A »Colliding Area« on the Pacific Coast

Text: Thomas Masuch; Photos: Xponentialworks — 2019/05/30

On the Pacific coast of California, Xponentialworks brings together promising start-ups from all over the world under one roof. A mixture of venture capital, guidance, domain experts, and state-of-the-art innovation labs – all underpinned by a global ecosystem of industry contacts – ensures that new products are brought to market quickly.

When Jakub Graczyk and Tomasz Cieszynski left their home in Krakow, Poland, at the end of 2017 and moved to California, they put all their trust in Avi Reichental. The two young entrepreneurs had not only left their families far behind; they had also put aside their further plans for a nascent start-up named Sand Made.

The decision to move to Ventura, a coastal city about 100 kilometers northwest of Los Angeles between Santa Monica and Santa Barbara, was not made for its beloved Pacific surf. It was the prospect of a successful future in additive manufacturing that led the two to found a new start-up with the potential to change the industry. »At Formnext 2017, we talked to many people from the industry about our plans,« Jakub Graczyk remembers. »The massive feedback we got convinced us that there was no time to waste. One week later, we moved to California.«

»The move to California has been well worth it.«

Reichental, who was CEO of the AM heavyweight 3D Systems from 2003 to 2015, has created an environment in which young tech companies can develop quickly and successfully in Ventura. It’s based on a company he founded in 2015 called Xponentialworks – a blend of venture capital, expert advisors, innovation labs, and a powerful ecosystem that is fast becoming a force multiplier for tomorrow’s players in additive manufacturing and generative design.

The young companies that Xponentialworks has assembled under its umbrella come from fields like these, as well as from medical technology, applied AI, and robotics. Through his involvement as a co-founder, investor, and shareholder, Reichental has very strong relationships with the start-ups.

speed up the SLS production

Graczyk and Cieszynski confirm that the move to California has been »well worth it, as we’re seeing in how our project and company are growing«. In November 2017, they launched NXT Factory and started working on their new »Quantum Laser Sintering« technology (QLS), which aims to speed up the SLS production of plastic parts by projecting layers at once. »Our proprietary projection system can split the beam of a single three-kilowatt laser into millions of microlasers capable of sintering the entire powder bed all at once,« explains Tomasz Cieszynski, now the CTO of NXF Factory. »This technology is in the making, but it’s going to compete with the fast, state-of-the-art technologies out there.«

In the QLS 250 and QLS 350 systems that the company is currently fast-tracking to market, however, those millions of microlasers are not yet in use. Instead, NXT Factory is deploying a novel »Quad Laser Sintering« system consisting of four lasers. At Formnext 2019, NXT Factory will present a fully automated system that includes an autonomous powder cart. The materials it can process range from the polyamides PA6, PA11, and PA12 to TPU and high-temperature substances.

According to Cieszynski, the prospect of a new sintering technology from Ventura revolutionizing the AM market has also drawn the attention of many investors. »Nearly every other day, we have people who are interested to see what we’re doing,« Graczyk adds. »Obtaining venture capital is much easier here than it is in Europe.«

In Ventura, NXT Factory has a growing team of five employees that is expected to double in size before the year ends. Graczyk and Cieszynski have also maintained a core R&D team in Krakow, where another five employees are engaged in software development, CAD design, and mechanical engineering.

Operating in California comes with numerous other advantages, as well. »One great thing is our direct access to the Xponentialworks community: When you’re working at your desk, you’ll have experts in engineering, AI, marketing, intellectual property, go-to-market strategy, and competitive analysis just a few steps away with whom you can discuss your ideas,« says Graczyk .

»no need to repeat the mistakes«

At Xponentialworks, a full-time team of 12 experts from fields such as AM printing engines, material science, applied AI, and robotics is available to the young partners. »We follow and guide the companies every day,« Reichental explains. »Like we tell the CEOs, there’s no need to repeat the mistakes we’ve already made – teach us how to make new ones!« In addition, the start-ups have at their disposal rapid prototyping and design expertise; solid branding, marketing, and PR resources; and daily access to innovation laboratories and technical services that »normally only bigger companies can afford«.

At the same time, Reichental makes it easier for the start-ups at Xponentialworks to engage with companies larger in size. »Here, we leverage our global ecosystem of contacts to provide immediate access to key industrial players so that our start-ups can get feedback and validate their technologies more quickly,« he says. Reichental calls this the »colliding area«, which is meant to forge partnerships that can speed up time-to-market for everyone involved.

»MENTORING A KEY BENEFIT«

It was precisely the right guidance that the young entrepreneurs from Krakow lacked at their first start-up, Sand Made. »In 2014, we started together on SLS printers for foundries and assembled a team in Krakow. By 2016, we were already going to shows and had sold some printers,« Jakub Graczyk recounts. »We wanted to do something, but we didn’t have proper guidance on market opportunities or the rest of the business side. We were paying for our mistakes. Then we met Avi.«

Reichental knew that the world didn’t need another low-cost SLS system. He traveled to Krakow for a whole week to brainstorm with the young entrepreneurs on what they wanted to do. »Mentoring was one of the biggest benefits we got,« Graczyk reports. »With the help of Avi’s experience and knowledge, we came to the conclusion that there was a bigger market to address: medium- and high-volume production, where injection molding is struggling right now.«

Avi Reichental and his team continue to keep an eye out for companies that have the potential to change the industry. The most important criterion, however, is the people involved. »Are they resourceful and resilient? Have they had any successful exits?« As a further basis for investing in a young company, Xponentialworks relies on its »own assessment of the current state of additive manufacturing and whether we believe the new company has the ability to be a category leader – if it really can disrupt« Reichental continues.

create the maximum options

In Xponentialworks’ concept Reichental also sees an advantage over conventional investment models. »Keeping all the companies in one place with a lot of authoritative experience and resources can substantially de-risk the entire investment and make the cycle more cost-effective,« he reveals.

As Reichental reports, Xponentialworks usually conducts rounds of seed financing for start-ups itself. »If it comes to subsequent rounds, we typically invite other partners to co-invest with us,« he explains. As to whether he would like to remain invested in the young companies for the long term or has an exit strategy in mind, Reichental is non-committal. »You have to be responsible and create options for every company because we live in a very dynamic and fast-moving space. I think the job of people like me is to create the maximum options for each company.«

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