Digital manufacturing service provider Fast radius has announced that it will go public through a merger with the Special Purpose Acquisition Company (SPAC) ECP environmental growth opportunities (NASDAQ: ENNV).
With an estimated value of $ 995 million, the new company is expected to be backed by cash proceeds of $ 445 million from the transaction, with Fast Radius shareholders contributing 100% of their equity. All funds raised under the transaction will be used to fund the company’s ongoing software development and asset expansion strategy in the hope of increasing annual revenue to $ 635 million by 2025.
“We are excited to partner with ENNV as their team’s long track record, leadership in new sustainable infrastructure transitions, and institutional reach will accelerate the next chapter in our growth,” said Lou Rassey, CEO of Schneller Radius. “Our board of directors and management team continue to strive to implement our proven business model and add value to all stakeholders.”
Fast Radius’ ambitious goals
Chicago-based Fast Radius provides on-demand services for 3D printing, CNC machining, urethane molding, and injection molding through its proprietary Cloud Manufacturing Platform. Much like its service provider competitors’ websites, the company’s software enables customers to upload and order to-specification parts through its distributed network of company-owned microfactories and third-party suppliers.
Over the past three years, Fast Radius has begun scaling its manufacturing capacity, opening new headquarters, and investing $ 48 million through a financing round led by UPS. Since then, the company has continued to expand its portfolio and was one of the first to install Desktop Metal’s production system before launching it along with a “DICOM-to-Print” service for its North American clinicians Axial3D.
In anticipation of the upcoming merger with ENNV, the company has now set out to expand even further and achieve an EBITDA target of $ 135 million and a revenue target of $ 635 million by 2025. On a recent phone call with analysts and investors, Fast Radius COO Pat McCusker drew a picture of the company’s financials, suggesting that reaching that number could be challenging.
While McCusker pointed out that Fast Radius had seen an average annual growth rate of 100% for the past four years, he forecast corporate revenue of $ 25 million by 2021 and more than $ 100 million by 2022. To match the high projections of the Underpinning the company, McCusker cited the impact of the company’s upcoming $ 445 million profit as well as a boom in customer demand showing that his model is “proven and working.”
Of course, Fast Radius isn’t the only office going public via a SPAC merger and setting optimistic growth targets there Shapeways recently forecast sales of $ 250 million by 2024. Nevertheless, according to McCusker, his company is unique in that it has built a “digital marketing tech stack” that enables him to address high-quality prospects in a more measurable and scalable manner than his competitors.
“We have proven that we can acquire new customers in a cost-effective and scalable manner,” said McCusker at the company’s investor call. “These investments create real business value as we compare customer acquisition costs with what we see beyond average customer sales, gross production margins, customer retention rates and account expansion.”
Cloud manufacturing on NADSAQ
Fast Radius’ merger with ENNV will bring the company together with an electric power-focused SPAC that has managed over $ 22 billion in capital since 2005, including four private equity funds. The company has privatized two companies in the past, but it now intends to IPO Fast Radius, a company it says “does well on sustainability and energy efficiency.”
Through their merger, the companies aim to raise $ 445 million in capital, with $ 345 million held in ENNV’s escrow account and an additional $ 100 million from a private investment in public equity (PIPE). Goldman Sachs Account Management has already allocated $ 25 million for this PIPE, with other backers including UPS, Palantir, ECP and other institutional investors.
As part of the deal, ENNV will be renamed “Fast Radius, Inc.” and is expected to remain listed on the NASDAQ while the current office of the same name is effectively publicly traded for the first time. Once approved by the boards of both companies, the transaction is expected to close in the fourth quarter of 2021, subject to regulatory and shareholder approval and customary closing conditions.
Regarding its spending priorities, Fast Radius says that any capital raised through the transaction will be invested in increasing sales growth through “customer acquisition and software development,” in addition to expanding its microfactory facilities to increase its production capacity and ability to meet the needs of a company to meet growing customer base.
“We look forward to working with Lou and his team to accelerate growth as they implement their proven business model and capitalize on significant opportunities in the growing custom parts market,” said Doug Kimmelman, chairman of ENNV. “As a publicly traded company, we believe that Fast Radius will be even better positioned to maintain its leadership position in the software and industrial technology industries.”
“The Fast Radius Cloud Manufacturing Platform offers a fundamentally more sustainable way to produce and fulfill parts around the world.”
AM’s on-demand SPAC mergers
Over the past year, the number of 3D printing companies going public through SPAC mergers has grown significantly, and those business combination agreements are now worth more than $ 15 billion. With AM service providers in particular, such deals have become a popular means of conducting IPOs Fathom digital manufacturing It also reveals that it will go public via a $ 1.5 billion SpaC merger later in 2021.
However, not all manufacturing offices are convinced of the benefits of SPAC mergers, as Xometry went public on NASDAQ via a traditional IPO last month. Even though the company increased the value of its shares shortly before it went public, its decision to go public could still result in over $ 290 million in cash proceeds.
Elsewhere in the industry Formlabs Recently raised $ 150 million in funding that exceeded the $ 2 billion mark, but leadership remains reluctant to launch an IPO. The company’s CEO, Max Lobovsky, paid lip service to the rising popularity of the SPAC merger, saying that while it was “big enough” to take such a move, he would rather “take his time” to become “an excellent public company”. instead.
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The picture presented shows four carbon 3D printers installed in one of Fast Radius’ micro-factories. Photo via Fast Radius.