Koch Industries’ subsidiary invests in metal 3D printing


Desktop Metal, an additive manufacturing [3D printing] firm which specializes in metal printing, announced last week that it raised $160 million from a financing round led by Koch Disruptive Technologies (KDT), a subsidiary of Koch Industries. According to Desktop Metal’s press release, this round of financing lifts Desktop Metal’s overall funding since its creation in 2015 to $438 million and positions the company to help change the nature of global supply chains.

“It’s [additive manufacturing] slow right now, but incredibly precise and has the potential to redraw the geography of manufacturing.” said Dan Pickett, head of data science at FreightWaves. “Right now, manufacturing happens where labor is cheap because transportation costs are low relative to labor cost. If you take almost all of the human labor out of manufacturing with a 3D printer, then transportation becomes one of the larger costs. We’d then see manufacturing move much closer to consumption.”

Michael Petch, editor-in-chief at 3D Printing Industry, said 3D printing may contribute to “slowbalization” in which globalized supply chains contract to domestic markets rather than reaching worldwide.

Desktop Metal’s additive manufacturing innovation comes from its Studio System and Production System. Studio System is designed to conduct 3D metal printing in an office environment. Production system is capable of printing several different metals, including titanium and aluminum.

According to Petch, Desktop Metal’s Production System uses binder jetting as part of a multi-stage process to print metal products. Metal powders are sprayed with polymer and wax adhesive by the printer to form the part’s shape before it’s debinded (the wax is removed) and put into a furnace to sinter (in which the porous part is compressed) into a finished product.

Advanced 3D metal printing processes, now used by aerospace manufacturers, include powder bed fusion, blown powder and rapid plasma deposition. These processes use high energy machines that are unsuitable for an office environment.

Desktop Metal’s press release indicated that the company is the largest private 3D company to date. In addition to KDT, Google Ventures (GOOGL: NASDAQ), Panasonic (PCRFY: OTC US) and Hong Kong-based Techtronic Industries (TTNDY: OTC US) have also invested in the enterprise.

“More importantly, it [the investment] marks an inflection point where metal 3D printing begins to disrupt traditional manufacturing.” said the release.

KDT focuses on funding emerging technologies. The company has invested $17 billion in technology firms over the past six years. KDT is led by Chase Koch, son of Koch Industries’ chief executive officer Charles Koch.

“Desktop Metal’s 3D printing solutions can redefine the prototyping and mass production of metal products, which has profound disruptive implications for manufacturers like Koch Industries,” said Chase Koch. “We are very bullish about the prospects of Desktop Metal, not just as investor, but also as a customer and partner.”

Koch Industries maintains its own global supply chain, distributing its products through its subsidiary, Koch Supply and Trading. Koch Industries is the second-largest privately held company in the world and operates in over 50 countries.

Desktop Metal is also encouraged by the latest round of investment.

“This new funding will fuel the continued development of our metal 3D printing technology and rich product roadmap, the scaling of operations to meet a growing demand of orders, and the financing of major new research and development initiatives,” said Ric Fulop, co-founder of Desktop Metal.

The investment by KDT may enable the printing company to access the larger network and capital available to Koch Industries.

“One of the key factors KDT evaluates when determining whether to invest with a company is if access to Koch’s existing capabilities can provide real value in the partnership.” said Rob Carlton, director of communications and marketing with Koch Industries. “In this case, we think the ability to work with Koch’s various companies across multiple industries has the potential to create mutual benefit, both for Desktop Metal as it innovates new solutions to solve customer needs, as well as for Koch companies looking for ways to stay at the forefront of the markets in which we operate.”  

According to Desktop Metal, the Studio System already has a range of clients including auto manufacturers Ford (F: NYSE) and BMW (BMWYY: OTC US).

“It [KDT’s investment in Desktop Metal] makes sense when you consider Koch’s investments in the auto industry, Ford as an investor and customer of Desktop Metal, and the auto industry being a leading industry for the application of metal additive manufacturing.” said Alan Amling, vice president of corporate strategy at UPS (UPS: NYSE).

Federal agencies such as the Department of Defense and the Department of Homeland Security also use Studio System. This too may promote more interest in advancing metal additive manufacturing.

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