Xometry IPO -Transforming custom manufacturing across the globe
Last week, Xometry celebrated its initial public offering, a huge milestone for the Maryland company that began 8 years ago with the ambitious mission of applying cutting-edge technologies to bring efficiency and speed to one of the largest and most important industries in the world: manufacturing. Given our strong conviction, we led Xometry’s $15M Series B round back in 2017 and kept investing in the company since. And, they never let us down.
My journey with Xometry has been one of the most personal and unique experiences for me as an investor, and it was a privilege to ring the bell with the Xometry team at NASDAQ. Our partnership began in 2017, and Xometry is my first investment when I had just joined BMW i Ventures. Back in the day, as an industrial engineering student, I programmed CNC machines on the manufacturing floor, and later as an investment banker I helped enterprise software companies go public, so Xometry has been a natural fit for me and was a very exciting company to dig into. At BMW i Ventures, we believed that Xometry’s marketplace model could not only work well but scale much faster, hence it was a very attractive opportunity for investment. Back then, Xometry’s marketplace business line was nascent with only about 250 machine shops in the network (vs. today’s 5K+ manufacturing partners). Being impressed by the data-driven, world-class team led by Randy Altschuler (serial entrepreneur- previously founded and sold CloudBlue and OfficeTiger) and Laurence Zuriff (previously investor at Granite Capital), we were convinced that the marketplace model could be the future of on-demand manufacturing and Xometry could play a key role.
As a matter of fact, the pain point for customers was clear to us: we often heard from engineers or product designers working on hardware (e.g., autonomous vehicles, space capsules and rockets among others) how difficult and time consuming it is to find the optimal custom manufacturing process for their needs. To address this problem, Xometry, leveraging machine learning algorithms, built a proprietary manufacturing platform enabling engineers and designers to tap into capacity and capabilities of a network of machine shops. As soon as customers upload 3D files, they instantly get manufacturability analysis, price and expected lead times feedback. Thanks to the large manufacturing partner network, Xometry can deliver high quality parts at a very low price with fast lead times.
For any marketplace to scale, you’d need to make sure that both supply and demand sides are in a sticky and scalable relationship. Hearing overwhelmingly positive feedback from customers, we’ve started digging much deeper into the manufacturing partner side. After cold calling 30+ machine shops around the country, I could easily feel their frustration about the status quo in which finding new customers and responding to customer inquiries took considerable time and energy that they wanted to put towards manufacturing. Once I started pitching Xometry’s concept, the excitement was palpable among the manufacturing shops. The more we started digging into data and cohort behaviors, the clearer it was that Xometry is a special company with some of the best cohorts we’ve ever seen. Furthermore, Xometry’s user interface and the instant-pricing engine stood out as the most user friendly and intuitive option.
As I illustrate below, we were convinced that flipping the local machine shop business model into a machine-learning driven marketplace model has significant advantages such as strong two-sided network effects. The more machine shops sign up on the platform, the more variety of processes and the larger capacity Xometry can offer. At the same time, this drives the cost down as there will be a larger set of providers with spare capacity who could take the job. Larger set of capabilities, higher capacity, top quality and lower prices attract more and more customers to the platform, which in turn garners more machine shops adding to the platform. Each new customer and manufacturing partner improves the platform for everyone involved.
Xometry’s two-sided network offers significant advantages over the local machine shop business model
Fast forward to 2020, once the world got hit by the COVID-19 pandemic, the strategic importance of manufacturing became even more pronounced. Xometry has helped manufacture some of the most critical items, including millions of FDA-cleared surgical masks and other important supplies. As Randy explained: “COVID has reinforced the need for distributed manufacturing and our platform enables that by empowering these local manufacturers, and because we’re using technology to do it, as COVID has unfolded […] and as continents have shut down, and even specific states in the United States have shut down, our platform has allowed customers to autocorrect and shift work to other locations,”.
The IPO marks an important milestone for the extraordinary Xometry team, and its entire base of loyal customers and partners. It’s a celebration of many years of hard work, creativity and dedication for manufacturing. Most importantly, it’s a tribute to makers and builders everywhere. Yet, the team at Xometry will be the first to remind you that with 5K+ manufacturing partners, they are just getting warmed up. We’re delighted to be a part of this company’s beautiful story!
And yes, Xometry is hiring, please visit https://www.xometry.com/careers/