The hottest field in the world of advanced materials today is 3D printing. But this has been a long time coming. Hideo Kodama of Nagoya Municipal Industrial Research first developed additive manufacturing equipment and materials in1981. This original work closely resembles the stereolithography technique pioneered by Charles Hull that remains a dominant technique today. Despite the promising future at the time of this original work, it wasn’t until 27 years later, in 2008, that the additive manufacturing industry finally surpassed one billion dollars in revenue, a key threshold in becoming mainstream. Borrowing from Silicon Valley, I’ll use the term “revenue unicorn” for this milestone. Since that time, there has been no looking back.
Today, many companies, market researchers, and even my colleague Matt Cohen, envision 2D materials to be the next wonder material. Matt’s ode to the most well known 2D material, “Oh, the Places Graphene'll Go!” said it well. Graphene was first produced in measurable quantities in 2003. In 2014, reported sales of graphene reached $9MM and by 2025, Lux Research forecasts revenue to reach $325 MM. With any luck, graphene will beat 3D printing’s 27-year time to revenue unicorn, but with the current trajectory it won’t be by much. This is a scary thought for the more than 50 graphene-related start-ups that Pangaea has spoken with over the last few years. Can something be learned from the recent 3D printing hockey stick to help our 2D Materials friends bring that unicorn milestone forward a decade or more? Here are some thoughts:
Manufacturing equipment is at the bottom of the value chain. In mature markets, an equipment sales model is almost never a recipe for venture-backable success. But as we have seen with 3D printing, in the early days of a new industry, equipment can have rapid growth and capture the lion’s share of revenue as the industry ramps. A successful equipment focused company can then have a fork in the road where it aims to become the Applied Materials of its industry, or transition to another model by leveraging process and materials IP developed along the way. So what if one or more of the dozens of graphene start-ups, with their own “proprietary” processes (typically guarded like the crown jewels), were to package that into a robust and user-friendly manufacturing “package”? What if the jobs of product development, manufacturing and marketing were outsourced to their customers in multiple verticals around the world? A company name of “2D Systems” or “Graphasis” might work well. This would give the world the tools for more rapid product development and fuel further equipment sales that feed upon themselves. Chance to become the industry standard – check. Rapid, profitable revenue growth without major CAPEX and working capital investments – check. Driving an industry down the scale economies curve – check. Making competitors irrelevant – check. Not a bad place to be if you ask me.
The magic of software is that for next to zero incremental cost, knowledge and tools can proliferate to almost anyone in the world. In the realm of 3D printing, software is what enables anyone to take a digital photograph of an object and instruct the printer exactly what to do. Simple! What if a company open-sourced to product developers the Computer Assisted Design “CAD” of 2D Materials, which enabled the development of products and applications by selecting desirable attributes, with the software providing starting points? With the knowledge transfer enabled and early development risk profile minimized, I would envision 2D Materials hobbyists and corporate development groups proliferating, as they have in 3D printing over recent years.
In its early years, 3D printing innovators such as 3D Systems focused mostly on industrial prototyping markets. It wasn’t until the industry entered more consumer-centric segments that revenue, not to mention imagination about the potential for the technology, really started to take off. Unfortunately, the three markets where market researchers see graphene having the most promise are semiconductors, batteries, and composites. Most start-ups are chasing after at least one of these segments as a main target. All three are high on my top ten list of "slowest-to-adopt-new-materials markets". As a contrast, in the 3D printing world, much of the recent revenue growth has been from service bureaus or hobbyists producing toys and trinkets. Graphene’s MVP is clearly not the next Intel chip. What about a static-free carpet? An ultra-tough clear coat paint that prevents all but the nastiest rock chips? Or what about a coated conductive thread that enables heart rate and body mechanics sensing for athletes? Okay, maybe this is not as trivial as printing a plastic replica of the family pooch, but you get my point. Keeping an eye out for problems we find in daily life is the place to start.
When you visit the General Electric website today, they are eager to tell you about how additive manufacturing is one of the platforms for their future. And of course everyone knows about GE 3D printed jet engine nozzles. The point is that no start-up can drive the massive growth of a new industrial technology like the investment and signaling power of a behemoth like GE. The smartest graphene entrepreneurs are focused on alliances and partnerships. Unfortunately, the majority seem focused on the torturous model of scaling-up in order to sell material on a per-kilogram basis to whomever wants to buy. Fortunately, there are many large corporates, including several of Pangaea’s Strategic Limited Partners, that have graphene and 2D materials on their radar and can be a starting point to partnering for success.
It's news to nobody that materials development takes a long time, and the history of 3D printing is the norm rather than the anomaly. But with creative business models and leveraging of complementary technology, a 2020 graphene industry revenue unicorn should be the goal that every 2D materials entrepreneur is helping to enable. If successful, maybe we’ll even see some VC-backed unicorn valuations to reward that success.