Capital Scarcity Fuels Additive Manufacturing Growth

Amid tightening private capital markets, the additive manufacturing (AM) market is set up for growth driven by companies with service business models and/or clearly defined applications. Since 2017, the AM industry has ridden waves of record-breaking investment, acquisition activity and highly variable company valuations. From 2017 through 2022, capital was available for additive technology developers to obtain. Some industry analysts believe this capital was poorly allocated as investors were searching for where AM fit within the overall manufacturing ecosystem and misjudged the technology’s adoption curve. AM companies made aggressive promises on growth potential, scalability, and market fit and today’s companies will now need to show progress with the limited private capital that remains available to them.

Additive manufacturing remains in its early stages, offering significant growth potential, as highlighted by Stephen Butkow, managing director at Cantor Fitzgerald, during his IMTS+ Main Stage presentation, at IMTS 2024. Stephen was joined on stage by Danny Piper (NewCap Partners), Arno Held (AM Ventures), and Troy Jensen (Cantor Fitzgerald) on a panel titled “How Capital will Influence the Future of Manufacturing.” The current landscape for the AM industry is characterized in part by capital scarcity. After the “SPAC cycle” of 2021-2023 where companies raised more than $1.5 billion, private investment has become a challenge to acquire. “Scarcity of capital will strengthen the industry,” noted the panelists. Entrepreneurs and startups have been given a true opportunity to learn from the recent waves of large investment and make more disciplined decisions on scaling and growing more sustainably.

While investment in additive technology development has slowed, the metal additive manufacturing service industry has shown signs of maturing and even profitability. Danny Piper noted that some service companies have been operating for a while with very little outside capital and have grown, innovated, and are ready to scale. This is encouraging for investors in the industry because private equity is more familiar with these growth investment scenarios. The next few years will represent healthy growth for metal additive service providers in a few key industries; however, investment will still need to be made into core 3D printing technologies to further improve process consistency. Most industry investments will be driven by the application space where a solution or product is being developed to address a specific and clearly defined market need.

For ongoing insights and expert analysis, stay tuned for future market assessments from AMT’s Strategic Analytics department. For more tailored research, the SA department also offers custom research opportunities. Simply reach out to us at research.amtonline.org. Watch the presentation at IMTS.com/Capital.