Breaking the Bottleneck | Issue 06
[12/22] PTC & ServiceMax, Deloitte's 2023 Manufacturing Outlook, Hadrian
Breaking the Bottleneck is a monthly newsletter with perspectives, interviews, news, funding announcements, and a manufacturing startup database. Check it out here!
Production Perspectives - PTC & ServiceMax 💭🎙️
A couple of weeks back PTC announced an agreement to acquire ServiceMax for approximately $1.46 billion, a slight premium on the 10-year average NTM revenue multiple. I thought it would be interesting to examine the transaction and see what might be in store for PTC moving forward.
PTC’s New Addition to Their Digital Thread
In the past few years, PTC has long been pursuing a strategy to be the digital backbone of the hardware development lifecycle creating a “closed-loop” for hardware vendors. The journey which began in 2019 with the acquisition of Onshape has only accelerated in 2022 with the acquisition of Cloudmilling bringing cloud-native CAM to Onshape and the acquisition of Intland to streamline Application Lifecycle Management for hardware engineers. However, even with these two acquisitions, PTC was missing a category-defining product across three components of the lifecycle, Architecture & Requirements, Procurement, and Field Service Management (FSM).
Architecture & Requirements: N/A
Application Lifecycle Management: Codebeamer (Formerly Intland Software)
Field Service / Service Lifecycle Management (SLM): Servigistics
With the ServiceMax acquisition, they expanded upon their SLM Servigistics product with a new category-defining FSM product to help vendors optimize device performance and extend device lifespan. Furthermore, ServiceMax will contribute approximately $160 million in ARR to PTC's record bookings in Q4’22 enabling PTC to cross the $1.0 billion ARR milestone in the next fiscal year. ServiceMax’s product provides organizations with multi-level hierarchical views, real-time equipment management, work orders & coverage management, condition-based maintenance plans, returns management, depot repair, and mobile technician enablement. With these capabilities, a Medical Device manufacturer now can fully design a Class 2 device with Creo or Onshape, facilitate design reviews & ensure GMP/compliance with Arena, capture IoT & time-series production data with Thingworx and Kepware, and maintain a post-factory system of record for monitoring/servicing products into customer use with ServiceMax.
It took 10 quarters to get from peak to trough in startup valuations during the Internet Bubble and 9 quarters from the high in 2007 after the Great Recession. Three quarters in startup valuations continue to retrench and advanced manufacturing deal size continues to drop, down 18% from full-year 2021. This only offers up more opportunity for PTC to consolidate and drive further margin expansion across their current suite of products. I believe the next two products PTC will target will sit across either Requirements Management (Jama), to drive cycle time reduction and quality improvement on initial product design, or Procurement (Factor, Precoro) to aid with supplier selection and integrate order/parts tracking. I am excited about where PTC goes next as it continues to compete with Dassault Systèmes and Siemens.
What I Enjoyed Reading This Month🏭🗞️🔬
Executing a Modern American Industrial Strategy by NEC Director Brian Deese [City Club of Cleveland]
Why Zero Trust Security is Needed in Manufacturing [Venturebeat]
ABB Investment In EV Charger Manufacturing [Cleantechnica]
US Retailers Shifting Product Capacity Away from China [Bloomberg]
Climate Change’s Impact on Manufacturing [Manufacturing Dive]
Heat Pump Manufacturers $250M DOE Injection [Manufacturing Dive]
The Value of Data and Human Experience in Manufacturing [Forbes]
2023 Manufacturing Outlook [Deloitte]
Mindshare with Manufacturing CEOs [Manufacturer’s Alliance]
A Running Look at the Manufacturing Labor Market [Manufacturing Dive]
Manufacturing Agility Assessment [The Manufacture & HSO]
November’s Manufacturing Deals 💰
Acerta Analytics - A startup that provides integrated insights into part quality that will optimize production and improve throughput using machine learning and AI
$7.82 million [Series B] - Co-Led by BDC Capital's Industrial Innovation and Thrive Venture Fund and joined by OMERS Ventures and StandUp Ventures
AMFG - A Manufacturing Execution System (MES) & workflow automation software for 3D printing
$8.5 million [Series A] - Led by Intel Capital
Hadrian - A startup developing automated manufacturing plants for the aerospace and defense industries
$38 million [Series A] - Led by Lux Capital and joined by 28 additional investors
Eliyan - A startup that connects chiplet components using standard chip packaging, to create faster-performing and more energy-efficient chips
$40 million [Series A] - Led by Intel and Micron and joined by Cerberus, Tracker Capital, and Celesta Capital
Pelico - A French factory operations SaaS platform that empowers manufacturers to deal with rising levels of complexity and volatility in their operations
$18 million [Series A] - Co-Led by 83 North and Serena and joined by Cerberus, Tracker Capital, and Celesta Capital
Software Defined Automation - A startup providing Industrial-Control-as-a-Service for automation engineers by turning Programmable Logic Controllers (PLCs) into software functions
$10 million [Series Seed] - Led by Insight Partners and joined by Baukunst VC, Fly Ventures, and First Momentum.
Zetwerk, an Indian B2B marketplace for manufacturing inputs, agreed to buy Unimacts, a Lexington, Mass.-based parts sourcing solutions for renewable energy companies.
$39 million [Acquisition]- The acquisition is Zetwerk’s fourth in recent months
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