The $100m deal for Estonia's 'Facebook for engineers'
16 September was a big day for the Estonian startup scene: GrabCAD, one of the most promising startups founded in Estonia in recent years, which has also been called 'Facebook for engineers' announced that it's going to be acquired by US 3D printing technology company Stratasys.
The value of the deal wasn't publicly disclosed, but according to reports, Stratasys paid around $100m for the company to outbid Adobe and Autodesk, which Forbes said have shown interest in the startup. GrabCAD last year formed a partnership with the latter to connect its AutoCAD 360 and Autodesk Fusion applications to GrabCAD's community and tools.
The deal was good news not only for the investors Matrix and Charles River which backed the company, but also to the state-run Estonian Development Fund's investing arm SmartCap, which was also one of the first investors.
"The main reason why [the] Estonian Development Fund was founded in 2006 was to help companies like GrabCAD, which are developing their own unique product, to emerge," said the head of the fund Pirko Konsa.
"Every successful exit such as Skype or Modesat [an Estonian communications technology company which was sold to Xilinx in 2012] has brought a development unit of some reputable company to Estonia. Also, another experience of how to build up an innovative company is gained."
GrabCad was founded five years ago in Estonia by two young mechanical engineers, Hardi Meybaum and Indrek Narusk, who decided to solve a big problem in the industry. They built a co-operation platform for CAD engineers, which contains a big library of free-to–use CAD-models and projects in order to save engineers thousands of working hours as well as money, because rival libraries charge for access to their projects and models.
The concept was successful — in just a few years, GrabCAD's engineer community has grown to more than 1.5 million members worldwide. They can access the library, co-operate on different projects and share their experiences with each other. Right now, there are more than 500,000 CAD designs available for download and nearly 50,000 file downloads per day.
In the spring of 2013, the startup started to offer a product named Workbench, a cloud-based collaboration tool that enables engineers and designers to share, manage and view and CAD files and other design data. Workbench allows multiple engineers to work on files at the same time without overwriting each other's work, trying to replace the often costly and complex product management data products.
GrabCAD also offers engineering challenges to its community — the engineers are given certain amount of time to solve a practical problem proposed by different companies. The company then gives feedback and chooses the best solution. Among others, this opportunity to use the best experiences and knowledge of a big community of professional engineers has been used by General Electric which, according to Meybaum, is the company's biggest client at the moment.
Although it all started in Estonia, the company decided to moved its headquarters abroad three years ago. According to Meybaum, the city of Boston was chosen in order to be near to the clients and useful networks as most of the of GrabCAD's clients are located in the US. Like another successful Estonian startup ZeroTurnaround, GrabCad didn't want to move to Silicon Valley, because the company isn't aiming for the consumer market, it earns money mostly from the engineering companies paying a monthly fee for the tools it provides. And like ZeroTurnaround, GrabCAD keeps most of its development team in Estonia and its marketing and sales abroad, close to the customers.
Right now, there are about 50 people working for the startup in Cambridge, UK, Tallinn, Estonia, and Boston, US altogether, and this number is going to significantly grow in the near future.
Meybaum confirmed that the fear that, after the acquisition by an US company the office in the Estonian capital of Tallinn is going to be closed, is baseless. On the contrary, the Estonian team is going to grow from 10 to 20 employees in the near future. He explained on the GrabCAD blog that the decision to sell the company had to some extent to do with the lack of resources to execute against the ideas of community, customers and team at full speed.
"GrabCAD was founded to bring the world's engineers together and help them collaborate to bring better products to market faster. By joining forces with Stratasys, we believe we can extend the reach of one of the most exciting and innovative design collaboration technologies available," he said in a statement.
Stratasys sees the acquisition as a way to accelerate the adoption and development of 3D solutions.
"The addition of GrabCAD provides Stratasys with a leading cloud-based collaboration platform for engineering teams to manage, share and view CAD files," said Stratasys CEO David Reis in a statement. "By increasing the collaboration and accessibility of 3D CAD files, we believe we can further accelerate the adoption of 3D printing solutions and Stratasys' product offerings.
"Together with GrabCAD, we believe that we will accelerate innovation and provide increased value to a growing universe of customers seeking to utilize 3D printing solutions. We also welcome GrabCAD's active and important community to the Stratasys family. The potential within our 3D ecosystem is very exciting."