You know what they say: behind every successful additive manufacturing startup is an investor. In many industrial AM cases, that investor is AM Ventures, a German firm that has—since its founding in 2015—supported and financed a range of innovative companies developing hardware, software, materials and applications for industrial 3D printing.
We recently spoke to AM Ventures’ Chief Venture Officer Arno Held about the importance of supporting innovation in industrial AM, how AM Ventures is different from other venture capital firms and what it takes for a startup to attract the company’s interest.
“I’m a industrial engineer by education,” Held starts off by saying. “And before I went to university I did an industrial apprenticeship with Trumpf, so I was interested in industrial laser applications and really enthusiastic about this kind of technology. With Trumpf I was a service engineer, so I repaired machines, which inspired me to go onto study engineering. After my studies—about 11 years ago—I did an internship with EOS and I became a master student in EOS’ R&D division and it was through this that I met Dr. Langer.”
From EOS beginnings
At that point, Held explains, EOS—now a giant among metal AM companies—was still a small company, employing under 200 people and bringing in about 50 million euros in revenue. “Everyone knew each other,” he remembers. “And Dr. Langer offered me a position as his assistant for strategic projects. I worked with him during the early phases of GE’s acquisition of Morris Technologies, I also got to meet Shapeways’ founders in an incubator in Eindhoven, which was very exciting. I also met Janne Kyttanen around that time.
“I was in a really cool position to witness EOS transition from rapid prototyping to manufacturing. The projects got bigger, the machines got bigger, the company got bigger. At that point I worked in business development and strategy for a couple of years, focusing especially on the work with Shapeways.”
“I got hooked on the startup culture after I saw how a company can develop when you find the right business model,” Held continues. “This led me to starting to work with startups more or less on a voluntary basis in Munich just because I liked the spirit. And, ultimately, I wanted to help companies get into the industry.”
When EOS had grown to become a company made up of over a thousand people, Held says he made the decision to head in a new direction—heading back to the beginning, in a way. “It was also by coincidence that I met Felix and Philip, the founders of DyeMansion,” he says. “At the time, they presented me a case about individualized iPhone covers, which was pretty much the most boring application for AM, but they realized they were onto something because the colors of the iPhone covers were really special. I ended up working with them on designing a business around the coloring technology.”
Around the same time, one of Held’s mentors, Johann Oberhofer, the former COO of EOS who had also worked with the Langer family, got in touch. When Held explained he had found this promising startup team that he wanted to support and that he believed there were many other innovative AM startups out there, Oberhofer was enthusiastic and brought on support from Dr. Langer. After talking things out, the idea for AM Ventures was born.
“We were convinced that it was important to have this new entity outside of the EOS world, because we wanted to boost the entire market not only EOS,” Held says. “And we also wanted to invest in competing technologies, not only EOS systems. So we said this must happen as a new entity and that was basically the idea for AM Ventures. That was in mid-2014.”
AM Ventures is born
“DyeMansion triggered everything, at least for me,” Held tells us. “I left the organization at the end of 2014 and I started working with the Langer family to do the groundwork for our new company for half a year. AM Ventures was founded in March 2015, though we didn’t have many startups invested in. Dimension was the first one that we did invest in, followed by Vienna-based ceramic AM company Lithoz, and software company 3YOURMIND.
Held lists a handful of other companies that AM Ventures invested in, including Vienna-based resin materials company Cubicure, Swiss SLS company Sintratec, and Vectoflow. Conflux Technology, the heat exchanger company from Melbourne, was reportedly one of Held’s big investments last year.
“It was clear for us that we wanted to focus around additive manufacturing because all of us have significant experience in the industry: Johann has 30 years of experience in the industry and a couple of other team members also have a footprint. I’ve been in AM for 11 years now. Overall, we never wanted to be a venture capital firm; we always wanted to be additive manufacturing enthusiasts and to deliver companies. That, of course, needed a venture capital angle, so we also had to bring in the skills for that.”
It’s all about the founders
“As I said, it’s still primarily about the technology and the industry,” Held elaborates. “So far, I would say this has worked quite well. We do have a few fundamental principles on which we base our investments. I think with our portfolio of companies that we have now we can enable industrial applications because we are investing in hardware companies, in software companies, in materials companies and applications companies.
“Everything always has to be related to industrial additive manufacturing.”
When asked what types of companies AM Ventures typically seeks out for its investments, Held indicates that there are certain critical elements him and his colleagues look out for, including solid IP and a clear and unique value proposition. Above all, though, are still the people.
“Above all, we want to be founder friendly,” Held says. “So we only invest minority shares—between 10 and 25 percent—because for us it’s important that the founders always remain entrepreneurs and are in control of their company. Those are basically the fundamentals. We also want to invest as early as possible and meet the founders early on, largely because we’re in the best position to evaluate the business. We always invest in people, not in companies. That’s our credo.
“It needs to be a really good team of founders,” he emphasizes. “This is probably what we focus on the most. We did a very precise analysis—because I’ve been doing my master’s thesis and an MBA in parallel to the job— evaluating 1,200 startups in additive manufacturing and we have quite a good overview of how many are there, what their survival rates are and also how they are distributed globally and technically across hardware, software, materials and applications.
“What we have seen, is that not a single company that we have met has become successful with its original idea. Over time, they always pivot into something else. And it’s always the people who turn the company around. It’s always a dedicated team that realizes that the market demand might be something completely different and they adjust. Yes, a business plan is still important, because it shows how structured people are and how they think and if they can plan something and commit to a plan. But it’s much more important that you have a very strong team of founders that works well together because these are the people who are running and turning around the company in the end.”
Finding steady growth in AM
Within the additive manufacturing industry today, there is continual growth but, because the technology is so recent and applications are still being developed and refined, it is a gradual growth that takes time. And while some more traditional venture capitalists would not find this especially appealing, AM Ventures revels in this reality as it understands the ins and outs of the industry.
“There are now three unicorn AM companies in the United States,” Held explains. “And that is impressive. But it also shows the amount of expectation and pressure that is on those companies. We are not venture capitalists, on the other hand, which means we don’t act according to the’ spray and pray’ method.
“That being said, we are a company and the company’s goal has to be to make more money than it’s spending. Otherwise you will not survive. Overall, though, we do want to create healthy companies that are profitable and growing. Something that I think differentiates us from conventional venture capitalists is that we understand the technology and understand that it takes much more patience to grow a company and to build it up, especially when you’re looking at physical goods, like applications and materials and hardware, as opposed to a classic digital investment.
“Because if you are a venture capitalist from a digital background and you’re used to the performance of software companies, your expectation is benchmarked against the software companies.”
“The setbacks are much much more painful because it takes so much money to build hardware and to develop applications and to run dozens of machines to print products,” Held says. “The setbacks are dramatic sometimes. And I think this requires a different breed of investor.”
“The main objective is of course to grow,” says Held about AM Venture’s goals for the future. “We also want to make further investments. The main question is where do these funds come from? We do have some plans, which we’ll be ready to talk about in six months or so.
“We have quite a luxurious challenge right now because, while in the venture capital world you expect about a 10% to 20% success rate, 100% of our startups are successful. We have not lost a single company and that means if you are the seed investor with something between two hundred and six hundred thousand euros seed investment in a single company, the next round is going to be tenfold at least. So we need to onboard new funds and people who can help with this. But clearly, the mission and our objective is to grow and to make even more investments.”
Presently, AM Ventures has shareholdings in 17 companies in the additive manufacturing industry across seven countries, including Germany, Austria, Switzerland, the UK, Sweden, the US and Australia. Going forward, Held says the company hopes to expand its investments globally.
“Now, the question is how can we increase the number of investments and keep the quality at the same level, because no matter who you ask or where we are invested, we support our network,” Held adds. “I still spend a lot of time with DyeMansion working directly with them onsite and I think this is really what differentiates us from other investors and this is what we have to maintain even if the number of investments goes up. My most important target is to keep the same level of quality and that is always a bit of a challenge.”
As Held tells us, AM Ventures has some exciting things in store, which we’re likely to hear about in the coming months.