Start Ups, Tariffs, & AI: What’s Really Shaping the Future of Manufacturing?
In a recent, insightful episode of the Additive Snack Podcast, recorded live at Rapid, host Fabian Alefeld welcomed back Arno Held, co-founder and Managing Partner of AM Ventures.
This discussion offered a candid look into the current state of the additive manufacturing (AM) startup ecosystem, the impact of geopolitical shifts, the transformative potential of artificial intelligence (AI), and the challenges and opportunities that lie ahead.
The Current Climate: Pressure, Promises, and Glimmers of Hope
Arno Held acknowledged the "pretty big chaos" and significant changes that have characterized the AM industry for the past year and a half. The financial pressure on startups is mounting, with many promises from previous years not fully materializing in the last six quarters. This has led to high expectations from investors for returns and for companies to deliver on past growth projections.
While some board meetings and Q4 reportings are beginning to show "good messages" with larger corporations engaging in innovative projects, Held believes that while the industry might be at the bottom, it's not necessarily through it yet. The key question is the duration and flatness of this bottom phase. He expressed that, while things feel like they are through the worst, the challenge remains for cash-constrained startups to survive until the anticipated brighter future, acknowledging that not all will make it.
Geopolitics, Defense, and Reshoring: A Shifting Terrain
The conversation touched upon the current political environment, including tariffs and increased defense spending. Held emphasized that the defense sector has been a crucial lifeline for the AM industry over the past year. While tariffs on intercontinental cooperation pose challenges to this global industry, he expressed cautious optimism that solutions will be found.
More significantly, Held noted that recent geopolitical shifts and US administration policies have catalyzed positive developments in Europe. He observed an increasing trend of European countries "getting things sorted out," with heightened cooperation and defense spending picking up. He believes that, in the end, these developments, though chaotic in the short term, will benefit AM companies and help the industry refocus on business.
AM Ventures: Fueling Additive Innovation
For those unfamiliar, Arno Held described AM Ventures as a specialized venture capital fund with a volume of 100 million euros, backed by approximately 35 European families and a few corporations. The firm, co-founded by Held and Johann Oberhofer, leverages its deep industry expertise to invest in early-stage (seed, Series A) AM startups across hardware, software, materials, and applications. Their mission is to provide not just funds, but also access to their extensive network and expert guidance to foster success.
Celebrating its 10th anniversary (founded in March 2015), AM Ventures has scouted over 3,000 startups, giving them an unparalleled overview of the AM landscape. Held noted a significant trend: an initial dominance of hardware innovation has shifted through software and now strongly towards an application focus. The current wave involves exploring how new technologies, particularly AI, can enhance these applications and broaden the technology's acceptance.
The Rise and Resilience of Application-Focused Startups
Revisiting a theme from their previous conversation, Held confirmed that application-focused startups are currently the best-performing ones in their portfolio. Companies like Additive Drives (electric motors), Conflux Technology (heat exchangers), and Vectorflow (airflow measurement devices) are scaling quickly and reaching profitability. This success validates the trend and underscores AM's capability to birth profitable companies around innovative applications, a testament to the technology's scalability. While more such successes are needed, these examples serve as vital inspiration.
AI: The Missing Link to Scale?
Held posited that AI could be the "missing link to success and to the great scale" the AM industry has long awaited. Given AM's data-heavy nature, AI can dramatically accelerate the condensation of vast amounts of data into valuable learnings, a process that traditionally takes decades of human experience.
He highlighted two promising AI companies: Euler3D and 1000 Kelvin. Euler3D analyzes the powder bed and build process to identify machine conditions and defect sources beyond human capability, thereby increasing trust, performance, and productivity. 1000 Kelvin, a Berlin-based startup, uses physics-based AI to accelerate material and parameter development, drastically reducing the man-years typically required by companies like EOS to qualify new materials.
Held believes these AI-driven improvements in quality, reliability, and development speed are crucial for AM to diversify into more verticals and applications. Furthermore, startups, being "designed on a green field," can more easily integrate AI into their processes — from R&D to HR — giving them a significant head start over incumbents.
Taking on Known Startup Challenges: Valuation, Debt, and Exhaustion
The discussion then turned to the significant challenges facing existing startups. Many companies funded during the hype phase (up to 2021–2022) at high valuations now face a starkly different refinancing landscape. Despite potentially overachieving on their plans, deflated market valuations and revenue multiples mean subsequent funding rounds could be at lower valuations. To avoid dilution, many founders accepted debt rounds or convertible loans. Now, as these companies need refinancing, they are often loaded with debt, leading to difficult discussions around down-rounds and founder dilution.
Compounding this is the issue of founder and team exhaustion. Unmet revenue projections and tough shareholder discussions, sometimes including multiple rounds of cost-cutting, have taken a toll on morale. Held emphasized that the way out is highly case-specific, requiring deep analysis and a strongly aligned shareholder base. One aggressive strategy is for stronger companies to become consolidators, acquiring competitors in a suffering market segment — a trend already visible in post-processing and materials.
Global Perspectives and Future Growth
AM Ventures maintains a global outlook, with investments currently spanning Austria, Australia, Germany, Switzerland, the UK, and the US. Held characterized the US startup culture as more volatile than Europe's, with higher highs and lower lows. After a quiet period, he sees the US AM startup scene beginning to pick up again, with new companies being founded and funded at levels not seen in recent quarters.
Looking ahead, Held anticipates that while AI startups have a bright future, the ultimate goal remains manufacturing valuable end-use parts. He foresees growth in applications beyond defense, including clean technology, new energy generation methods, and innovative transportation solutions. While the journey might take a "couple of tough quarters" more, his conviction remains "unbroken that this technology is changing the world," driven by the fundamental trend of digitizing manufacturing.
Connect and Learn More:
For more insights from Arno Held and to explore the work of AM Ventures:
Listen to the full Additive Snack Podcast episode.
Learn more about Arno G. Held and his work at AM Ventures.
Connect with Arno Held on LinkedIn.
