Fathom 3D Printing to Go Public via SPAC Merger
The hype surrounding 3D printing companies has been on the rise, and startups in the space have received many funding opportunities as a result. Fathom Digital Manufacturing Corp., a 3D printing company based in Wisconsin, is one such company. In early July, Fathom announced that it would be merging with a SPAC, or special purpose acquisition company. The deal, which will close by the end of the year, would value the 3-D printing firm at around $1.4 billion.
Fathom manufactures prototypes and complex parts for its customers using advanced 3-D printing techniques. Founded in 2008 by Ric Stump and Michelle Mihevc, Fathom sees the potential for its technology to disrupt manufacturing supply chains. The company deploys its proprietary software platform and advanced capabilities to serve its customer manufacturing needs.
Fathom 3D Printing Serves Many Industries
The company’s products serve customers across a wide variety of industries. These industries include consumer products, medical equipment, automotive parts, aerospace, and sporting goods. As stated by the CEO of Fathom, Ryan Martin, “we allow our customers to accelerate innovation. We become their secret sauce when it comes to product development.”
There is increasing demand for 3-D printed products. The rapidly developing technology has applications across a multitude of industries. Many also see 3-D printing as a clean technology. Most manufacturing method are subtractive, meaning they start with a base material such as wood or plastic, and then throw away the parts that are not needed. 3-D printing uses additive manufacturing because it involves adding thin layers of material together to create a physical product. The process behind 3-D printing tends to lead to less waste and therefore be more environmentally friendly.
Use of SPACs on the Rise
Along with Fathom, a number of other 3-D printing companies have already announced plans or completed mergers with SPACs. SPACs, also known as blank-check companies, are shell companies that are listed publicly on stock exchanges. They exist for the sole purpose of identifying and merging with a private operating company and taking it public. SPAC deals have become a popular alternative to traditional initial public offerings (IPOs).
Desktop Metal, a leading 3-D technology company for high-volume mass production of metals and carbon fiber parts, was early to the SPAC game. Founded in 2015, Desktop Metal quickly raised venture funding from major players such as Google Ventures, BMW and Ford Motor Company. Desktop Metal completed its SPAC merger in late 2020 in a $2.5 billion deal.
Many industry analysts believe the Desktop Metal SPAC merger prompted further SPAC interest by startups such as Fathom in the 3-D printing industry. “I believe Desktop Metal’s SPAC transaction and subsequent public status raised the profile of the industry. Desktop Metal has stated that the company’s technology will finally make 3D printing feasible for large-scale manufacturing, which caught the attention of many,” states Brian Drab, an analyst at consultancy firm William Blair. “It also triggered other private companies to explore raising capital and going public.”
Fathom’s merger partner is Altimar II. The Altimar II special purpose acquisition company is backed by the firm HPS Investment Partners. This investment firm also backed the SPAC that took Desktop Metal public.
More SPAC Mergers in the 3D Printing Sector
Another example of a 3-D printing company going public via a SPAC merger is VELO3D. The metal 3D-printing company produces components for space rockets and jet engines. VELO3D is in the process of completing a merger with a SPAC called JAWS Spitfire Acquisition Corporation. Tennis legend Serena Williams is a board member of JAWS. That deal is valued around $1.6 billion.
John Howe, a professor of finance at the University of Missouri, explains some of the reasons why technology companies like Fathom have been a popular target of SPAC mergers. “With the pandemic, the importance of technology has become apparent to everyone. SPACs are targeting technology companies because they are sexy, in the news, and hold out the possibility of very high returns.”
Within the technology industry, SPACs in particular have targeted hot industries such as electric vehicle makers and 3-D printing companies like Fathom. Many view these industries as disruptive and offering investors strong future growth returns. This perception has been further boosted by the media.
Fathom Responds to Demand for 3D Printing
Demand for certain 3-D printing applications increased during the pandemic. For example, healthcare companies seeking looked to the 3-D printing industry to quickly mass produce medical supplies such as ventilators and face masks. The pandemic has also shifted how some companies have approached manufacturing their products in the long-term.
Fathom generates more than $25 million in annual revenues. The company is growing by 30% to 40% per year and its future prospects appear strong. The strong momentum behind the 3-D printing industry combined with Fathom becoming a public company later this year will likely accelerate its growth.
