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3D printing has been making a comeback recently. Many startups entered the public market by partnering with SPACs (Special Purpose Acquisition Companies). Desktop metal (NYSE: DM) merged with Trine Acquisition last year and Markforged announced its deal with one (NYSE: AONE) last month.
SpaceX vendor Velo3D is now joining the fight, confirming recent reports it will merge with JAWS Spitfire acquisition (NYSE: SPFR) in a $ 1.6 billion deal. Here’s a look at Velo3D.
Why Velo3D is merging with JAWS Spitfire (SPFR)
Velo3D specializes in 3D printers for high quality metals and is known as the Sapphire printer range. The company’s offers are therefore useful for a large number of industrial applications such as microturbines or heat exchangers. Thanks to Velo3D technology, numerous parts can be combined into one unit. This enables simpler constructions and higher efficiency with simultaneous cost savings.
The company’s commercial launch came in late 2018, and Velo3D has since gained many high profile clients, including SpaceX and Elon Musk’s Industrial Behemoth Honeywell (NYSE: HON) among others. SpaceX used technology from Velo3D to create its Raptor engine, which powers the spacecraft the rocket company is developing in hopes of sending people into space. SpaceX is also an investor in Velo3D.
Velo3D had raised $ 28 million in a Series D funding round less than a year ago, although the valuation it received in the private market remains unclear. This capital increase had raised Velo3D’s total funding to $ 138 million at the time.
The aim is to move from a pre-sale model to a recurring revenue model, which Velo3D says can be achieved more quickly with the SPAC transaction. In terms of current financial data, the company had $ 19 million in revenue in 2020, of which only $ 300,000 was annual recurring revenue (ARR). Velo3D projects ambitious growth in the coming years and estimates that sales will be $ 546 million in 2025, including $ 213 million in ARR.
Velo3D is preparing to launch its newest printer, the Sapphire XC, in the fourth quarter of 2021. This product has a larger format that allows for larger build volumes and higher productivity. Customer demand for Sapphire XC is strong. Existing pre-orders already represent the first two full production quarters. New pre-orders are expected to be delivered in the second quarter of 2022. Sapphire XC has a current backlog of $ 47.5 million, according to Velo3D.
Time to Buy SPFR? Details about the Velo3D SPAC
The combination will give Velo3D a post-money enterprise value of $ 1.6 billion, or three times its estimated sales by 2025. The transaction is expected to close in the second half of 2021 and the combined company will be listed under the ticker symbol ” VLD “act.
The SPAC currently has $ 345 million in cash while JAWS has provided Spitfire with an additional $ 155 million in PIPE (private investment in public equity) funding. If you add it all up, JAWS Spitfire brings a total of $ 500 million to the table. JAWS Spitfire’s public investors will end up owning approximately 16.5% of the combined company.
Investor sentiment about the deal was subdued, and SPFR shares fell 5% after the merger was announced.
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