Two Years Are Up, Which Companies Will Fail?

By on March 17th, 2016 in Ideas

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I’m expecting some big changes in the 3D printing startup community this year. 

The peak of 3D printing interest seemed to be around the beginning of 2014, when stock prices were at their highest and the technology received its most frequent mentions in the press.  Since then, things have settled down quite a bit, and in some cases so much so that it’s caused companies to make very serious adjustments to their business plans or even go out of business entirely.

The buzz that peaked in 2014 was visible earlier, in 2012 and 2013, when many interested parties felt there was a way to “get into” the 3D printing business. Such parties discussed among themselves and many invented businesses to do so. 

Some created 3D printer hardware, such as a printer or accessory. They may have been unique in some way, but more often than not, they were simply yet another version of the same technology. 

Some created 3D print services and software. Sometimes in the cloud, sometimes installed in standalone mode on computers. 

But a great many of these companies were conceived in 2012-2013 and launched in 2014. 

But launching a startup is always a bit of a gamble. You get a great idea and make it real, but then face the daunting prospect of getting the word out through marketing and distributors to make sales. That’s really hard to do, and takes considerable money to do so to pay for the labor required. 

Startups usually are bankrolled by investors for this activity, either privately with “angel” investors, or sometimes publicly through crowdfunding services such as Kickstarter. 

There’s often a deficit between the company’s initial meagre revenues and their expenses for production, labor and other costs. This monthly deficit is their “burn rate” and when divided into their investment bankroll indicates how long they have to survive – or in other words, how long they’ve got to transform into a profitable business. 

Quite often investments are planned around the burn rate and expected time to profitability, in many cases being around two years. 

But wait – we’re now about two years after the launch of many 3D printing companies. It may be that in many cases, their burn rate may have burned down their initial investments, leaving them in a state where they may have to shut down, if they haven’t become profitable. 

In such a state, a company may choose to seek additional investment, or perhaps pivot their business to some other angle they’ve found profitable. This is indeed the case as I’ve seen several companies who previously simply made 3D printers now seek extreme specialization, perhaps in the education market. 

In other cases, they may simply shut down. It’s less likely other companies may purchase them for use of their assets, as most small companies have no patents or unique technology, particularly those companies that would be shutting down. 

So, over the course of this year it’s very possible we may see the demise of several 3D printing startup companies that tried hard, but didn’t quite make it. 

Image credit: Wikipedia

By Kerry Stevenson

Kerry Stevenson, aka "General Fabb" has written over 8,000 stories on 3D printing at Fabbaloo since he launched the venture in 2007, with an intention to promote and grow the incredible technology of 3D printing across the world. So far, it seems to be working!

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