benefits of the throughput of this technology for the company as a whole. This means that even if a consolidated and lighter, but more expensive part could benefit a company’s P&L as a whole by decreasing fuel costs, reducing inventory or improving quality control, it’s hard to get these innovations introduced. When the project is driven by the procurement department the part will land as a higher cost line item on their excel sheet and it won’t find adaptation. 

Phil Reeves, principal at Reeves Insight comments: “In the future there will be a place for these types of geometries, but at this point in time, they are highly niche and academic.”

If the train is moving away from incremental technology investments, the most interesting ideas need to look past the technology itself and create unexpected connections between other disciplines, which in return create new blue ocean markets for end-to-end applications.

With the invention of Invisalign, Align Technology has demonstrated how a company can utilize 3D printing to create an entirely new product, a new brand, a new market and a new distribution channel. Invisalign is powered by 3D printing, yet Align Technology isn’t selling 3D printing, they’re selling smiles. This particular application can be found as a case study at practically every stand at 3D printing events, but the reality is that Invisalign only consumes about 5 pallets of material per day, and the brand generates the highest revenue and yields the highest profits; not the creators of the technology or the manufacturers of the materials.

In a similar manner to Aligntech, 3DTI combines thermoforming and 3D printing in a hybrid offering, opening up opportunities to disrupt traditional manufacturing in countless product categories, including frozen confections. Changing an industry such as ice cream isn’t likely to happen from the inside. Robert Acree, a consultant in the ice cream business, who has run operations at Unilever, Ben and Jerry’s and Yasso, comments: “Their plants need to run at 90% efficiency or they won’t make money”. As such, there’s little space for innovation in food manufacturing plants. In order for this industry to see innovation we need to completely rethink how ice cream is made in the first place, how a brand is created and the product distribution strategy. 

By using 3DTI to create ice cream an entirely new horizontal manufacturing process has been created. By injecting ice cream directly into 3D product packaging, freezing, demolding and packaging have been completely removed from the production line, radically simplifying operations. 3D printed tooling costs are just a few dollars instead of $100K+ for traditional steel tooling which means that 3DTI also offers limitless customization opportunities. 

Taking this one step further, when custom printed packaging can be created on the fly using technology like HP’s Indigo digital presses, and when the product packaging is also the product mold, freezing could even be left to consumers. Removing expensive frozen logistics from the equation opens up a whole new playing field for new brands to emerge with ingredient chemistry that contributes to rethinking frozen confections.

Hoteliers never imagined that regular people would turn their spare rooms into hotel rooms via Airbnb, and corporate taxi firms didn’t anticipate that anyone could become a taxi driver via Uber. In the same way the ice cream industry won’t be shaken up by anyone who thinks from the perspective of existing manufacturing processes, sales channels, margins and distribution. Out of the box thinking will blindside the incremental improvement that comes from within.

Which applications have you seen that combine the best of 3D printing with another technology in an unexpected way and that have the power to disrupt entire industries?