Read time: 15 mins.
Key highlights:
- Fund-run: Why tech entrepreneurs are keen to procure VC capital.
- Hands-on, hands-off: How involved should an investor be in their portfolio companies?
- On the horizon: How will the slowdown in VC investment in 3D printing affect AM technology providers?
“We were 18 months into the ten-year horizon,” Lin Kayser, the co-founder and former CEO of Hyperganic, recalls, “when all of a sudden, all hell broke loose.”
It is early 2023. The roadmap Kayser alludes to was sketched out in 2021 by investors who came on board as Hyperganic sought to change the way modern manufacturers design parts and systems.
Hyperganic, which had been mostly bootstrapped until now, was still pre-revenue when the Covid-19 pandemic hit. The company, like the Leap 71 business Kasyer went on to co-found with Josefine Lissner, was working to usher in an era of computational engineering, deducing that current design practices were not the solution to the modern world’s mounting engineering challenges.
It was a project that Kayser knew would take time, even before the onset of a global pandemic. By March 2020, nobody was in a rush to take the kind of risk a transformation to one’s design practices entails. Patience was required for the fulfilment of this vision, but all of a sudden, urgency was required to keep the lights on.
In 2021, Kayser procured investment from some existing acquaintances in the venture capital world, with a decade-long horizon seeming to suit all parties. But a year and a half on, the landscape was vastly different. Most of the leading AM technology providers were still struggling to yield consistent profits, and those that boarded the SPAC hype train during the Covid years were given a reality check. Hyperganic, meanwhile, had increased the size of its team fivefold following the investment and was still some years away from bringing in the revenue to sustain itself.
When patience was needed, it could not be found. The investors, Kayser says, wanted Hyperganic to pivot, positioning its computational software offering as a latticing solution. Kayser and CTO Michael Gallo believed in sticking to the long-term vision. A product, allowing users to make a start with computational engineering, was on the market; an aerospike engine had been developed with EOS; and it had secured an agreement with a Middle Eastern company to develop more efficient air conditioning systems.
“Fundamentally,” Kayser argues, “there was nothing wrong with what we were doing, but it was also clear that this would not create a profitable company next year. Otherwise, I wouldn’t have taken VC investment.”
A compromise could not be found, and Kayser and Gallo departed in March 2023; the former setting up Leap 71 with Lissner, and the latter retiring. Hyperganic did pursue the lattice solution offering, but it was not enough to prevent the company from encountering financial difficulty. TCT has been awaiting confirmation from Hyperganic all year, but it is understood that the company has all but ceased operations.
Though an isolated incident, the arc of Hyperganic serves as a cautionary tale. Investment can provide an entrepreneur with hope, it can fuel a company’s vision, but it can also redistribute influence and pull a long-term strategy apart.
For a time, it felt like additive manufacturing was the apple of the investment community’s eye. But since the pandemic, VC interest in the sector has waned.
In this Additive Insight Deep Dives newsletter, we explore the considerations both entities make during the investment procurement process, the ideal role of investors once they’ve injected cash, and whether the lack of investment now coming into the AM space is a good thing for the industry.
