MacroFab, a leading electronics manufacturing platform, has recently secured a $15 million Series B funding round, a success that underscores the momentum of the digital transformation of manufacturing.
The company brings cloud-based, manufacturing-as-a-service (MaaS) solutions to the electronics industry. On its platform, companies can upload component designs, obtain quotes, place orders and follow the progress towards delivery. Companies can price and order a wide range of parts and products, from printed circuit boards (PCB) to fully assembled and packaged electronics products.
MacroFab’s fast growth reflects three key ingredients:
First: the ability to unlock new efficiencies through digital solutions. This is a defining characteristic of digital-industrial innovations, and here MacroFab’s approach in the electronics sector mirrors that deployed in industrial manufacturing by companies like Fictiv, Xometry and Protolabs. By connecting demand and supply in real time, MacroFab’s platform improves capacity utilization, allowing companies to accelerate the development of new designs and to scale production at a faster pace. In a recent EMSNOW interview, MacroFab’s CEO Misha Govshteyn notes that electronics manufacturing capacity utilization in North America runs at only about 60%, leaving massive scope for efficiency gains.
Second: the right tools to improve supply-chain efficiency and resilience in response to structural changes in global trade and geopolitics. Even before the Covid-19 pandemic struck, global supply chains had been disrupted by an accelerating trend towards protectionism. At the same time, digital innovation on one side and rising incomes in China and other emerging markets on the other have greatly reduced the importance of lower labor costs in determining where a production plant should be located. Govshteyn confirms that many of MacroFab’s clients have been looking to re-shore production to North America or Mexico in order to be closer to their own final customers while reducing the exposure to tariffs or other protectionist measures. Moreover, by relying on a manufacturing platform with over seventy-five factories in the US and Mexico, companies gain much greater flexibility in allocating production. This flexibility has already proved crucial for companies that now need to meet a massive surge in demand as the economy enters its post-pandemic recovery.
Third: the chance for electronics manufacturing companies to gain much better visibility on their supply chain. The tools on MacroFab’s platform allow customers to have much better real-time information on where their components are in the production and delivery cycle, and on the state of their inventories.
MacroFab’s successful Series B round, and the quality of the investors involved, are a testament to the growing confidence in the industry’s digital transformation; they also underscore the ecosystem approach that defines this transformation.
Edison Partners, which led the funding round, is an early growth investor that focuses on high-growth companies; their involvement, says Govshteyn, signals that the business model is now well defined, and that investors see it as the right bet on important secular trends like reshoring and digital efficiency in electronics manufacturing. Prior investors like ATX Venture Partners also participated in the round, demonstrating their continued confidence in MacroFab’s growth path.
Altium Limited, which joined the funding round as a strategic investor, is a cloud-based electronics design platform which is very active in the manufacturing and supply chain space and has been collaborating with MacroFab for some time. “The future is not just design, it’s design plus manufacturing” says Govshteyn in the EMSNOW interview. The collaboration between the two companies represents a joint conviction bet that connecting design, manufacturing and supply chain solutions is the best way to accelerate innovation and boost efficiency.
Is this confidence in MacroFab’s growth potential justified? Misha Govshteyn notes that the mid-volume electronics manufacturing market in North America is worth over $100 billion, and that digital manufacturing models could easily aim to take about one-fifth of it before their growth slows down and competition gets tougher. MacroFab, which has been growing at an over 100% pace recently, aims to deploy the new funding to hire more talent across engineering, R&D, product management, sales and marketing, and to launch a second distribution center in Mexico (the current one is in Houston, TX), so as to stay ahead of the market.
Most importantly, the trend that MacroFab is betting on appears well entrenched. Globalization has entered a new phase, where protectionism and strategic national interests are set to keep playing a stronger role. The disruptions of recent years have persuaded more and more companies to restructure and localize their supply chains so as to be closer to customers and less exposed to various trade shocks. And manufacturing platforms offer increasingly attractive benefits in terms of diversification and speed. Companies like MacroFab are playing a major role in accelerating this transformation, and well positioned to reap the benefits.