Right in the middle of Twin Cities Startup Week, one of the companies that hit the radar a few years ago at the event is about to get a new infusion of capital.
Chromatic 3D Materials, which uses 3-D printing to produce specialized molds for med-tech firms and other manufacturers, is about to close a new round of $5 million in venture capital, chief executive Cora Leibig said.
The Golden Valley-based company was a finalist in the 2017 MN Cup, the annual business competition for seed money that's run by a public-private partnership and administered through the U's Carlson School of Management. The next year, it raised $3 million in its first round with outside investors.
"MN Cup also helped us develop a solid business plan and realistic financial projections," Leibig said. "That raises the profile with investors. And it helped us raise that $3 million in 2018."
A materials scientist who started at Dow Chemical, Leibig expects to double the size of her organization to about 25, including several in Germany, and hit annual revenue of $3 million by 2023.
She's starting to blaze a new, albeit small, trail in the fast-growing industry of 3-D printing of prototype molds and short-order runs of parts for medical, transportation and other industries. Chromatic makes software and a "thermoset polymer" that is generally more flexible and stronger than typically used "thermoplastic."
"One of my business mentors in Minnesota Cup, Don Keysser, an investment banker, introduced me to my first commercial customer, Pro3dure, which is based in Germany," Leibig said in a phone interview last week from Germany, where she visited that customer and attended a trade show.
Scott Giller, who runs the Eden Prairie-based U.S. operations for Pro3dure Medical, has been doing business with Chromatic for three years.
"Chromatic helped us develop a material we use in an audiology product," Giller said. "The customer preprints a cast mold of somebody's ear and injects a material that becomes flexible upon wearing it. Cora helped us with a cast material that's water soluble."
Leibig noted that Chromatic is not the cheapest maker of rubber-type parts. It is relatively fast, flexible, versatile and makes stronger parts, customers say.
And it beats the monthslong wait times from Asian providers for smaller batches of essential products. For example, Chromatic supplies the German Rail Service with various-sized brake-valve seals. It can't afford sidelined locomotives. A longterm contract that Chromatic seeks with German Rail would be worth $3 million alone, according a recent Chromatics investor pitch.
PriceWaterhouseCoopers predicts that 25% of spare parts will be 3-D-printed by 2025.
And Leibig said the proprietary resins in its products and precise software also is greener and generates much less waste than competitors.
The firm sources its 3-D printers from JuggerBot 3D of Youngstown, Ohio.
"Cora is a renowned material scientist and Chromatic develops amazing thermoset materials," said Zac DiVencenzo, founder and CEO of JuggerBot 3D. "There were not many machines that could process their material. We built the machine to do it. They have the secret sauce and Cora is attracting investment and taking it to the next level."
There are numerous finalists in MN Cup and the Meda Million Dollar Challenge this week hoping to win or at least be recognized by investors and customers.
Jessica Berg, director of MN Cup, also noted that the competition has awarded more than $400 million in seed capital to dozens of companies since it started 16 years ago. And Cup entrants have raised more than $600 million in capital after the competition from angel investors, venture capitalist and other institutions.
"The results have been good for these companies and Minnesota," Berg said. "We are industry-agnostic. There's a lot of diversity."
MN Cup supports early-stage founders of less than $1 million in annual revenue.
Past winners include 75F, When I Work, StemoniX, Sezzle, Carrot Health and Rebiotix.
"We have our largest-ever number of applicants and participants," Berg said. "And our applicant pool was the most diverse with 45 percent female and 36 percent people of color.''