Key takeaways

• Funding

• Partnerships 

• Product updates

• M&A

• Regulations

• Outlook 
  • Partnerships and product updates to continue driving activity: Given what we saw in 2023, it is likely that partnerships and product updates will continue to dominate Advanced Manufacturing activities. We saw a few common themes throughout the year, which may continue to 2024, including 1) embedding GenAI to solutions (such as Microsoft partnering with Siemens, Rockwell Automation, ABB, and Doosan Robotics), 2) leveraging DT technology to enhance smart factory offerings (similar to READY Robotics and Litmus Automation), and 3) entering sales partnerships for international expansion (as was done by Meltio, Tritone, and Essentium, among others). 
  • Expansion in the metal AM space: Players broadening their metal 3D printing scale and competencies has been a common theme during the year, with several product partnerships, updates, and acquisitions taking place. Moreover, there were seven America Makes project calls during the year (the largest one worth nearly USD 12 million), indicating US government interest as well. Interest from governments and companies indicates metal AM could continue to be an area of interest. Moreover, suppliers in the aerospace field should also benefit from partnerships entered into during the quarter to standardize supplier qualification and onboarding.    
  • AM demand in defense to increase: Throughout the year, we saw several US government organizations investing in defense-based AM solutions. This includes the Air Force Research Laboratory (AFRL; funding the development of Powder Alloys and beryllium and aluminum-beryllium alloys); Office of the Under Secretary of Defense, Research, and Engineering Manufacturing Technology Office (OSD [R&E]; funding the development of AM material datasets); and the Department of Defense (DOD; funding 6K Additive to convert waste into higher grade metals). Continued government interest should benefit players developing defense-based AM solutions by enabling them to access funding and expand operations. 

Funding: Fall in funding despite recovery in AM investment 

Analyst Take: The funding raised in Q4 2023 dropped 22.8% YoY to ~USD 454 million. However, the AM space saw a recovery on the back of two leading disruptors—Divergent Technologies and Seurat Technologies—raising growth funding to scale up operations. We also note that none of the players covered in the Mining Tech space raised funding in Q4 2023, possibly because companies needed less funding after raising substantial amounts earlier this year.

Advanced Manufacturing Q4 2023 funding summary

• In Q4 2023, Advanced Manufacturing companies raised USD 454.4 million across 13 funding rounds. The total was 22.8% lower YoY, as the number of rounds fell 46% YoY (USD 588.3 million across 24 rounds in Q4 2022). The decline was primarily driven by funds raised by startups in the Smart Factory and DT space dropping 87.4% YoY to USD 39.3 million and the absence of funding rounds in the Mining Tech space.
• Despite the downward trend in funding, AM saw upticks in investment, with funds raised during Q4 2023 increasing 2.9x YoY to USD 415.1 million. This was driven by Divergent Technologies raising a substantial USD 230 million in Series D funding during the quarter to support its commercial scale-up.

• Average deal sizes were up 42.6% YoY, driven by the AM average deal size surging 3.3x YoY. However, the average deal sizes in the Smart Factory and DT spaces fell 87.4% YoY and 36.2% YoY, respectively. The rise in overall average deal size was primarily due to the average growth funding round value almost tripling YoY. It was supported by the share of seed-stage funding falling (accounted for ~8% of all rounds, down ~13 percentage points YoY).

• Besides Divergent Technologies’ Series D round, Seurat Technologies’ Series C round (USD 99 million) to scale up product capabilities was the next largest funding round in the Advanced Manufacturing space during Q4 2023. Notably, the top 10 funding rounds for Q4 2023 had a combined value of around USD 446 million (~98% of the funds raised during the quarter). 
• NEURA Robotics’ USD 16 million funding round in October this year was the largest round among Smart Factory players during the quarter. Meanwhile, Blackshart.ai’s USD 15 million extension to its Series A round in November was the largest round for the DT sector.

Partnerships: Product partnerships dominate Advanced Manufacturing; AM the most prominent sector

Analyst Take: Siemens was the most active in terms of Advanced Manufacturing partnerships, accounting for around 23% (nine partnerships) of the overall partnerships in Q4 2023. The AM industry saw the most partnership activity; however, this quarter, the activity was driven by incumbents unlike in previous quarters this year. Partnerships were commonly targeted at launching new printers and materials as well as improving digital workflows and data processing. The latter should help AM adoption, as creating digital threads (which relies on data collection and processing) is considered one of the main constraints to AM adoption. In terms of Smart Factory partnerships, we noticed two key trends continuing: 1) Siemens entering into several partnerships (targeting product collaborations) and 2) embedding GenAI to solutions by partnering with Microsoft (Microsoft partnered with Siemens in April, ABB in July, and Doosan Robotics in August). DT partnership activity continued to be driven by new solutions and adoption in the mobility industry, primarily due to Siemens and supported by Flow Labs partnering with TomTom. 

• We observed 39 partnerships in Q4 2023, with several incumbents being involved (accounting for ~55% of partnerships), including Siemens, Microsoft, Amazon, and HP. AM saw the most number of partnerships (22), followed by Smart Factory (10), and DT (7). Meanwhile, product partnerships (28) were the most common, followed by customer partnerships (7) and sales partnerships (4).

Notable incumbent partnerships in advanced manufacturing during Q4

For more details on all of the partnerships, please refer to the appendices

Source: Compiled by SPEEDA Edge based on company disclosures

• AM partnership activity driven by product partnerships led by incumbents; disruptors use sales partnerships to expand geographically
  • Product partnerships accounted for over three-quarters of the overall partnerships in the AM space, driven by incumbents (11 of the 16 product partnerships). This includes the development and commercialization of new printers and materials. Key developments include 1) GE Researchto launch a large sand binder jet 3D printer for the US Department of Energy and 2) Materion Corp from the US Air Force Research Laboratory to develop beryllium and aluminum-beryllium alloys. 
  • There were also several partnerships aimed at launching software solutions during the quarter to help optimize AM digital workflows. For instance, 1) Dyndrite partnered with AMFG to improve the calculation of project size, production time, and associated costs. Meanwhile, Materialise partnered with Nikon SLM to improve the data processing phase and with Ansys to streamline the AM process by reducing time-to-market and enhancing distortion compensation. 
  • While most developments were industry agnostic, we noted that several developments were directed at the healthcare sector. This included 1) Dinsmore partnering with HP to develop 3D-printed components for the medical industry, 2) Stratasys partnering with Siemens Healthineers to create ultra-realistic 3D models mimicking specific patient anatomy and pathologies, and 3) Ricoh to facilitate 3D-printed anatomical models.
  • Meanwhile, sales partnerships were driven by several disruptors entering partnerships to expand their global presence. This includes 1) Meltio partnering with Büttner to distribute its solutions in Hungary, 2) Tritone Technologies partnering with ACS Hybrid to expand its presence in the American Pacific Northwest, and 3) Essentium and KVG partnering to offer military 3D-printing solutions to Ukraine. 

• Incumbents’ product collaborations drive Smart Factory partnerships; GenAI-based collaborations continue  
  • Smart Factory partnerships were driven by several incumbents entering into product partnerships (incumbents accounted for three-quarters of the product partnerships). This was primarily due to Siemens entering several partnerships to enhance its smart factory solutions. This includes partnering with Basler (a computer vision hardware and devices provider) and MVTec (a machine vision software developer) to offer a plug-and-play machine vision solution that can be embedded into the user’s machines and systems. 
  • Meanwhile, GenAI continues to make its way into the Smart Factory space, with Microsoft entering into partnerships with Siemens and Rockwell Automation to develop solutions for users to generate, optimize, and debug automation code through natural language interactions. Meanwhile, AWS into a multi-year strategic collaboration agreement (SCA) with IT infrastructure services provider Kyndryl to accelerate digital transformation for mutual customers, focusing on GenAI and ML capabilities.

• DT partnerships driven by the growing activity in the mobility sector
  • Siemens was involved in four of the seven DT partnerships during the quarter. This was mainly due to the continued activity of developing and delivering DT solutions for the mobility industry. During the quarter, Red Bull Ford Powertrains announced that it was using the Siemens Xcelerator portfolio to develop a new hybrid power unit for the 2026 racing season. Moreover, Siemens also partnered with to deliver Siemens’ PAVE360 DT solution on AWS to help developers build software-defined vehicle innovations and automotive systems.  
  • Meanwhile, Flow Labs partnered with Dutch navigation company TomTom to allow transportation agencies to develop traffic management and safety monitoring solutions via a DT for the transportation industry.
  • Disruptor activity during the quarter was driven by Matterport partnering with Belden to enable businesses to manage their physical environments (related to asset performance, production monitoring, and sustainable manufacturing). Matterport also became an Autodesk premium partner to access more construction professionals.

Product updates: AM leads the way with several new materials and printers 

Analyst Take: AM had the most product updates this quarter, mainly due to the launch of new materials and printers (similar to partnerships), presumably due to studies indicating that material availability and design accuracy were among the main challenges for AM adoption. Notably, several companies that launched new materials and printers earlier this year (such as Carbon, 3D Systems, and Desktop Metal) continued to launch new products during the quarter as well. Meanwhile, Smart Factory developments during the quarter consisted of no-code programming software and introducing performance guarantees. This should boost accessibility and support smart factory tech adoption, as studies have indicated that difficulties in achieving ROI and the lack of internal robotics skills restrain robotics adoption. ScaleOut Software launched an open-source edition of its DT APIs and development workbench to boost DT adoption. The company took similar initiatives to boost the accessibility of its platform earlier this year as well. In February, ScaleOut updated its platform to support simulations including predictive assessments.

• We observed 19 new product updates in Q4 2023, with AM accounting for 16. 

• AM product updates center around launching new materials and printers
  • New materials and printers accounted for more than half of the product updates in the AM industry during the quarter, driven by 3D Systems and Markforged launching two new materials each (3D Systems also launched a corresponding new printer). 
  • Most new printers and materials were directed at specific use cases and industries. This includes 1) new materials for the dental industry from Carbon and 3D Systems; 2) new materials for metal AM and aerospace 3D printing from Markforged, as well as steel producer ArcelorMittal entering the AM space by launching steel powders from recycled steel; 3) new printer and materials for jewelry manufacturing from 3D Systems; and 4) new materials for the electronics industry from Nano Dimensions.
  • Other notable developments included companies such as Fictiv and Evolve Additive Solutions expanding their on-demand 3D printing solutions as well as new launches to help users optimize AM processes. This includes 1) Desktop Metal launching “Live Monitor” for users to monitor and use real-time data to improve efficiency and 2) Nexa3D introducing an AI platform to help users simplify and automate the printing process from initial file preparation to the final post-processing stage (including detecting and rectifying errors in real time). 

• Smart Factory and DT developments target improving accessibility and tech adoption
  • In the Smart Factory space, we saw ABB launching a no-code programming software covering industrial robots to boost automation tech accessibility. Meanwhile, Vecna Robotics introduced a performance guarantee to streamline the deployment of mobile robots and encourage adoption, as it assures users of an ROI. 
  • ScaleOut Software launched an of its DT APIs and development workbench, which enables users to build and test DT models for free. The open-source nature of the offering essentially boosts accessibility and flexibility for users. 

M&A: AM industry continues to see M&A activity, driven by metal AM

Analyst Take: AM activity rebounded in Q4 2023, with four major M&As, compared with just one in the last quarter and two in Q4 2022. Most of the acquisitions centered around boosting metal AM capabilities (similar to the only acquisition in the past quarter), either through horizontal or vertical integration, with disruptors accounting for most of the activity. Meanwhile, Nano Dimension made its third attempt this year to acquire Stratasys, which has been at the center of M&A activity (as an acquirer and potential target) throughout this year. 

• Three-quarters of M&A center around expanding metal AM capabilities in the AM industry; disruptors drive activity 
  • We observed four major M&A activities in Q4 2023, with three of them related to companies boosting their metal AM offerings. Moreover, the activity was driven by disruptors looking for horizontal integrations. However, high-precision component and system manufacturer Shaefler was the only incumbent and incidentally accessed vertical backward integration.  
  • On-demand 3D printing services provider Cumberland acquired the Stratasys Direct Manufacturing Metals operation in Texas to double its metal AM capacity and offer more materials (diversification in aluminum, copper, and other metals).
  • 6K Additive, a developer of sustainable materials and metal alloys for 3D printing, acquired Global Metal Powders (GMP) to use the latter’s technology to produce sustainable titanium and refractory metal powder on a large scale.
  • Shaefler, a company that offers an industrial solution for simultaneous metallic multi-material printing, from Desktop Metal. The company aimed to use this technology as a competitive advantage in the industrial use of metal-based AM processes in Industry 4.0.
  • Meanwhile, end-to-end AM solutions provider Divergent 3D acquired Sigma Additive Solutions to integrate Sigma’s in-process quality assurance solutions into Divergent’s software (Divergent Adaptive Production System [DAPS]).   

• Nano Dimension makes a third proposal this year to acquire Stratasys
  • Nano Dimension, Stratasys’ largest single shareholder, made an offer in December to acquire all outstanding shares of Stratasys for USD 16.50 per share. This was reportedly at a 40% premium to the volume-weighted average share price in September when Stratasys terminated the merger agreement with Desktop Metal.
  • This is Nano Dimension’s third attempt this year to acquire Stratasys, with the first offer being rejected in March and the revised proposal (partial tender offer) being rejected in May. 

Timeline of Stratasys’ M&A activity in 2023

Source: Compiled by SPEEDA Edge based on company disclosures

Regulation: Government initiatives and projects to boost AM adoption

Analyst Take: This quarter saw several initiatives through various US government organizations to boost the AM industry, primarily with the view of improving defense solutions. This included new project calls through America Makes (continuing on the momentum from the last quarter where two new project calls were announced), funding several players (including awards from completed America Makes projects), and partnering with disruptors to develop and adopt AM solutions. Although the industry should be impacted positively by the interest in defense-related AM solutions, players may continue to face constraints when exporting solutions in light of the US tightening export regulations earlier this year and implementing export licensing for military-related products. 

• The US Government takes several initiatives to boost AM development, primarily for defense 
  • The US Government took various encouraging measures for the AM industry, including project calls, funding various players, as well as partnering with disruptors to develop and adopt AM solutions. 
  • America Makes, together with the Manufacturing Innovation Institutes (MII) and the OSD Manufacturing Technology Program (ManTech), launched a project call in November (the DOD Organic Industrial Base Modernization Challenge). The project call is set to award up to USD 2.5 million (less than USD 500,000 per project) for projects aimed at accelerating the use of AM in the commercial and defense sectors. 
  • Various government bodies have also funded companies for specific projects during the quarter. For instance, 6K Additive received USD 23.4 million from the DOD to convert waste into higher-grade metals, while Materion Corporation received USD 5 million in funding from the US AFRL to develop beryllium and aluminum-beryllium alloys.
  • Other notable developments during the quarter include NUBURU completing the US Air Force project for blue laser-based 3D printing (which commenced in August 2022) and Velo3D’s “Sapphire” series of printers becoming the first to achieve the DOD Green-level Security Technical Implementation Guide (STIG) Compliance, facilitating a secure connection between the printers and the DoD's Secret Internet Protocol Router Network (SIPRNet). 
  • Meanwhile, non-profit organization ASTRO America partnered with three leading aerospace manufacturers—Pratt & Whitney, Honeywell, and GE—to standardize the AM supplier qualification and onboarding process. This partnership should help small 3D printing vendors access leading aerospace manufacturers. The project is supported by the OSD (R&E) and executed through America Makes.    

Appendices

01. Notable partnerships across advanced manufacturing

02. Startups that raised external funding for the first time during Q4 2023