Galileo Acquisition Corporation (NYSE:GLEO) announced a $410 million deal with additive manufacturing company Shapeways on April 28. Shapeways provides a software platform for designers to have digitally-designed parts or products optimized and manufactured out of its Long Island City, NY facilities.
The deal, which also drew investment from former SPAC target Desktop Metal (NYSE:DM), is expected to close in the summer of 2021. SPACInsider spoke with Shapeways CEO Gregory Kress about the transaction and why this sector has attracted so much SPAC activity.
To read more about the Shapeways-Galileo transaction, click here.
SPACInsider: What more can you tell us about your partnership with Desktop Metal, who is also investing into the company as a part of this deal?
Kress: So one, the announcement in this deal is that we will, we’ve signed an MOU and we’ll be working through the full announcement of the Desktop Metal strategic partnership. The high-level overview of what it will include is us more aggressively entering into the metal space. As you know, Shapeways primarily is polymers today, we have some metals offerings, but we wanted to make this big leap into the metal space for quite a while. We’ll be doing that with Desktop Metal, we’ll also be evaluating others, this is not an exclusive relationship. But this is a great starting point. We see Desktop Metal’s technology as some of the best in class, and so we would like to make sure that we’re offering that up to our customers so we can support the full market. So, that’s one piece.
The second thing is if you know, it requires quite a bit of work to go launch new printers and make that investment or open that up internally to your manufacturing capabilities. So, a majority of customers really don’t have access to really high-quality industrial grade metal manufacturing. It’s really a small sort of select piece of the market that actually has access to those machines. And with Shapeways, we give everyone access to it. I mean, anyone at any size gets access to this through our software platform and our manufacturing capabilities. And so, by launching basically metals technology on Shapeways, we have the ability for anyone to upload a part to our site, get instantaneous pricing, and get access to those industrial grade additive manufacturing technologies without making the investment. Right. It’s similar to like an AWS for the 3D printing industry. So rather than them making all of this investment themselves, you can upload a part to Shapeways get an instant price, and then you’ll get a part with in a couple of days, right? And you can scale up and down as necessary get access to this great technology.
SPACInsider: So, with the boom of the additive manufacturing space, what are the value dynamics between being a primarily software player versus a hardware player? Are the returns better on the software side or will Shapeways look to put its own hardware on the market down the road?
Kress: Yeah, we will not be putting hardware to the market. Shapeways offers additive manufacturing capabilities. We have internal manufacturing sites using the latest and greatest hardware in materials around the market today. But that’s really powered by our end-to-end manufacturing software. So, we’ve built, we spent over $100 million in the last 10 years, building a fully digitized manufacturing operating system.
And so what that does, is it allows you to offer a broad spectrum of capabilities, aggregate orders across customers together, and deliver really high quality industrial reporting great economics. And so unlike a traditional manufacturer, where everything is very, I would call 1.0, or very traditional or paper driven or offline, if you upload a file to Shapeways, all the way through our system, that file really never gets downloaded. It’s fully integrated into every step of our software platform. And so, we’re instantaneously pricing it, we’re instantaneously correcting files and checking for manufacturability and dealing with file corrections.
We’re planning that for software and allocating it out for our supply chain in the most effective way possible. We’re using our software to create all of the upfront builds to make the manufacturing as economically viable as possible by lowering labor rates and improving material usage and higher asset utilization. And then ultimately, we’re delivering very high quality, low volume, high mix production to customers and great economics.
SPACInsider: How difficult would you say is it to keep an innovative edge within this sector? It appears that many of the pioneer companies in 3D printing have since fallen by the wayside.
Kress: That’s an awesome question, and there’s so much innovation taking place on the hardware material side, and we’re agnostic to all those players, right? We’re neutral to the innovations that are taking place on our hardware and on the material side, and we adopt all of them, we have very deep partnerships with all the major players in both the hardware side and the material side of the business. And so as those market shifts take place, and as innovation takes place, we offer our customers access to the latest and greatest technologies. And so we de-risk basically this market by offering this suite of capabilities, that would be: One, very, very hard to replicate, because you need to fully digitize the process to make it economically viable. But we also offer our customers a path to get access to the latest and greatest innovation without making those huge investments in capex, bringing it in-house with the risk that innovation will change over time.
SPACInsider: So, you are a software player in this market and this deal values you at a discount to several hardware players in the market. Frequently, in other technology spaces, the software subscription overlays are the ones the market loves and the hardware tends to be less valued. Do you see those dynamics changing as this market matures?
Kress: Yeah, in general, I would say the additive manufacturing space is still in a huge amount of opportunity. And I think the thing you should think about is: One, if you look at the dynamics of the market, those legacy players that you’ve mentioned, a lot of their IP has been expiring over the last several years, which is caused huge amounts of innovation and investment taking place on hardware.
Those hardware players are coming to the space with an open material model, which means the large chemical companies are creating tons of materials to be used on these machines. These large chemical companies like BASF or DSM or Henkel or GKN are pouring tons of innovation into real end-product applications. And so, what that creates is almost exponential end-product applications and shifting to a lot more applications in real large-scale production applications. And so, now you have significantly better hardware, significantly more material usage. And then that just opens up almost exponential applications across medical, industrial, aerospace, automotive and so like we see a tremendous amount of growth.
So as the market continues to grow, I think a lot of players can be really successful in reality and I see Shapeways as a software provider, we are able to enable the industry and then we’re also having the manufacturing capability to go support all of those customers that are using our software for overflow capacity, additional capabilities that they wouldn’t want to bring in house. So, just, we’re very complimentary to the overall space. So as I see those major players doing well, I see Shapeways benefiting from everyone being very successful.