Shapeways Is the Latest 3D Printing SPAC
Several 3D printing companies have gone public in the past couple of years by merging with special purpose acquisition companies (SPACs). The latest startup to join the fray is 3D printing marketplace Shapeways, which has announced that it is merging with Galileo Acquisition (NYSE: GLEO).
Here’s what SPAC investors need to know about Shapeways.
What Shapeways does
Shapeways operates a 3D printing marketplace that facilitates on-demand digital manufacturing services. Instead of having to incur the hefty capital investments associated with buying industrial-scale 3D printers, enterprise customers can tap Shapeways to outsource production to a network of verified manufacturing partners.
As of the end of 2020, the company had manufactured over 21 million parts on its platform using 11 different additive technologies. Last year, 88% of revenue was generated from repeat customers, with the remaining 12% of sales coming from new customers. Shapeways services a wide variety of industries, including medical, aerospace, education, and robotics, among others.
Shapeways uses proprietary software to allow customers to transform digital designs into physical products using industrial-grade manufacturing processes. The company expects the digital manufacturing market to grow from $39 billion in 2020 to $120 billion in 2030, disrupting the traditional manufacturing market.
The company has partnered with Desktop Metal (NYSE: DM), another 3D printing specialist that focuses on metals and similarly went public with a SPAC merger last year, to expand beyond Shapeways’ current specialty of polymers. Starting in 2020, Shapeways began licensing a commercialized version of its software under a software-as-a-service (SaaS) subscription model, allowing those customers to deploy the software internally.
Total revenue was $32 million in 2020, and Shapeways is forecasting sales to grow to $400 million in 2025. That ambitious outlook is despite recent reports that the SEC may be considering new guidance that could crack down on overly optimistic long-term forecasts, which have been featured in many SPAC deals even though delivering on those financial results is far from certain and startups face considerable execution risks.
The merger details
The transaction is expected to provide Shapeways with $195 million in net proceeds, assuming little to no redemptions from the SPAC’s shareholders. Galileo Acquisition currently has $139 million in cash in its trust account, and the SPAC has arranged $75 million in PIPE (private investment in public equity) financing commitments from institutional investors such as Miller Value, Andreessen Horowitz, and Desktop Metal. The agreement assigns Shapeways a post-money enterprise value of $410 million, with an equity value of $605 million.
The SPAC’s public shareholders are expected to collectively own 23% of the combined company, with the PIPE investors having a 12% stake. Existing shareholders will roll over their equity and retain 60% ownership, while the SPAC sponsor will hold 5%.
The deal is expected to close this summer, at which point the ticker symbol will change to “SHPW.”
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