The manufacturing industry took a hard hit amid the COVID-19 pandemic, but there are signs of recovery -- helped in part by new efforts to make factories more responsive to the fluctuations in demand that come with the ups and downs of the shifting economy, virus outbreaks and more. Today, a business that is positioning itself as part of that new guard of flexible custom manufacturing -- a startup called Fractory -- announced a Series A of $9 million (€7.7 million) that underscores the trend.
The funding is led by OTB Ventures, a leading European investor focussed on early growth, post-product, high-tech startups, with existing investors Trind Ventures, Superhero Capital, United Angels VC, Startup Wise Guys and Verve Ventures also participating.
Founded in Estonia but now based in Manchester, England -- historically a strong hub for manufacturing in the country, and close to Fractory's customers -- Fractory has built a platform to make it easier for those that need to get custom metalwork to upload and order it, and for factories to pick up new customers and jobs based on those requests.
Fractory's Series A will be used to continue expanding its technology and bringing more partners into its ecosystem.
To date, the company has worked with more than 24,000 customers and hundreds of manufacturers and metal companies, and altogether it has helped crank out more than 2.5 million metal parts.
To be clear, Fractory isn't a manufacturer itself, nor does it have plans to get involved in that part of the process. Rather, it is in the business of enterprise software, with a marketplace for those who are able to carry out manufacturing jobs -- currently in the area of metalwork -- to engage with companies that need metal parts, using intelligent tools to identify what needs to be made and connecting that potential job to the specialist manufacturers that can make it.
The challenge that Fractory is solving is not unlike that faced in many industries that have variable supply and demand, a lot of fragmentation and a generally inefficient way of sourcing work.
As Martin Vares, Fractory's founder and CEO, described it to me, companies that need metal parts might have one factory they regularly work with. But if there are any circumstances that might mean that this factory cannot carry out a job, then the customer needs to shop around and find others to do it instead. This can be a time-consuming and costly process.
"It's a very fragmented market and there are so many ways to manufacture products, and the connection between those two is complicated," he said. "In the past, if you wanted to outsource something, it would mean multiple emails to multiple places. But you can't go to 30 different suppliers like that individually. We make it into a one-stop shop."
On the other side, factories are always looking for better ways to fill out their roster of work so there is little downtime -- factories want to avoid having people paid to work with no work coming in, or machinery that is not being used.
"The average uptime capacity is 50%," Vares said of the metalwork plants on Fractory's platform (and in the industry in general). "We have a lot more machines out there than are being used. We really want to solve the issue of leftover capacity and make the market function better and reduce waste. We want to make their factories more efficient and thus sustainable."
The Fractory approach involves customers -- today those customers are typically in construction, or other heavy machinery industries like shipbuilding, aerospace and automotive -- uploading CAD files specifying what they need to be made. These then get sent out to a network of manufacturers to bid for and take on as jobs -- a little like a freelance marketplace, but for manufacturing jobs.
About 30% of those jobs are then fully automated, while the other 70% might include some involvement from Fractory to help advise customers on their approach, including in the quoting of the work, manufacturing, delivery and more. The plan is to build in more technology to improve the proportion that can be automated, Vares said. That would include further investment in RPA, but also computer vision to better understand what a customer is looking to do, and how best to execute it.
Currently, Fractory's platform can help fill orders for laser cutting and metal folding services, including work like CNC machining, and it's next looking at industrial additive 3D printing. It will also consider other materials like stonework and chip making.
Manufacturing is one of those industries that has in some ways been very slow to modernize, which is not a huge surprise: equipment is heavy and expensive, and generally the maxim of "if it ain't broke, don't fix it" applies in this world. That's why companies that are building more intelligent software to run that legacy equipment more efficiently are finding some footing.
Xometry, a bigger company out of the U.S. that also built a bridge between manufacturers and companies that need things custom-made, went public earlier this year and now has a market cap of over $3 billion. Others in the same space include Hubs (which is now part of Protolabs) and Qimtek, among others.
One selling point that Fractory has been pushing is that it generally aims to keep manufacturing local to the customer to reduce the logistics component of the work to cut back on carbon emissions, although as the company grows it will be interesting to see how and whether it adheres to that commitment.
In the meantime, investors believe that Fractory's approach and fast growth are strong signs that it's here to stay and make an impact in the industry.
"Fractory has created an enterprise software platform like no other in the manufacturing setting. Its rapid customer adoption is clear demonstrable feedback of the value that Fractory brings to manufacturing supply chains with technology to automate and digitize an ecosystem poised for innovation," OTB Ventures' Marcin Hejka said in a statement. "We have invested in a great product and a talented group of software engineers, committed to developing a product and continuing with their formidable track record of rapid international growth