More than just money

by Thomas Masuch — 2020/02/08

While young AM companies like Carbon, Formlabs, Desktop Metal, and Markforged have impressive stories to tell about how hundreds of millions in venture capital have fueled their growth in the United States, investments in German and other European start-ups remain comparatively modest. Sometimes, even with a slimmer financial portfolio, however, up-and-coming firms can certainly hit the ground running on the international stage. This prompted us to ask investors from the U.S. and Europe about related strategies and the criteria that are key to success. Our discussions turned to much more than just money.

Over the past five years, Arno Held and his team at AM Ventures have visited more than 1,400 start-ups across the globe. These investment experts, who specialize in additive manufacturing and normally work at offices on picturesque Lake Starnberg (near Munich), have looked over all the business and financial plans; they’ve spoken with the founders and their teams. For Held, the personal relationships that arise from these meetings are one of the most influential factors when it comes to deciding whether to invest in a young company. »You have to be able to trust one another«, he says.

That said, the fact that AM Ventures has invested in 18 start-ups in those five years – a rate of 1.2% – has to do with more than a mere lack of trust in so many entrepreneurs. »You can rule out 70% of them pretty quickly«, chief venture officer Held continues. »For us, the important thing is seeing an opportunity to work with a young company and its team on building something successful and sustainable. That’s why the team aspect plays such a big part in our investments. We don’t invest as much in technology as we do in minds.«

»Initially, we are investing between 5 and 20 million dollars. Later, we can increase that to 50 to 100 million dollars.«

Before committing to an investment, AM Ventures evaluates the company in question and buys shares in it. It usually takes part in the first or second round of financing, investing between €500,000 and €5 million. »We mainly acquire minority stakes«, Held reveals. »We want the entrepreneurs to stay entrepreneurs, after all.«


AM Ventures currently has holdings ranging between 10 and 25% in companies like 3YOURMIND and DyeMansion (Germany); Lithoz, Cubicure, and Incus (Austria), and Sintratec and Spectroplast (Switzerland), as well as others from the U.S., Great Britain, Australia, and Sweden. »Stakes of less than 10% aren’t worth the effort we make«, explains Held, who worked for EOS for eight years before joining his current company. Among other positions, he was an assistant to EOS founder Dr. Hans Langer – the man who founded AM Ventures in 2015. AM Ventures sometimes offers other types of financing as well, such as when a target’s financial needs exceed the value of its available shares.

Dayna Grayson, partner of the US venture capital company NEA, invests significantly larger volumes. With an invested capital of around 3 billion dollars, it is one of the largest venture capital companies in the world. »Initially, we are investing between 5 and 20 million dollars. Later, we can increase that to 50 to 100 million dollars.« NEA joined Desktop Metal in its founding year, among other reasons because Grayson and her colleagues were and are convinced of the potential of »affordable and fast 3D printing for the mass market.«

For Dayna Grayson, who with NEA also invested in the Boston-based AM heavyweight Formlabs, the decisive factor in selecting investments in additive manufacturing is that the products »are ready for the market and suitable not only for prototypes but also for end-use parts.« It is also important to the investor that the technology differentiates itself from existing solutions and is ideally protectable. »And third, we also look at the team: whether they have experience and the ability to become great entrepreneurs.«

Arno Held, Chief Venture Officer AM Ventures.

Dayna Grayson, partner of the US venture capital company NEA.

Avi Reichental, founder and CEO XponentialWorks.

NEA is shaping the future development of »its« companies as both an owner and member of the board. AM Ventures combines its investment activities with »long-term support« for the companies it works with. For Held, this approach has shown that the start-ups’ success »correlates directly with the amount of attention we give them.« Take DyeMansion, for example, whose founders started out making colorful cell phone cases before coming up with successful color-finishing solutions for 3D-printed parts. That said, Held also stresses the fact that he still gives company founders the freedom they need to make entrepreneurial decisions. »We put people in contact with one another, but we don’t push our holdings to work together«, he asserts. This is also reflected by DyeMansion, which sells its products through HP – a direct competitor of EOS.

»inflative evaluations«

Even in the USA, with its enormous investment resources, there are models that want to build start-ups as efficiently as possible and with lower investment volumes. »Not everything can be solved by money«, explains Avi Reichental, who with his company Xponential-Works in California offers young companies a complete package of investment, consulting and technical support and sees a clear advantage over conventional investment models. »At an early stage companies can do it more efficiently. If companies get so much money upfront, there is a risk of deploying the money in areas that may not give the same return of investment.« Although Reichental, who led 3D Systems as CEO from 2003 through 2015, is also convinced that money helps to grow businesses, »in some cases it also creates inflative evaluations that are much more difficult for the companies than to grow and to create maximum exit optionalities.«

The business concept of investors usually includes a successful exit and a profitable sale of the investments. In its investment in additive manufacturing, even a large investment company like NEA pursues a long-term strategy: »As an early-stage investor, we typically don’t have a short time horizon, like investors who joined at a later point in time or even after the IPO«, says Dayna Grayson. »We have to be patient and want to drive the company as tier as it takes. We are very excited about Desktop Metal, it could be a multi-billion dollar company. «

»If you only want to make money, you’re in it for the wrong reason.«

Meanwhile, a venture that proves fruitful can quickly become a »problem« for smaller investment firms, as Held points out. When start-ups find success, they typically want to take their business global, which entails a greater need for capital. »Before you know it, you need €5 million or more«, Held says. »That’s when it gets tricky for a comparatively small venture capital firm like ours.« This is why AM Ventures cooperates with industry partners on making larger investments. At the same time, Held doesn’t see these partners merely as sources of funds. »They also have to bring something more to the table – the ability to open doors in certain sectors, for instance.«


The initial financial aspect of the development of »his« start-ups isn’t Arno Held’s top priority, however. »We’re not bankers; we’re full-blooded engineers who love interesting ideas«, he declares. »If you only want to make money, you’re in it for the wrong reason.« Instilled in AM Ventures by owner and EOS founder Langer, this credo continues to guide the company today.

On the subject of the hundreds of millions of dollars that numerous AM companies in the U.S. have raked in over several financing rounds, Held has mixed feelings. While AM Ventures does have its own stake in Elementum 3D (Colorado), he describes himself as »always very careful with investments in the U.S.«, citing valuations that are sometimes quite high in the country. »As far as money is concerned, they do tend to operate on a hair trigger in the U.S. You might say that the motto of the investment scene there is ›spray and pray‹,« Held continues, adding that the U.S. is investing much more money than Europe in a large number of companies. He also notes that when a few companies achieve major success, it compensates for a large number of investment flops.


Avi Reichental, on the other hand, tries to combine the advantages of the fertile investment ground in the USA with an efficient strategy by bringing start-ups from Poland, Italy, India and other countries to California. »In terms of investment, if you want to make a company investable, most of the will require that the company is US entity. Because the will not safe investing in companies that are not governed by US corporate law.«

This principle has convinced Kuba Graczyk, CEO of NXT Factory. Born in Poland, Graczyk followed Reichental to California, as his experience in Europe not a lot of knowledge to proper found start-ups and let them grow. »There is a bigger barrier of risk. European investors are less likely to invest in projects on early stages. People here are not afraid of losing their money, but they are aware that 1 of 10 or 20 will succeed. The culture of investing here come from Silicon Valley and has a tradition of 30 or 40 years.«

Held affirms that the investment culture in Europe is a conservative one, but adds that while people tend to take their time, they have a higher rate of success, as well. »More deals are made in the U.S., but not as many of them pan out on average«, he explains. He doesn’t consider this an inferior approach – just a different strategy. »In the end, the results might even be more or less the same.«

AM Ventures

Headquartered in Starnberg near Munich, Germany, AM Ventures Holding GmbH (AMV) is an independent strategic investment company that focuses on industrial 3D printing. It was founded in 2015 by Dr. Hans J. Langer, CEO of the EOS Group. AMV has since expanded to Asia, having opened an office in Busan, South Korea, in 2019.