FDM Innovation & Entrepreneurship Scott Crump BSME, Co-Founder & CEO Stratasys

1. FDM Innovation & EntrepreneurshipScott CrumpBSME, Co-Founder & CEO Stratasys

2. Stratasys & UTEP Partnership • 10 years of business & partnering • UTEP has twelve Stratasys FDM Systems • UTEP has been a Beta Site and they do joint development in R&D including: • research • mechanical strength properties & characteristics • build parts for customers

3. FDM Innovation & Entrepreneurship

4. CO-FOUNDERS Scott & Lisa Crump set out to automate the gap between the CAD blueprint and the final manufactured product …. now called Rapid Prototyping

5. The “Start Up” • Built “Toy Froggy” with 2 yr. old daughter - 1988 • Realized layered beads could build a part with a glue gun • Added glue gun to a 2D Pen Plotter = 3D Plotter • For Proof of Concept • In our garage

6. Vision • Offer Engineers a 3D Printer for desktop 3D CAD: • Easy to use - one “build button” from CAD • Automatic build of prototype • Use in the design office • $12,000 Price • Real production grade plastic parts • We kept with the vision

7. 3D Plotter - Vision

8. Operating 3D Plotter prototype

9. The “Start Up” • “3D Plotter” for AutoCAD run on IBM PC • Tested Proof of Feasibility & it worked • We had spent $10,000 so far - the big question: • Do we take the risk of a start up • Quit my job with good income - for no income • Or just forget the idea • Looked easy - but it wasn’t an easy decision • Started up Stratasys on 2nd shift – working 1st shift

10. Lessons Learned for Engineers • Follow your dreams • Clear vision is more valuable than a detailed plan & have faith in your vision • Take as high of a risk as you can stomach and control

11. Emerging History - FDM Technology • I filed for a FDM Technology Patent • It was granted in 1992 • FDM - Fused Deposition Modeling: • Lower acquisition price vs. competition • Production grade plastic parts • Office friendly environment

12. Emerging History - Patented FDM Technology Support Material Modeling Material

13. FDM Filament Spools

14. Lessons Learned • Get Patents to protect global proprietary position • Start ups are a lot about survival and persistence • The entrepreneur is persistent • Cash is KING - you’re in business as long as you have cash

15. Lessons Learned • Keep focused on what value you add to your customer • Price your service and product to the market - not cost • Work with a seasoned Mentor that has done it • Try to have variable cost & low fixed cost

16. Funding - Sold equity as needed - to grow • Lisa & I invested in 1989 • My family invested in 1990 • Talked with 74 Venture groups & we found one • Battery Ventures (VC) invested $1.2M in 1990 • Lisa & I invested again 1992

17. Funding- Sold equity as needed - to grow • Serious problem funding high growth!! • We were growing at 125% per year • Unsuccessful getting $5M private offering • Difficult decision - do IPO or shut the doors • We contacted 23 IPO underwriters nationally • Successful $7M IPO in 1994 • East Coast Underwriter • We had Sales of about $3 million • Stratasys publicly traded on NASDAQ

18. Lessons Learned • Stock options help employees focus & gain • Don’t be afraid to sell equity - 100% of nothing is nothing • Don’t fund long term risk - with debt • We thought we could grow Stratasys with $90,000, it actually required $20M - Hey not all plans work

19. FDM can build working assemblies

20. 3D Printer – Stratasys First to Market $25,000 IPO funded 3D Printer development

21. Enormous Growth Potential Global Engineering Population 28.5 Million Engineers 5 Million MCAD Users Source: Stratasys, CADigest, engineeringtalk.com, Deskeng.com

22. 3D Printer Opportunity AF Systems Today 37,000 5 Million CAD Workstations Worldwide 3D Printer Opportunity >500k Systems at the right price!

23. Currently shipping 2,000 Units per year We have a plan for 5,000 per year My vision is 10,000 per year 3D Printing Vision SSYS

24. 3D Printing SSYS • The question is, how to do 10,000 per year? • For this expansion, we need to: • Improve system quality & our culture • Growth of sales channel

25. Lessons Learned • It’s really all about your team of employees • Hire the right employees the first time • If you don’t know how to hire, use a head hunter • Don’t be cheap with employee salaries • Measure and share critical business metrics

26. Traditional Technology “S” Curve The 3D Printer fits aTraditional Technology “S” Curve

27. Stratasys Sales Growth (in Millions)

28. Industry Overview

29. Industry Overview

30. Cross the Chasm with a Whole Product

32. Whole Product Criteria • Correct price • Correct ongoing operating cost • Product reliability • Ease of use • Correct sales channel • Product speed • Part quality • Correct market application • Competitive positioning

33. Whole Product Criteria - FDM-3000 Scale: 10 = High to 0 = Low

34. HP Agreement Stratasys and HP Agreement:Taking 3D Printing Mainstream

35. HP Agreement HP will sell our 3D printers as HP brand. Stratasys will develop and manufacture for HP based on proprietary Stratasys FDM technology. Part of $24 billion HP’s Graphic Solutions Business HP’s goal is worldwide distribution of 3D printers.

36. 3D Printing Opportunity + + Right Solution Right Channel Millions of Potential Users

37. FDM Medical

38. Application Success Story For Medical Tools, Functional Prototypes Improve Design – Ratchet for Spinal surgical procedures “At Medtronic – Sofamor Danek, cutting edge medical technology takes new shape, thanks in part to FDM prototyping technology, forward-looking companies seek forward-looking partners.” says RP designer, David Freeman.

39. FDM Future So how will FDM expand in the future?

40. Futuristic FDM • Architectural models • FDM for the home hobbyist • Metal FDM parts • Nano and composite build materials • FDM fabricated semi-conductor chips

41. Direct Digital Manufacturing • Fully automatic touch-less labor products • Production of end use parts • Hydro forming sheet metal fixtures

42. Sheet Metal Hydro Forming FDM Hydro-form Example • Male mold with intensifier • FDM trim tools for sheet metal blanks or formed sheet part • Coordinated structure removal and installation tooling

43. 3D Production Systems Direct Digital Manufacturing End Use Parts (EUP) 200mc™ 360mc™ 400mc™ 900mc™ $100,000 tool savings using DDM process for one part

44. Questions