Formlabs unexpectedly announced a truly massive investment yesterday.
The company announced a US$150M raise, perhaps one of the largest ever in the 3D printing industry. They say this injection of funds alters the company’s valuation to a staggering US$2B (yes, that’s a “B”).
The Series E round was led by SoftBank Vision Fund 2, and increases the total amount of investment into Formlabs to a whopping US$253.7M. The latest round is much more than all other Formlabs previous raises combined.
But what will Formlabs do with all this cash? They explain:
“Formlabs will use the funds to continue to grow its portfolio of 3D printing technologies, enabling greater mass production and customization, as well as grow its team across its seven offices worldwide.”
That almost goes without saying, but what specifically will they do? Co-Founder Max Lobovsky said:
“Today, most 3D printing technology is still too expensive and difficult to use for widespread adoption. Our laser focus on improving the user experience and quality of these machines while bringing down the cost is central to our success and the growth of the industry. With this investment, we plan to expand our current portfolio of SLA and SLS technology and accelerate our product development to continue delivering on the expectations of the 3D printing industry.”
This makes a great deal of sense. The technology is absolutely too difficult to use for many potential customers, and a move to improve the user experience will certainly unlock many more clients in the future.
Can they do this? I believe so, as their previous product releases have indeed focused very strongly on the user experience. I’ve often said that their PreForm job preparation software must be the easiest tool of them all, and anyone can master it in minutes. That’s the style of product they will most likely bring to new customers.
There’s another possibility here, and that has to do with the company valuation. The valuation, if you’re not familiar, is the product of the company stock price with the number of outstanding shares. In other words, the cost of buying all the shares of the company.
The Formlabs news release stated their valuation “doubled” to “$2 billion” as a result of this investment.
What’s happened here? Basically the fund bought an unknown quantity of shares, and the price of each of those purchased shares became the price of ALL the shares. Someone just paid that price for them, so that’s the current price. When you then perform the valuation calculation, the result is apparently over US$2B.
Why is this important? I think the other factor at play here is the possibility of a future public offering by Formlabs. In other words, putting the company’s shares on the stock market. It may be that this latest investment drives the valuation up much higher in anticipation of an IPO or SPAC move to get on a stock market.
If you’re going to sell shares to the public, you might as well make sure the price is as high as possible.
While this investment will surely supercharge Formlabs’ operations, it also sets them up quite nicely for a public offering.