Stratasys to Acquire AM Startup Origin to Bolster Production Polymer Innovation and Improve Software and Service-Based Business Models

Stratasys signed an agreement to acquire Three-Dimensional (3D) printing startup Origin for a total consideration of up to US$100 million in cash and stock. The transaction enables Stratasys to enter the race to develop a production-capable photopolymerization offering and is a must-do move for a leadership position in the AM polymer market.

Origin was founded in 2015 and will continue to sell its first printer, the Origin One, and full solution as it is doing today through 1H 2021. In 2H 2021, Origin will be integrated into Stratasys’ Go-to-Market (GTM) organization (sales, marketing), with the Origin team leading the development of the technology and product platform under Stratasys. The target areas will be dental, medical, tooling, and select industrial, defense, and consumer goods segments. The transaction is expected to close in January 2021 and includes a 3-year retention addendum for its founders.

Origin is an Additive Manufacturing (AM) startup most often compared to Carbon due to its similar lease-based subscription model (~US$100,000 over 3 years) and use of programmable photopolymerization for technology, which it calls Programmable Photopolymerization (P3). The technology is part of the Digital Light Processing (DLP) family, which cures liquid photopolymer resin with light. Origin’s first commercially available printer, the Origin One, launched at the tail end of 2019, with general availability in 2020. Since the start, it has built and shipped more than 135 systems to produce everything from footwear (ECCO) and Personal Protective Equipment (PPE) to a hydraulic line clamp for the F-16 fighter jet. Unique about the platform is its small footprint (400 Millimeters (mm) x 530 mm x 1,145 mm; 160 Pounds (lbs)), focus on software, and open materials approach.

Initial material partners include BASF, DSM, and Henkel, though a larger roster has yet to be announced. The benefit of opening material development is less Research and Development (R&D) for Origin and a lower risk and lower cost model for the customer via redundant sourcing. The partnerships with BASF and DSM (which led Origin’s US$10 million Series A round of funding in 2H 2018) has also allowed the material providers to get a head start on developing for the AM market. At the same time, users of these systems get a head start on their competition. For example, Origin’s work with ECCO is enabled by BASF materials. This approach drives down the Total Cost of Ownership (TCO) for end users, leading to more machine sales, and will allow Origin—and now Stratasys—to charge for software-enabled capabilities like texturing.

Because the leasing model guarantees uptime for customers, monitoring machine health and performance is critical. Origin’s systems address this with more than 20 sensors, including light sensors that remotely monitor projector irradiance and thermal imaging sensors that monitor build performance. It also has customers run a series of test prints with features that can be measured with calipers. By analyzing the understood dimensional variants, Origin can physically verify that the printer is producing accurate parts or vary the light dosage from the projector if it is not. This operating model is unique to Origin, but ABI Research expects more companies will employ test artifacts for Quality Assurance (QA) as the market jockeys toward production manufacturing.

This deal gives Stratasys access to a must-have technology and the chance to experiment with a lease-based/subscription model with little impact on its legacy offerings. Origin gains access to Stratasys’ global infrastructure, channel and strategic partners, and user base (~150,000). The market impact is a greater interest in material development (due to the scale of Stratasys’ user base), emphasis on software, and emergence of a different set of Key Performance Indicators (KPIs)—production capacity per square foot of factory space. Origin is also one of the few companies in the industry taking a software-first approach, which is a school of thought that will undoubtedly transfer to Stratasys, among others.

The Origin One is a good example of the company’s approach to software. The printer is cloud-connected and runs purpose-built software that Origin created from the ground up. This software allows remote monitoring and fleet management for the printers, providing a web-based interface that works across all devices. This is a very modern and scalable approach to software development that especially benefits companies moving into Industry 4.0 and cloud-connected environments. At a high level, this is an approach analogous to what you would see from Tesla for autonomous driving (shipping vehicles with hardware later enabled or improved by software) or Amazon/Google via Echo/Google Home for Artificial Intelligence (AI)-enabled digital assistants; except in this case, Origin is shipping systems with sensors that will later be enabled to improve performance, as well as new features/capabilities. Advances and scale in the consumer space have reduced the cost of sensors to make this tactic economically viable.

For Stratasys, the strategy is to fortify a position in the polymer 3D printing market by developing and delivering solutions in every major technology category. DLP is one of the newest and most innovate production-capable polymer technologies of late and acquiring Origin dramatically accelerates the timeline for such an offering; Stratasys was not in this race previously. But again, software is super important to the Stratasys business moving forward, and we will see Stratasys start to monetize its software development efforts beginning in 2021 for multi-material printing, process improvement, and part feature enhancement. Over time, software will become the magic bullet that alleviates the longstanding interdependency between hardware and materials, opening the door for AM 2.0 business model innovation. Stratasys must ride this wave, or risk being overtaking by competitors like Carbon and 3D Systems.