Although the Covid-19 pandemic had a devastating impact on the manufacturing industry, there are some signs that it is starting to recover. This is partly due to new efforts to make factories more responsive and flexible to fluctuations in demand. Fractory, a startup that is positioning itself to be part of the new guard of flexible custom-manufacturing, has announced a Series A of $9million (7.7million) to confirm this trend.
OTB Ventures is leading the funding. This investor is a leader in Europe and focuses on high-tech start ups with early growth. Other investors include Superhero Capital (UK), United Angels VC (US), Startup Wise Guys (US), and Verve Ventures.
Although founded in Estonia, Fractory is now based in Manchester. England has been a strong manufacturing hub in Estonia. Fractorys customers are close to Fractorys customers. Fractory built a platform that allows customers to upload custom metalwork and factories to take up new orders based on these requests.
Fractorys Series B will be used for the expansion of its technology and to attract more partners to its ecosystem.
The company has worked with over 24,000 customers, hundreds of metal companies and manufacturers to date and has produced more than 2.5 million parts.
Fractory is not a manufacturer and has no plans to become one. It is primarily in enterprise software and has a marketplace that allows those who can perform manufacturing jobs in the metalwork area to connect with companies that require metal parts. Intelligent tools are used to identify the job requirements and then link it to the right specialist manufacturers.
Fractory's challenge is similar to the one faced by many industries with variable supply and demand, lots of fragmentation and inefficient sourcing.
Martin Vares (Fractorys founder, MD) described it to me as: Companies that need metal parts manufactured might have one factory they work with regularly. If the factory is unable to perform a job due to any reason, the customer should shop around for other factories. This can be time-consuming and expensive.
He said that it is a fragmented market with many manufacturing options. The connection between these two is complex. It used to take multiple emails to send out requests to external suppliers to get something done in the past. You can't contact 30 different suppliers individually. It's a one-stop-shop.
However, factories are constantly looking for ways to increase their work force so that there is minimal downtime.
Vares stated that the average uptime capacity of metalwork plants on Fractorys platform (and the industry overall) is 50%. There are many more machines than needed. We want to eliminate the problem of excess capacity, improve the market's efficiency and reduce waste. We want their factories to be more efficient and therefore more sustainable.
Customers are usually in construction or other heavy machinery industries, such as aerospace, automotive, and shipbuilding. They upload CAD files detailing what they need. The files are then sent to a network to be bid on and taken on by manufacturers. It's a bit like a freelance market, but for manufacturing jobs. The 30% that are fully automated will be replaced by Fractory, which might help customers with their approach to quoting, manufacturing, and delivery. Vares stated that the plan is to add more technology to increase the automation rate. This would include more investment in RPA but also computer vision to better understand the customer's needs and determine how to best execute them.
Fractorys can currently fill orders for laser cutting, metal folding, including work by CNC machining. It is now looking into industrial additive 3D printing. It will also be studying other materials, such as stonework and chip manufacturing.
Manufacturing is one industry that has been slow to modernize. It is because equipment is expensive and heavy. The rule of thumb "if it isn't broke don't fix it" applies in this world. Companies that create intelligent software to run legacy equipment better are starting to gain ground. Xometry, a larger company based in the U.S., which has also built a bridge between manufacturers, companies that require custom-made items, went public earlier in the year. It now has a market capitalization of more than $3 billion. Hubs, which is now part Protolabs, and Qimtek are other companies in this same space.
Fractory's main selling point is its commitment to keeping manufacturing close to customers to reduce carbon emissions. However, it will be interesting to observe how the company grows to ensure that this remains true.
Investors believe that Fractorys fast growth and its approach to the industry are signs it is here to stay.
Fractory has developed a unique enterprise software platform that is unrivaled in the manufacturing industry. Marcin Hejka stated that the rapid adoption of Fractory's software platform by customers is a clear indication of the value it brings to manufacturing supply chains. Fractory uses technology to automate and digitalise an ecosystem that is poised for innovation. We invested in a great product, and a talented team of software engineers. They are committed to continuing their impressive track record of international growth and developing a product.
