MT Magazine March/April 2024

FEATURE STORY

MARCH/APRIL 2024

29

investment excesses resulting from the global COVID-19 pandemic. More notable for 2023 than the 44% drop due to changing investor sentiment across the investment landscape was the $579 million in applications investments. The 12 application deals in 2023 represented 21% of all deals and 56% of all dollars compared to the 22 application deals in 2022 with 28% and 33%, respectively. The 2023 data reinforces the investment trend observed the prior year: Applications matter. Investors continue to focus on product-market fit opportunities with specialization and the promise of services at scale. Notable service business model companies that raised significant funding in 2023 include Divergent, Freeform, Seurat Technologies, Arris Composites, Alloy Enterprises, and Zeda. Furthermore, nearly all these companies have developed technologies or processes that help them offer differentiated manufacturing services. Average investment size decreased to $23 million for 2023, down nearly 15% despite large investments into Seurat Technologies, Divergent, and Ursa Major. This decrease in the average is in line with fewer large investments in 2023 compared to an overexuberant 2021-2022 and also in line with publicly traded company values decreasing in 2022-2023. Mergers and acquisitions involving companies working in part or whole with additive manufacturing decreased from the 2021 high of 66 down to 41 transactions for 2022 and further to 24 transactions in 2023. The significant slowdown in M&A activity reflects the increased cost of capital due to rising interest rates alongside recessionary concerns and geopolitical uncertainty. Looking at 2019 and 2020 as a basis, 2023 M&A activity should be viewed as typical for an industry that continues to add more new companies than the combination of consolidation and bankruptcy. The company types acquired in 2023 were also typical with nearly equal numbers of service businesses and technology businesses joining larger entities. In light of 2023 activity, additive manufacturing remains a growth industry with double-digit year-over-year growth rates. While 2023’s venture investments trended down, the application focus was reaffirmed and retains some of the industry’s currently overshadowed successes. Similarly, stepping back to pre-pandemic M&A activity and taking stock of the low publicly traded company valuations should feel like a return to business fundamentals. The AM roller coaster’s loops and turns appear to be coming to an end as the industry finally approaches the station, where a stable foundation awaits application companies and service business. This article was written by Dayton Horvath with analysis and contributions from Mark Huber. For questions or comments, please email dhorvath@AMTonline.org. Additive Manufacturing Mergers and Acquisitions

Average Investment Round Size Over Time

$30M

$25M

$20M

$15M

$27M

$23M

$10M

$20M

$15M

$12M

$5M

$0

2019

2020

2021

2022

2023

Number of Additive-Related Acquisitions by Year

70

60

50

40

66

30

41

20

28

25

24

10

0

2019

2020

2021

2022

2023