SpaceX has secured a license and services agreement for Velo3D for $8 million.
Velo3D, a metal additive manufacturing technology company, is known for its unsupported printing and complex geometry manufacturing capabilities, primarily for the aerospace, energy, industrial and defense sectors. The company went public on the New York Stock Exchange in September 2021 through a SPAC merger. Recently, Velo3D was forced to delist from the NYSE due to its average global market capitalization falling below the minimum requirement of $15 million for 30 consecutive trading days, and has now moved to the OTC market.
No company has yet acquired Velo3D, but SpaceX is likely to be a potential acquirer.
SpaceX doesn’t want to lose Velo3D as a key partner
After helping Velo3D get off the ground successfully, SpaceX is once again stepping up to the plate to support the company as it faces a difficult time. According to the repository, SpaceX reached a significant agreement with Velo3D, including a $5 million payment to license its technology, in addition to a $3 million payment to Velo3D to provide related engineering support and other service costs.
SpaceX, founded by Elon Musk, was one of the first customers of Velo3D in the early days of its establishment, and the three-year-long bonding between the two parties has resulted in a deep bonding. The high dependency brought by this cooperation makes it very costly to change partners, whether in terms of technology adaptation, supply chain integration, or production efficiency.
SpaceX, a global leader in aerospace innovation, has just announced that its Polaris Dawn has successfully completed the first commercial spacewalk mission for humans. The technology behind this great commercial success is essential. Last month, SpaceX rolled out its first Raptor 3 rocket engine. Compared to Raptor 1 and Raptor 2, Raptor 3 is the ultimate in structural simplicity. Musk said, “SpaceX has the most advanced metal 3D printing technology in the world.”
And it is likely that the technology referred to here is that of Velo3D. SpaceX has reportedly purchased at least 22 of Velo3D’s Sapphire Laser Beam Powder Bed Fusion (PBF-LB) metal additive manufacturing machines for the production of a range of critical components, including the Raptor 3 engine.
Partnering rather than acquiring, SpaceX is more about being prepared
Under the new agreement, SpaceX will use Velo3D’s technology extensively in its manufacturing processes, particularly in the production of rocket and spacecraft components. The agreement grants SpaceX a worldwide, non-exclusive, royalty-free, perpetual license to use the technology. As a result, SpaceX will be able to use, copy and modify Velo3D’s technology for internal production and manufacturing. At the same time, Velo3D retains intellectual property rights to its core technology.
In other words, the agreement allows SpaceX to build on Velo3D’s technology and use it internally, but the scope of use will be strictly limited to rocket- and spacecraft-related manufacturing, thus ensuring that Velo3D maintains control over external applications of the technology. In addition, any improvements SpaceX makes to the technology in the course of its use will remain entirely the property of SpaceX and need not be shared with Velo3D.
In order to ensure the smooth progress of the cooperation, Velo3D will provide SpaceX with comprehensive technical support, especially engineering support, to help SpaceX better integrate additive manufacturing technology into its manufacturing process. Velo3D commits to continuously improving and updating its technology within 12 months after the signing of the agreement to ensure that SpaceX will have timely access to the latest technological achievements.
Through the above agreement, it can be seen that SpaceX hopes to avoid the impact of Velo3D’s possible malfunction or closure due to this cooperation, and to ensure the stable supply of key technologies, so as to guarantee that the manufacturing of its rocket engines and other core components will not be interfered with.
What is the final destination for Velo3D? There’s no answer yet
It’s clear that the $8 million provided by SpaceX will not be able to support Velo3D’s long-term operations. The funds are more for emergency purposes to help the company maintain operations in the short term. It is expected that these funds will soon be used to pay off debts and maintain daily operating expenses. Although this can temporarily relieve Velo3D’s financial pressure, it is not enough to solve its fundamental financial problems, and the company still needs to find other more sustainable solutions to ensure long-term survival and development.
We speculate that SpaceX may be evaluating the feasibility of acquiring Velo3D outright to ensure long-term ownership and autonomous control of its technology. However, another possibility is that once Velo3D exits the market, SpaceX could master and iteratively upgrade Velo3D’s technology through in-house R&D to meet its own needs.
Ultimately, Velo3D’s technology won’t go away either way, or will simply continue to exist in a different way.
