Carbon announced they’re acquiring more cash through a Series E funding round.
According to a report on TechCrunch, the California-based company is set to sell Series E shares to the tune of US$300M. To put this in perspective, the company has previously, through six funding rounds, raised a grand total of US$542M. Series E, if it sells out at US$300M, will be their single largest funding round yet.
Carbon has not announced this publicly as far as we can tell. Instead, the news appeared in PitchBook, a service that mysteriously knows the details of most large corporate investments, even if they are not made officially public.
You might be wondering why a company that has already raised almost half a billion dollars would require more money. One might say, “more is better”, and that’s generally true, but hundreds of millions of dollars is a rather large amount.
Consider what you would do if you had to spend US$300M. One way to look at it would be in terms of labor. If you’re paying, say, US$100K per year per staff member, this amount represents 3,000 person-years. Assuming your intention is to spend this over three years, this means you now have to hire 1,000 people. Actually more, because it will obviously take months to hire that many people, and that will burn through part of your three-year plan.
Another possible use of the cash might be to acquire another company, but I don’t see any very large companies worth that amount that would fit with Carbon at the moment, aside from some smaller 3D CAD operations.
What I’m trying to say is that it is very challenging to spend a huge amount of cash. So why then is Carbon raising this money?
I suspect it is a valuation play. Let’s say that the previous investors who paid in US$542M at an average cost of US$1.00 per share. If a new investor pays US$2.00 per share, everyone’s shares are now proven to be double their original value — because someone bought shares at that level.
In other words, by having someone buy a chunk of the company, the existing investors have a smaller percentage, but their pieces are now worth more than they originally were.
This theory seems plausible given PitchBook’s analysis:
“The funding could value the company at up to $2.5 billion, per a PitchBook estimate, up from a $1.7 billion valuation the company attained with its prior round of VC backing.”
This is quite significant. Consider that as of this writing, the two major publicly traded 3D printing companies, Stratasys and 3D Systems, have valuations of “only” US$1.26B and US$1.27B respectively. This move could potentially make Carbon worth MORE THAN STRATASYS AND 3D SYSTEMS COMBINED!
Unfortunately, Carbon is not (yet) publicly traded, so you can’t get in on the action, unless you know someone at the VCs involved.
This is likely to change at some point in the future when Carbon has established a sufficiently high valuation for the company. At that stage they will perform an initial public offering (IPO) and transform into a publicly traded company. This will allow the initial investors to “cash out”.
And no doubt make a very tidy profit.