In these difficult days, 3D printing startups are struggling. Despite growing demand and some promising technological advances, the COVID-19 pandemic has left a negative impact on the industry.
Supply shortages, logistics problems, gridlock and closed businesses are not ideal operating conditions. Regardless, people keep coming up with interesting ideas. The global pandemic may not even be the most serious problem for startups.
Generally, every startup goes through similar stages, from searching for ideas and like-minded people, to raising capital and scaling. We'll talk about building a product another time, but for now let's focus on the things a startup needs to prepare for when it gets too big for the garage phase.
Where are we now?
As we look at startups from a 3D printing perspective, it makes sense to review the current state of the industry as a whole. Let's start with the bad news.
It's true that the demand for 3D printing is constantly growing, but the pandemic has significantly slowed down the entire industry, and the consequences are only beginning to subside. Now you have to deal with the shortage of consumables, materials, various spare parts, wires, microcircuits, boards - and this is only the tip of the iceberg. Logistics have become complicated due to closed borders and business shutdowns. These factors combine to make it difficult to deliver adequate services.
At the same time, the industry played a crucial role in the fight against COVID-19 - companies were printing ventilation valves, masks, safe door handles for hospitals and much more.
The situation is far from perfect, but that doesn't mean 3D printing startups should strictly focus on the pandemic and put aside future plans. You have to be inventive when it comes to your technology. Unlike traditional business, the 3D printing industry must be able to quickly reconfigure production to meet almost any need.
Most new ideas are simply replicated versions of what already exists, rather than anything innovative. On the other hand, there are many more 3D printer manufacturers with their own strengths and weaknesses. With this newfound variety, the cost of technology has become more affordable than ever. There are many alternatives and 3D printing is becoming more and more accessible to the masses.
The industry also needs to drastically reduce print times. Until now, only Carbon has been able to achieve this with its CLIP technology, which prints 100 times faster than traditional FDM printers. If someone figures out how to do the same, the startup is bound to exit immediately.
Unique materials, advanced equipment and fundamentally new trends in printing are also in great demand on the market. Needless to say, one cannot develop without the other – everything is interconnected.
Unfortunately, most of the ideas aimed at improving the old never come to fruition. There are a number of reasons for this, both subjective and objective. Let's talk about those that can be fixed to give your project a chance.
Building a startup
The most pressing problem for any startup is obvious: beginners often don't have the right experience or money. There are endless ideas, projects, theoretical knowledge and projects, but many startups have no idea how to sell them or who to sell them to. Even the most promising project can fail without ever seeing the light of day, and usually this is due to one of two reasons: either no one knew about it, or it was poorly presented to investors.
The first step is to learn how to present your project properly.
That's right, this business is not all about inventions and manufacturing. That's why a startup ideally needs at least two people, smart and social or smart and rich. Expertise and knowledge don't amount to much without the investment or marketing skills needed to get that investment. Such partnerships may not be vital to the project, but they will ultimately increase its chances of success. The bigger and more diverse professionals you have in your team, the greater the chance of getting funding. You can sell and protect an idea yourself, but an experienced person can do it even better.
There's no need to give up on an idea just because there's only one developer on the team. Investors can take on the role of a partner if they understand the specifics of the project (in our case, this means they must work in the 3D printing industry). They can help bring the product to market, sell it to the end user, and fill in the gaps when it comes to expertise or personnel.
When preparing for a meeting with a potential investor, you should always keep in mind that this meeting may be the only one you will get. The chances of getting another one depends on how well you present the project. In fact, there can be an unspoken decision whether your project is worth the investor's time and effort right after the first meeting.
Suppose there is an investor with "free" money. A bright mind approaches the investor and presents his idea from a scientific point of view. For example, this is a technology for the production of printed materials from aluminum, which, when exposed to certain substances, decomposes without waste. An investor who does not have experience in the industry, most likely, will not be able to understand the intricacies of such a project, which means that the "advanced mind" will not get money.
This case requires a partner who can effectively present the idea and talk about things like ROI and markets. A good specialist does not even need to be an expert in the 3D printing industry - a few days will be enough to study your specific product and prepare the ground.
Finding that person is a serious task in itself. There are several ways this can be done: networking, online recruiting platforms, industry conferences, pitch sessions and other events. Don't be shy when you meet interesting people and exchange contacts. For example, this is exactly how HARZ Labs started - from a collaboration of two passionate specialists to a successful producer of polymers for 3D printing. The guys were also a startup, and now they supply 70 countries around the world with their products and plan to expand. But that's a story for another article.
Let's continue. You need to clearly understand every aspect of your project. In particular:
- The problem it solves;
- The field in which it will be applied;
- How long will development take;
- How much will it cost;
- Who do you need on the team to complete the project?
Whether it is the consumer or industrial sector, the idea should be well thought out and not some kind of "let's make a printer that prints with dough". Like, yeah, that's cool. So, so what? If you want to find an investor, just the idea is not enough. You need a detailed story that matters: the dough printer will be mass-produced for bakeries, you can pour water and flour into it and print products of any shape, it will cost $150 and we will sell a million units. In three years, I will make a catalog of 3D models based on the most popular shapes, I will also develop different print heads, etc. This is just an abstract example, of course, but it could become a startup, right?
An evaluation of the financial results of your project will not hurt either. You should be able to draw a rough number even if the technology is unique to the market and no one has made this kind of product before. You can do it yourself if you are confident in your financial literacy. If you are not, another person with financial experience may be helpful.
You need to clearly understand which segment you want to enter. To do this, you need to research the market and compare your product with direct competitors, their pros and cons, print speed, feature specification, pricing, availability, etc. You don't need a detailed assessment, just a general understanding.
It is also important that the product is interesting in terms of marginality and scalability. HARZ Labs decided to start producing 3D printing materials in Russia, and now they are supplying them to private customers in dozens of countries, while getting certified for the European and American markets.
How to nail your first presentation
A first impression can only be made once. Here's what you need to get the most out of your date:
- Project description : What is it, will there be demand in the market, is there potential for further development or is it already a finished product, etc. The more details you have, the better.
- Financial investment required : Simply put, how much money are you projected to need.
- Delivery time : In other words, how long will it take you to complete the project. For better results, make a rough development schedule divided into stages: prototype, testing, revision, etc.
- Business arrangements : This includes legal issues such as distribution of shares, co-founders or ownership rights and other inquiries to the investor.
You don't need to come up with binders full of formulas, graphs, and spreadsheets to make a detailed project description. Stick to a concise 10-slide presentation that will clearly convey all the important points of your project.
In a perfect scenario, the startup should be able to defend its idea even to investors who do not understand the 3D printing industry.
However, selling an abstract idea without justifying its value to the industry is difficult. Finished products are valued the most, even if it is only a first prototype. If you have already started producing your own, have a business model and clearly understand what you want to do, you are actually a perfect candidate for funding.
Starting a partnership and getting investment
The startup must negotiate legal terms and sign a contract. No one will finalize an investment until the final arrangements are clear.
Everything that happens within this process is completely unique and depends on the type of project, the state of completion, how much investment it requires, etc.
Partners can receive 50/50 technology ownership, the investor can receive a percentage of future profits without the right to interfere in company affairs, or it can be a full purchase of technology. It is important to remember that all clauses of the agreement can and should be discussed with the investor, as both parties are interested in positive results and long-term cooperation.
At this point, you have the money, the terms and the time frame – all you have to do is work on the project successfully. If you need to hire a few full-time employees, buy missing components, or something else to deliver, the decision is entirely up to the startup, but it's good to have an investor to turn to for advice or help.
The investor should not interfere in the work process and the technical part, but only provide support: including expertise, feedback and production facilities (if available). But if the development is at a dead end and the project does not turn out as it was originally intended, then it would be good for the investor to be able to offer best practices or help in project management.
The growth of a startup is not a straight path from point A to point B. The development process reveals a huge number of challenges that no one could have foreseen at the beginning. You'll have to figure it out as you go along, adjust some things, change plans. For many people, this is their first real interaction with the 3D printing industry and technology. This is a great chance for newcomers to improve their skills, understand specifics and gain contacts and skills they can use in the future.
If the development is successful, everything is simple: your project enters the market, is sold, rented or provides services. For all intents and purposes it is gradually paying off. This is no longer a startup, you now have a full-fledged company.
Sometimes the project does not develop. If this happens, the investment is irreversible and everyone understands the risks. Everything said in the above sentences - failure is not a reason to give up. If the team is really great and has fresh ideas, you can take your new experience, learn from your mistakes and move on.
How to prepare the ground for the meeting with an investor
And now for some practical advice. In other words, prepare the ground we talked about in this article. Here is step by step how it should look like:
1. Title : Clear and concise, it should reflect the main feature of your project. For example, "FDM printer that prints 10 times faster than existing models".
2. Brief description : Develop the title. Why is your project cool? What special features does it have? You can tell how it works.
3. Presentation : Discover the most important things and try to put everything in 10 slides.
Tell more about your project in this presentation: what it is about, what is the target market, special features, how long it will take to develop, how much money it requires, etc. Don't try to cram everything you come up with into one presentation.
Investors would also like to hear about your team and see project footage if you already have something to show. As a bonus, you can tell them how your project came about, where the idea came from, or what non-standard solutions you used along the way.
3MG Bonev Ltd. would help anyone who wants to get into 3D printing – non-binding and free of charge. Don't hesitate to ask us! Good luck !!!
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