Desktop Metal is one of the most interesting startups to come out of Boston for some time with a technology to “print metal”. This is a potentially huge expansion for the 3D printing market, where flexible polymers are the norm, a material that limits the types of products these machines can produce. No wonder, then, that the company caught the attention of a SPAC a few weeks ago and, if all goes well, will begin public trading later this year.
This morning, the SPAC (called Trine) and the startup filed their latest financial and shareholder reports with the SEC to give us an idea of who the big VC winners are here.
First, let’s take a look at Desktop Metal̵
According to the submission, the largest VC investors in Desktop Metal are NEA with 17.66%, Lux with 11.59%, Kleiner with 11.10%, GV (formerly Google Ventures) with 8.89%, Northern Trust with 6.96 % and KDT, a subsidiary of Koch Industries. with 5.89%.
Desktop Metal is valued at $ 1.83 billion of the total SPAC award of $ 2.5 billion. The difference between these two numbers comes from the capital held by SPAC of $ 305 million and a private investment of $ 275 million in the company made as part of the acquisition, along with fees and a few others Grants.
How does that look from the point of view of the return? Desktop Metal raised six capital rounds (Series A through Series E & E-1) and raised a total of $ 438 million, according to the company. Using the numbers from these records, we can do some back-of-the-envelope calculations to give a rough guess as to how each fund returned on its investment.
The biggest overall winner in terms of multiples of investment is Kleiner Perkins, This is roughly 10 times the return on his full investment in the company. Kleiner took one-fifth of Serie A and grossed around $ 3 million. The company then doubled in Series B, where it invested approximately $ 13 million before declining proportionately in later rounds. Given that the invested capital of $ 20.4 million is geared towards the earliest rounds, this resulted in an increase in the return multiplier.
NEA, Perhaps because of its larger fund size, which has been continuously invested in the company over all rounds, ultimately investing around $ 57 million. The company invested in desktop metal as part of its seed program, doing around 43% of the Series A. It also continued to invest heavily in all of the company’s growth rounds. Ultimately, NEA had a calculated multiple of the investment of about 5.67x.
Among the early-stage investors, Lux eventually managed to get a 5.31x return, and it also plowed money into the company on all rounds, albeit a little less aggressively than NEA, ultimately investing around $ 40 million in desktop metal .
En route to the growth investors, GV began investing in the Series C round and invested around $ 65 million in total in the later stage for a 2.5x return. Northern Trust got into Series D scoring 1.6x and Koch Industries’s KDT scoring 1.44x through its mezzanine capital infusion.
This includes all investors with more than a 5% stake in the company under SEC regulations. Approximately $ 100 million of the company’s $ 438 million in fundraising is not shown on the cap table. As a result, there may be other VCs with swell returns that were not required to disclose their stakes. Additionally, I am not including some minor common stocks of these venture companies that are small enough not to radically change their return profile.
The rapid appreciation of Desktop Metal in just five years will also give these companies very strong IRRs on their investments.
Given that Desktop Metal enters the public markets through a SPAC, all of these investors have the option to sell or hold their shares in the future. If they hold up and Desktop Metal performs well, their stakes can grow in value dramatically and generate much higher returns. The opposite is of course also the case. Once public, companies have flexibility as to whether and when to exit, and that decision will ultimately determine their final realized returns for LPs.
For now, however, this is a good checkpoint to see how successful some of these venture firms have been in this deal. Maybe companies can print gold with these 3D printers after all.