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Start Date

12/03/2022

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Not Scheduled

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$0

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$0

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Synopsis

Additive manufacturing, also known as 3D printing, brings two-dimensional objects from a digital file into the three-dimensional world. Although the market has experienced quite a bit of success, some inherent limitations may be preventing more widespread adoption. As an example, when working with materials like metal and ceramic, traditional sintering can take several days to complete. Add in how difficult it can be to use a mixture of materials simultaneously like metal, ceramic, and plastic, and it’s not surprising that the space is still fairly small.

One company dedicated to addressing these shortcomings is Metallum3D. With three patent-pending technologies under its belt, the business is working to reduce the time required for 3D printing projects. This, in turn, should reduce costs and inefficiencies. The company has achieved this by applying microwave energy to uniformly heat up the metal or ceramic for an additive manufacturing machine. Metallum3D claims its technology reduces a process that normally takes around 144 hours to a process that lasts between two and 16 hours.

Previously, the use of microwave energy has resulted in an uneven heat distribution, often leaving the interior of a part hotter than the exterior. To be efficient, heat needs to be distributed as evenly as possible. Tied to this, an object’s internal temperature cannot be vastly different from the external temperature. Metallum3D solved these challenges by using non-resonant slotted waveguides and a granular susceptor material that evenly distributes the microwave energy. The company also developed a pellet extruder that enables the use of different materials in a single project. 

Metallum3D plans to sell its system directly to clients, which should begin in the fourth quarter of 2021. The intended price as of this writing is about $60,000 per unit. Other potential revenue sources could include licensing the technology out. The company could also provide parts and other services to their client base as well as sell pellets directly to customers.

Metallum3D’s current raise has been rated a Neutral Deal by the KingsCrowd investment team.

Price

Metallum3D is currently raising at a pre-money valuation of just over $10 million. The company has generated no revenue yet, so there is no comparison to draw between valuation and revenue. For a pre-revenue, early stage startup, $10 million is unjustified but not out of line with other startups currently raising capital. As a result, Metallum3D receives an unimpressive price rating.

Market

Estimates of the overall market size for additive manufacturing are relatively consistent. One source valued the market at $13.8 billion in 2020 and estimated that it was growing at an impressive 21% each year. A second source pegged the global market size at $6.61 billion in 2019 with an annual growth rate of 30% through 2025. It is incredibly rare to see markets grow at an annual rate above 20%. A third source estimated the global additive manufacturing market was worth $9.11 billion in 2019. It said that the industry should continue expanding at a rate of 14.4% per year. Impressively, all sources point to rapid growth and, though there is quite a range, even the lower end of the spectrum is appealing. Given the fairly decent size and the rapid growth rate, the market metric was among the highest of Metallum3D’s scores.

Team

CEO and CTO Nelson Zambrana is the founder of Metallum3D. Zambrana has more than 20 years of engineering and manufacturing experience. He has worked with multiple medical device companies, including serving as a principal manufacturing engineer at Microaire Surgical Instruments and a senior manufacturing engineer at Medtronic ENT. Zambrana also has experience as an automation engineer for Hewlett-Packard. While engineering and manufacturing expertise is somewhat useful to Metallum3D, Zambrana does not have any prior experience in 3D printing specifically. 

With only two other team members outside the founder, Zambrana will need to massively scale personnel in the near future in order to grow the business. Additionally, it is unclear as to the nature of the other two employees. It appears that both are members of the board and are not full time employees of the company. Kyle Redinger appears to be advising several startups at a time, though he is a serial entrepreneur and will likely bring valuable insights to the table. The other, Phillip Wiliford, does not even list the company on his LinkedIn profile. Overall, this team has massive gaps in expertise, including legal, marketing, sales, and engineering. Because of this, Metallum3D has a very low team score.

Differentiators

At this point in time, additive manufacturing is a crowded industry. There are other solutions out there, such as the Carbon Digital Light Synthesis technology promoted by Carbon3D. Other forms of 3D printing can work around some of the issues that Metallum3D addresses. 

Metallum3D’s approach, however, does set it apart. The company has three pending patents for its solution. One of its patent-pending unique technologies is a “melt pump pellet extruder which accepts material in pellet form.” Thanks to independent heating zones, the technology is compatible with a range of materials. This paired with accepting material in pellet form makes for an open material system for all-in-one capabilities. The team also claims to significantly reduce manufacturing times compared to competitors (up to nine times faster for sintering large parts and 12 times faster for small parts.) 

Performance

Metallum3D excels in the respect that it already has three patents pending. It is currently working on getting its product out on the market by the end of 2021 The company has received grant funding from the Virginia Center of Innovative Technology and has participated in 757 Accelerate in Norfolk, VA and Catalyst Accelerator in Charlottesville VA. It has also raised more than $500,000 in capital from angel networks and individual investors. All of these impressive milestones contribute to the performance to date, despite the company still being pre-revenue.

From a purely financial standpoint, Metallum3D is slightly lacking. The company generated only $4,209 in revenue in 2019 and nothing in 2020. In 2019, it generated a net loss of $287,003, while in 2020 this loss widened to $371,192. The company’s non-financial and financial traction more or less even out. Therefore, Metallum3D scores decently in the performance metric.

Risks

Metallum3D has a very high risk profile as an investment. There is an elevated team risk because there is only one founder. Having a single founder can limit the experience and network that a company can depend on. In addition, if the founder were to stop working at the company, the company would likely fail. 

Even more pressing is the financial risk. Metallum3D is experiencing significant net losses and cash outflows at a point when the company is not even generating revenue. With its product only in prototype, there’s no guarantee that Metallum3D will find the product-market fit it is projecting. If the company is unable to begin generating revenue in the near term, its financial struggles will only increase. 

Time is another risk investors should take into account. The team needs time to scale production and commercialization as the product is still in the prototyping phase. This need pushes any possibility of returns back multiple years, and investors should be prepared to wait.

Bearish Outlook

The Metallum3D team only has a single founder. The rest of the team consists of what appear to be part-time advisors. This is a massive risk should the founder fold before building out a support network. The price of the round also seems to be excessively high given the company’s traction so far. The product has yet to launch and no revenue was generated for the most recent fiscal year. The company has experienced significant losses and taken on more than $700,000 in debt as it developed its prototype. Now the company is preparing to bring its product to market, but that will take time. Metallum3D now has to scale production and manufacturing while also finding and securing customers. The 3D printing space is quite competitive, so Metallum3D could struggle to carve a niche for itself.

Bullish Outlook

Metallum3D is targeting the 3D printing market. Although the market size is not massive, it is still significant and growing at a rapid pace. The annual growth rate projections are impressive across the board, with reports on the lower end hovering around 15% annually. Metallum3D has patent-pending technology, and its product is differentiated from the competition. Founder, CEO, and CTO Nelson Zambrana has plenty of relevant experience to reassure investors. Finally, the company plans to release its product by the end of 2021, which means it will likely begin earning revenue. Hopefully, this will allow Metallum3D to offset its losses.

Executive Summary

Metallum3D is developing patent-pending technology that will reduce the time it takes for 3D printers to print with materials like metals and ceramics. It is introducing a commercially viable microwave sintering process to the manufacturing industry. This technology accepts material in pellet form and increases the additive manufacturing speeds. In doing so, the company has created an all-in-one, open material system. The product has yet to be launched but is backed by grant funding and capital from angel networks and individual investors.

The company’s current valuation seems excessively high considering its lack of revenue. Because of its lack of revenue, the Metallum3D’s financial performance is a concern. Additionally, the team seems to be lacking with just three employees including the founder, two of which appear to be only board members. Having a company so dependent on one person could lead to troubles down the line, which investors should take into consideration.

However, Metallum3D plans to begin selling its product at the end of the year, which could lead to increased revenue and offset the financial troubles. Although 3D printing isn’t a huge market, it is at a decent size and growing rapidly. The space does have its fair share of competition, but Metallum3D’s strong differentiation and defensible product give it a good chance of drawing in business. Metallum3D has a competent and experienced leader in Nelson Zambrana. Putting everything together, the company has been rated a Neutral Deal at this time.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Daniel Jones.

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