Australia-based Titomic Kinetic Fusion (TKF) 3D printing developer Titomic is seeking to go public in the US via a merger with a Special Purpose Acquisition Company (SPAC), its CEO Herbert Koeck has revealed.
Speaking to 3D Printing Industry, Koeck has explained how Titomic aims to become the latest to join the $13 billion 3D printing SPAC IPO trend that has been seen over the last two years to become listed in the US. As well as enabling it to raise funding and gain access to US markets more quickly than regular IPOs, the Austrian said a SPAC merger could bring new defense opportunities for its technology.
“The reason we have started talking to SPACs is definitely because we thought: ‘what other ways do you have to get to the US?’” said Koeck. “You could get into conversation with the banks, potentially find a large strategic investor, but for a small company that could be a multi-year exercise. Our understanding is if you get engaged, and there is a fit with a SPAC, the process could roll in within a year.”
“We’ve also done many jobs in the US defense sector, for example, where there are International Traffic in Arms Regulations (ITAR) controls and export controls in place,” he added. “If you’re not based in the US, you just can’t attract the same business because you’re limited in terms of what you can do and what you can’t.”
Titomic Kinetic Fusion 3D printing
Since its foundation in 2014, Titomic has focused primarily on commercializing its proprietary TKF 3D printing process. The technology itself involves firing metal powders toward a substrate at such a high velocity that they begin to deform and bond onto it, forming additional layers. This process, which can be used to build from scratch or onto existing parts, is a form of cold spray 3D printing in that it doesn’t rely on lasers or heat-based energy and instead leverages kinetic energy.
However, unlike many other metal 3D printing firms, which seek to disrupt industries by selling machines as a replacement for traditional technologies, Titomic isn’t banking its business on this strategy. While Koeck says his firm is seeking to sell some systems, it’s also working with those that are already industry leaders to validate use cases and create “joint ventures” to commercialize them.
“I want to team up with one of the existing players to basically overcome the challenge of competing with the rest of the industry,” explains Koeck. “At the end of the day, as a new kid on the block, you can only get a bloody nose and a black eye. Our future sits in the manufacturing space, where we can enable certain industry leaders to do something even better than they are doing it today.”
So far, this strategy has seen Titomic partner with aerospace firm Boeing to investigate the potential sustainability benefits of TKF 3D printing parts for space systems. Last year, Titomic and Repkon began 3D printing weapon parts in Australia as well, and with its US subsidiary having bought smart pipe infrastructure firm Tri-D Dynamics, the company has increasingly sought to expand in America.
Titomic’s differentiated approach
According to Koeck, Titomic has been seeking to go public in the US for some time, thus its recent efforts to reach out to SPACs, haven’t been inspired by the moves of other 3D printing firms. On the contrary, the CEO says it’s more a case of wanting to access the lucrative US market, which he sees as “20 times bigger” than Australia’s.
That said, Koeck has priced Titomic at around $60 million ahead of a potential SPAC merger, despite admitting that it remains cash flow negative and isn’t yet turning a profit.
There is also a broader question regarding the suitability of holding shares in a SPAC enterprise for the average investor. When asked about whether VC firms are better placed to manage risk than individual investors who may be less well informed about investing in pre-revenue enterprises, the 3D Systems and HP veteran said Titomic’s application-focused strategy sets it apart from its metal 3D printing rivals.
Koeck believes the company offers a strong value proposition, and this could well resonate with investors. Although high-profile moves such as Bright Machines’ SPAC IPO have fallen through over the last year, the Austrian therefore says it’s still possible to attract investment, provided firms can prove they’re “chasing the right mountains.”
“You can pretend to be something different, and it works for a while. Up to the next proof point when revenue reporting comes back,” he added. “But the point is, you can’t do it on an ongoing basis. With Desktop Metal, they raised $560 million, and I think they started at around $34.00, but they ended today (August 25, 2022) at about $3.40. That’s more than a black eye if you’re an investor.”
Chasing profitability post-SPAC IPO
Several well-established 3D printing firms have gone public in the US over the last two years, but some have faced share price dips and profitability issues post-IPO. After Desktop Metal went public on the NYSE in December 2020, it made several acquisitions. However, it has since sought to streamline, and Desktop Metal laid off 12% of its staff in June 2022.
Velo3D’s 3D printing SPAC IPO went through a little later, in September 2021, but it too has sought to spend on business expansion. While Velo3D reported a net profit in Q2 2022 of $128 million, this was due to a change in the fair value of its warrants and earn-out liabilities. Without this, the firm would’ve turned a $26 million loss, thus it too has launched an internal efficiency drive.
Shapeways, meanwhile, was listed during the same month as Velo3D, and its recent share price performance has been so poor that it could be ejected from the NYSE altogether. Shapeways was hit with a NYSE notice, warning that it has six months to regain compliance with the exchange’s continued listing standards or face delisting.
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Featured image shows a Titomic Kinetic Fusion 3D printer. Photo via Titomic.
