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START-UP MANUFACTURING: 3D Printing, Fab Labs, Hackerspaces and Crowdfunding

The document discusses start-up manufacturing, focusing on 3D printing, hackerspaces, and crowdfunding. It emphasizes the importance of these elements for educational professionals and outlines the characteristics of successful incubators and fab labs. Additionally, the document details venture capital interest in start-up manufacturing and the mechanics of crowdfunding as a support mechanism for new ideas.

Business◦Economy & Finance◦

START-UP MANUFACTURING: 3D Printing, Fab Labs, Hackerspaces and Crowdfunding

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START-UP MANUFACTURING: 3D Printing,Fab Labs, Hackerspaces, and Crowdfunding Jim Allen Director – Economic Programs Shapeways, Inc. jim@shapeways.com 708-205-3813
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• What isstart-up manufacturing? • What is 3D Printing? • Why is 3D Printing important? • What is Shapeways? • What are Hackerspaces? • How do 3D Printing and Hackerspaces fit together? • Why is all this important to you as ED professionals? • What are the key elements of a successful hackerspace? • What can an EDO do to support these activities? • What is crowdfunding and what is its role in start-up manufacturing? Goals: 2
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Overview of Start-upManufacturing US Government Activity Recent Press 3
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Venture Capital Firmswith Investments in Start-up Manufacturing Companies Andreesen Horowitz Arizona Bay Technology Ventures Beringea Bezos Expeditions Contour Venture Partners Excell Partners Foundry Group First Round Capital Greylock Partners iDSoft Index Ventures K9 Ventures Khosla Ventures Kleiner Perkins Caufield & Byers Lerer Ventures Lowercase Capital Lux Capital Norwest Venture Partners RRE Ventures Sequoia Capital SK Ventures SoftTechVC Trident Venture Capital True Ventures Union Square Ventures Village Ventures 4
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5 What manufacturing was…
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Manufacturing Redefined: “The fulfillmentof ideas through the transformation of materials.” Mark Albert, Editor-in Chief, Modern Machine Shop 6
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7 Manufacturing today…
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How does Shapewayswork? An idea! Make your design. Upload to Shapeways. Choose materials & get instant pricing. We’ll fabricate your order using 3D printing technology …and ship directly to you or your customers! Your idea made real! 9
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Shapeways: The Powerof 3D Printing 11
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Start-up Manufacturing &Fab Labs in NYC 12
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“The Empty Promiseof Tax Incentives” - Louise Story, New York Times, Dec. 2, 2012 “Over-sweetening the deal: how US states use incentives to attract investment” - Karen E. Thuermer, fDi Intelligence, Nov. 4, 2012 To avoid or limit this… 14
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49,000 200,000 $15 billion 87% 84% $1.00 $30.00 Whyis this important to you? 15
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Characteristics of TopPerforming Incubators, Fab Labs & Hackerspaces • Provide: • Space • Machines, 3D Printers, etc. • Internet access • Administrative Services • Training • Mentorship • Networking opportunities • Marketing assistance • Engineering & fabrication assistance • Access to: • Financing, legal, accounting • Educational resources • Strategic partners • Government resources • Management Characteristics: • Initial feasibility study • Written mission statement, budget & goals • Effective Board of Directors • Selective admission • IP protection • “Safe”, collaborative environment • Community support & involvement • Data collection & follow-up 16
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Other Steps toTake: Meetups & Social Media Contests & Challenges 17
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Crowdfunding & Start-upManufacturing • How it works • 13 Product Categories • All or nothing concept • Tipping point at 30% of funding • 5% fee • Stats (All Projects) • 84,000 projects launched • $466 million pledged • 43.6% success rate • Stats (Design & Technology) • ~5,000 projects launched • ~$130 million pledged • 33% to 38% success rate Kickstarter Success Stories Other sites: JOBS Act Effect 19
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Chris Anderson, Makers:The New Industrial Revolution, New York: Crown Business, 2012. Kevin Lawton and Dan Marom, The Crowdfunding Revolution, New York: McGraw-Hill, 2013. Mark Albert, Modern Machine Shop, p. 16, Nov. 2012. http://www.nbia.org/ http://www.edaincubatortool.org Kickstarter, The Best of 2012, http://www.kickstarter.com/year/2012?utm_campaign=Jan082013&utm_medium=email&utm_source=newsletter#osc ars Louise Story, “The Empty Promise of Tax Incentives”, The New York Times, Dec. 2, 2012. Karen E. Thuermer, “Over-sweetening the deal: how US states use incentives to attract investment”, fDi Intelligence, Nov. 4, 2012. Jon Healy, “Democratizing manufacturing, minus the people”, Los Angeles Times, Nov. 13, 2012. Haytham Elhawary, Director, Zahn Center for Entrepreneurship, City College, New York, NY. JF Brandon and Samir Ajmera, Dshape, Brooklyn, NY Miquela Craytor and Alison Hodgson, New York City Economic Development Corporation. NYCEDC Innovation Index, 2011 http://tech.co/top-startup-accelerators-ranked-2012-08 http://hackerspaces.org/wiki/ http://www.marketsandmarkets.com/AnalystBriefing/additive-manufacturing-market.asp http://challengepost.com/ and http://challenge.gov/ References 20
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Editor's Notes

#2 Thanks & honored to be here. Questions for audience: Show of hands: How many of you are familiar with 3D printing? Have hackerspaces/fab labs (or incubators or accelerators) in your region? From major markets? From markets/regions with <250-500K pop?
#3 As I was putting this preso together,I thought it would be helpful both for me and for you put together a list of questions I hope to answer.
#4 Manufacturing, the new technologies involved, particularly 3DP, have received a lot of attention recently. In the US, one of the biggest government programs ($1B) directed toward manufacturing is the National Network for Manufacturing Innovation (NNMI) which is creating 15 centers of excellence. The first, coincidentally, is the National Additive Manufacturing Innovation Institute (NAMII), in Youngstown, OH but covering the tristate region of OH, PA & WVA. Brookings Institution named the NAMII one of the Top 10 Innovative ED Initiatives for creating jobs, growing regional economies, and boosting global competitiveness in 2013.(Q: anybody here involved in that?) Several federal gov’t agencies are involved: DOC, DOD, DOE, NASA, NSF. Now this is just a sample, but other agencies that have significant projects related to mfg include NIST (NatlInst of Stds & Testing), DARPA (Defense Adv. Resrch Projects Agency), EDA. All of them have a mandate to involve Small-Medium Enterprises. I included the EDA here because they have rolled out 10 public-private partnerships across America will receive $20 million in total awards to help revitalize American manufacturing and encourage companies to invest in the United States. 10 partnerships were selected through the Advanced Manufacturing Jobs and Innovation Accelerator Challenge, which is a competitive multi-agency grant process announced in May 2012 to support initiatives that strengthen advanced manufacturing at the local level. These public-private partnerships consist of small and large businesses, colleges, nonprofits and other local stakeholders that "cluster" in a particular area. Arizona, California, Michigan, New York, Oklahoma, Oregon, Pennsylvania, Tennessee, and Washington will each receive approximately $2 million to fund projects that are expected to train a total of 1,000 workers and help nearly 650 companies leverage a cluster's resources in their regions and create jobs across the country.Startup manufacturing, 3DP and companies like Shapeways have been featured prominently in major press outlets, both traditional & new economy, online, print, TV. Here is just a sample of the major media outlets from around the world.
#5 On top of government attention and funding, there is significant private investment in start-up mfg cos. Not a comprehensive list, in alphabetical order, but growing in terms of # of firms and investments. Some large, others smaller. Some focus on particular stages (seed, early) segments of manufacturing (cleantech, biomedical, 3D printing, combo plays) and/or geography. In addition to these more traditional sources of financing, crowdfunding has emerged as an alternative and has gained significant momentum with sites like Kickstarter and Indiegogo. I’ll talk more about crowdfunding later.
#6 Let’s get back to start-up manufacturing itself. This is what mfg is NOT. Despite the title of the movie (“Modern Times”), I would argue that many people in your regions still view mfg this way. I saw it first hand while working for an EDC in the Chicago area.
#8 Here’s what mfg looks like today. They range from desktop 3D printers (Makerbot, <$3K, objects size up to size of softball to football), to specialized “factories of the future” (>$500K/ea ) with machines capable of making objects as large as a chair. In both cases shown here the printing technology is the same: FDM which is analogous to a Playdoh extruder or cake decorator squeezing out frosting layer by layer. This and other 3DP technologies coupled with the cultural shift caused by online social media to collaborate and share are all part of the “Maker Movement” that has been called the “New Industrial Revolution” . It is easy to “convert bits to atoms” through the use of common CAD tools which use standardized file types.
#9 Without getting into the details of the various 3DP technologies, I want to show the range of possibilities with 3D printing with more on the way: structural parts (gears, molds), jewelry, home décor, full color accessories & figurines, clothing, shoes, concrete, medical devices (prosthesis, jaw, heart), etc. Many of these intricate parts could only be produced with 3D printing, while others compete with more traditional methods of production such as casting, machining, plastic injection molding, weaving, etc. Economic quantities as 1 – 10K+
#10 The barriers to becoming a manufacturer have been lowered significantly thanks to companies like Shapeways. All that’s needed to become a manufacturer are a computer, internet connection, designs (CAD files), and a physical address to ship the products to for USPS, UPS, FedEx. Even if you have no CAD skills, there are creator apps on the site to help you transform your ideas into the right format for printing or you can find a designer through the Shapeways community forum. In addition to taking away the need for capital investment, providers like Shapeways and 3D printing in general offer the start-up manufacturer the ability to:-reduce time to market-Faster, iterative product design in hours, days or weeks vs. months or years! (iPhone 5 case example, Nokia Lumia back panel)-Reduced market risk, by printing only what customers order, no inventory needs to be carried in case the product doesn’t sell (vs traditional way of say plastic injection molding where the mfgr has a minimum order quantity and significant tooling costs)-Produce the physical product as close to the customer as possible to minimize shipping costs & delivery times
#11 Here’s a snapshot of the Shapeways business. In less than 5 years, the company has printed over 1M products, mostly unique one-offs, with over 10K new designs being uploaded each week. Some of the stats that may be of interest to you as Econ Developers are job and wealth creation. The 8000+ shops represent individuals or small group of people who have uploaded designs that others can purchase on our website. It’s somewhat a proxy for job creation, in the sense that there are shop owners who make all or a significant portion of their income from products they sell on Shapeways. Within SW itself, the company has gone from 3 employees 5 years ago, to 20 2 years ago and now over 70.
#12 A short video about SW, to give you a better idea about the company and the creative potential of 3D printing.
#13 Within NYC itself, there is emerging a cluster of start-up manufacturers, fab labs, hacker spaces along with academic institutions with design programs. NYCEDC has made it easy to find these facilities as well as attracting more start-up companies through contests and challenges (which I will cover under crowdfunding later)
#14 Given that many of you are from smaller, less urban regions, I don’t want to dwell on major markets and have a sampling from around the US and even one in China of other hacker spaces, Hardware-based incubators, accelerators programs. I didn’t include necessarily the most well-known such as MIT Media Labs and TechStars, but just a sample. Michael and Matt will talk specifically about what they’ve done in smaller markets.NBIA: National Business Incubator Association- a wealth of information on best practices, certification, incubator locator. MENTOR Makerspace– DARPA-$10M program called MENTOR (Manufacturing Experimentation and Outreach) opportunity to influence hands-on education by establishing the collaborative practices of making (hackerspaces) in 1000 high schools by 2015. We will scale to 100 schools for the 2013-2014 school year and plan enroll 1000 schools in the 2014-15 school year. DARPA envisions deploying up to a thousand computer-numerically-controlled (CNC) manufacturing machines—such as “3D printers”—to high schools nationwide. The goal is to encourage students across clusters of schools to collaborate via social networking media to jointly design and build systems of moderate complexity, such as mobile robots, go carts, etc., in response to prize challenges.EIGERlab- in Rockford, IL mixed-use incubator. It serves the region with leading edge business and engineering support services, SBDC, PTAC, work closely with NIU & Rock Valley CollegeTechShop-”a playground for creativity”. Not incubator or accel, but more commercial. Part fabrication and prototyping studio, part hackerspace and part learning center, TechShop provides access to over $1 million worth of professional equipment and software. 7 locations: 3 in CA, TX, MI, NC, PA (Mar 2013). Plans for DC, NYCLemnosLabs – hardware incubator in SFOHAXLR8R-a venture fund which focuses on entrepreneurs building hardware devices. It offers seed funding ($25,000), office space as well as mentorship along with the other opportunies for 2-4 person startups to take an idea to a product. Shenzhen China & SFO.FUBAR Labs – Fair Use Building and Research, Highland, NJ New Jersey's first Hackerspace.
#15 Here are a couple recent headlines about how tax incentives given to firms as part of attraction, retention and expansion efforts in the US haven’t necessarily led to the job & wealth creation or tax base. Particularly when there’s not enough oversight and/or clawback provisions. Large corporations also tend to have deeper pockets & resources than governments and EDOs when it comes to negotiating incentives. I’m not saying this types of incentives are wrong, but why not consider supporting start-up manufacturing efforts, hackerspaces and the like in your region as part of the BR&E strategies for your region? Probably a better return on investment.
#16 Here are some numbers that may help to convince you. Remember, they do not necessarily consider the significant multiplier effect of manufacturing jobs.2011: North American incubators (all types) assisted 49,000 start-ups representing 200,000 FTE and $15 billion in revenuesReduce small business failures. 87% of start-ups graduating from NBIA member incubators report they are still in business. If failure means liquidating all assets, with investors losing most or all the money they put into the company, then the failure rate for start-ups is 30 to 40 percentIf failure refers to failing to see the projected return on investment, then the failure rate is 70 to 80 percentIf failure is defined as declaring a projection and then falling short of meeting it, then the failure rate is a whopping 90 to 95 percent84% of NBIA-member incubator graduates stay in their communitiesFor every $1 of estimated public operating subsidy provided the incubator, clients and graduates of NBIA member incubators generate approximately $30 in local tax revenue
#17 This is data from EDA, NBIA and talking with directors of hackerspaces dedicated to manufacturing. 32% affil w/university, 25% affil w/EDO, 16% govt, 15% have no sponsor or host, rest are a mix of sponsorship, or for-profit. Est of 7000 incubators worldwide.
#18 Meetup: the world's largest network of local groups (10.8M visitors monthly). Uses online social media to get people to meet face-to-face on just about any interest (117K topics). Easy to start a group. Inexpensive. Users get emails and suggestions of groups to join based on their interests. A quick search on hardware, mfg, 3d printing, etc. turned up dozens if not hundreds of groups. Can narrow search by radius from location.Eventbrite: online platform that facilitates and promotes events & gatherings, by helping people find and attend events that feed their interests, while connecting them with others who share their passions. Particularly good for events where you want to control access and/or charge for admission.NY Hardware Startup: a meetup group in NYC started less than a year ago originally to test the market to see if there was enough of critical mass to start a hardware accelerator within NYC. Has grown to nearly 500 in less than a year thru Meetup and word of mouth. 100+ attendees at each meeting. Group founder is now Director of the Zahn Center, City College of NY’s hardware/maker –based incubator.Maker Faire: regular events hosted in several US cities (SFO, NYC, Detroit, KC, Houston, Tyler TX, Las Vegas) and others around the world for the DIY, maker community. SXSW: a media, film and interactive festival/tradeshow in Austin TX. The interactive portion is increasingly becoming hardware oriented. They host a Start-up villageLinkedIn: you can start groups as a discussion forum to help each other on LI as I did in McHenryCty specifically for the manufacturing base.Twitter: another social media outlet to keep in touch with the community. Many in the DIY/Maker community are hereCP: a crowdsourcing site & platform specifically tailored to creating contest and challenges. NYCEDC has run an average of 3 challenges a year on this site.CG: crowdsourcing site & platform only for Fed govt contracting. Run by CP.Changemakers: crowdsourcing & crowdfunding site & platform to promote awareness and innovations in social change through competitions & challenges, many projects in developing countries. Startup mfg projects have included clean energy, agricultural equipment, drinking water systems. Crowdfunding for incubator in Arizona: manufacturing co-op, incubator and training facility will provide a place to help springboard Arizona's manufacturing industry.Crowdsourcing.org- industry site listing crowdfunding, crowdsourcing companies, industry news, etc.
#19 NYCEDC –using the ChallengePost platform, NYCEDC is sponsoring a contest challenging makers to create new physical products that have commercial potential. 5 finalists by judge panel, 1 finalist by public vote online. All 6 finalist teams will then go through a 5 month accelerator program (at a space donated by a design studio, given $4K budget, $300 in 3D printing services from SW, and an electronics kit) 1 grand prize winner will be selected at the end and given an additional $11K. NYCEDC has run about a dozen challenges on this platform over the past 4 years.
#20 KS: How many of you have heard of KS? Founded 2009. The site's killer feature is its simplicity. Creators describe their project, set a fundraising goal, and announce their target shipping date. Backers pledge money in exchange for rewards like a fresh-off-the-production-line copy of the item being created. Fees @ 5% of funding goal.Product categories: Mostly media & creative arts: Film & Video, music, publishing, art, theater, games. Don’t have a specific category for manufacturing so I have combined Technology and Design categories as a proxy for start-up manufacturing category.Stats are since 2009. $ amounts are totals of successful and unsuccessful campaigns. All projects successful $401M. Success rate is calculated as # successful projects/all projects that have reached their deadline regardless of if successful, unsuccessful, cancelled or suspended. Depending on category, ranges from 27% (Fashion) to 70% (Dance)Design & Technology Stats: $90M in successful projectsInteresting facts: 3 of the Top 10 KS projects are start-up manufacturing related, including: #1 project, the Pebble watch which raised over $10M (goal $100K)#6 was Form1 3D printer developed at MIT $2.9M ($100K goal)#10 was Oculus Rift Virtual Reality Goggles $2.4M ($250K goal)First Hackerspace in Baghdad was funded by Kickstarter in 2012 ($27K goal, raised $29K)Other sites: over 9000 registered sites end of 2012, up 10x since beginning of 2012, mostly in anticipation of the Jumpstart Our Business Startups (JOBS) Act being passed.Only 2000 of those sites have content. Indiegogo:IPI Village: lucrative pre-IPO investment opportunities can now be made directly available to the general public...the 99%... the Crowd. Mission is to give retail investors the opportunity to get in on the ground floor of the IPO investment lifecycle. RocketHub: Keep the funds you raise (not an "all or nothing" model), many hardware/mfg projects, claim lower fees than KSEarlyShares: friends, family, local community, and individuals across the globe will be able to help fund your business in exchange for shares of ownership (equity) in the company. The company’s model is to package multiple investors into single-entity corporations[1] to fund registering businesses, 60 percent of which are established companies with less than $5 million in revenue.JOBS Act: Signed into law April 12, 2012. There are provisions for crowdfunding to exempt from SEC and FINRA regulations:up to $1M in securities when raising funds via a registered crowdfunding platform. yearly aggregate limit on the amount each person may invest in offerings of this type, tiered by the person's net worth or yearly income. The limit ranges from 2% of people earning (or worth) up to $40,000, up to a cap of $10,000 for people earning (or worth) $100,000 or more.“emerging growth companies,” from certain regulatory and disclosure requirements in the registration statement they originally file when they go public, and for a period of five years after that.obligations imposed by Section 404 of the Sarbanes-Oxley Act and related rules and regulations. New public companies now have a two-year phase-in, so this bill would extend that by an additional three years.

START-UP MANUFACTURING: 3D Printing, Fab Labs, Hackerspaces and Crowdfunding

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Editor's Notes