The unCAD upstart got a ringing endorsement from its venture capital partners this week. Sales are through the roof as SpaceClaim Professional wins the hearts of simulation experts. We predict a bidding war in 2011.
SpaceClaim Corporation recently announced an additional $5 million in venture funding from current investors. We believe the Boston area start-up is riding explosive growth such as the CAD industry has not seen since the early days of SolidWorks.
The “D Round” of funding come from Borealis Ventures, Kodiak Venture Partners, Needham Capital Partners, and North Bridge Venture Partners. SpaceClaim says the new funding will support expansion of global sales and support—the same thing it said when it secured $7 million this time a year ago. It is an accretive round, to keep investment in balance with growth.
A farming analogy will be helpful in understanding SpaceClaim’s relationship to venture capital. The initial venture capital investments bought the pedigree cow and made sure it was bred to a prize bull. Last year’s $7 million paid for the care and feeding of a potential blue-ribbon calf. This year’s $5 million was the state fair grand prize for that fast-growing calf—soon to be a sire in his own right.
Explosive Sales Growth
SpaceClaim says 2009 sales were 253% higher than in 2008, with new license sales up 188%. Those are the official numbers, meaningless without context. So we read between the lines and combed our archives for additional clues; we estimate SpaceClaim to be above $4 million in annual revenue. SpaceClaim management declines to comment.
Global customers include Nokia Siemens Networks, BorgWarner, Medtronic, Lotus Cars, Sharp, K2 Medical Systems, FuelCell Energy, Emhart Glass, GE Aviation, General Dynamics, and the US Navy. Several large but unnamed automotive firms are also on the client list.
SpaceClaim customers are discovering they can eliminate bottlenecks in their work flow by quickly de-featuring CAD models for simulation and analysis. These firms are also elevating the role of simulation in design, by making simulation a strategic tool to initiate geometry creation, not to validate it after the fact. More than half of SpaceClaim’s revenue comes from the simulation market, mirroring the growth of simulation-based data management. Both technologies optimize the simulation process, allowing for more design iterations and data re-use.
SpaceClaim says one customer, a Tier 1 avionics customer, can do 3x – 4x more simulations using SpaceClaim, gaining a 2x throughput. Another customer, a glass machine manufacturer, formerly would run 3 or 4 simulations simultaneously; by adding SpaceClaim to the work flow it now does twice as many simulations in the same time.
In 2009 SpaceClaim formalized a partnership with ANSYS, resulting in what one company representative says is “much better growth than we anticipated.” Most MCAD vendors are working to incorporate simulation inside the CAD modeler to make it accessible to the general user, but SpaceClaim says it is succeeding by bucking the trend and empowering the simulation specialist. “We don’t want to disagree with the vision,” says co-founder Blake Courter, “but it is hardly the truth today. A big part of our work today is to make simulation tools more accessible.”
SpaceClaim was originally billed as a new solution for concept modeling and CAD model editing for non-engineers. This part of its intended market was slow at first, but has since kicked in. Some SpaceClaim customers are now using the product as a sales tool, working with clients to quickly model ideas in real time, in a way that can’t easily be done with existing parametric MCAD tools.
The Obligatory Customer Quotes
It is routine for software vendor press releases to include quotes from happy customers. Serious publications generally edit them out, but the most recent quotes from SpaceClaim push the happiness quotient to new highs:
- “The argument for streamlining by enforcing a single CAD platform is a thing of the past,” said Hiroshi Mizuide, Branch Manager, Hioki E.E. Corporation. “The goal is to streamline the work flow while introducing the best tools for every job. Although a mix of tools comes at higher support costs, reducing wasted time in engineering and getting products to market faster is what gives us our competitive edge. We have achieved this goal by empowering our engineers with SpaceClaim.”
- “Before we used SpaceClaim, we had to go to the CAD team every time we needed a change,” said Sue Stroope, NVH and CAE manager, BorgWarner, TorqTransfer Systems Business Unit. “Now with SpaceClaim, the process is speeded up significantly because we’re able to make and test the changes ourselves.”
- “We chose SpaceClaim’s solution because other tools were just too complex and the learning curve was very daunting,” said Angela Delbridge, Senior Engineer and Lead Project Manager, K2 Medical Systems. “We can create and modify 3D models in SpaceClaim with a speed not achievable in other software tools evaluated.”
- “Often I had models for analysis we couldn’t get to at all because it took forever,” said Mads Jakob Jensen, Development Engineer, Widex. “Now, I am saving at least 10 man hours per model analyzed and I am able to get results more quickly than I had anticipated.”
The Final Analysis
SpaceClaim is sitting in the catbird seat. It has a sweetheart sales partnership with ANSYS that also feeds the R&D idea machine. It has money coming out the wazoo. Competitors are falling all over themselves to match or beat its push-pull editing technology and CAD format neutrality. Experienced
CEO Chris Randles keeps a calm hand on the tiller while industry legend Mike Payne roars in the background, proving third time really is the charm. (See our article on 2010 CAD Society award winners for more about Mike Payne).
The SpaceClaim global customer base is growing and adoption within sites expanding; manufacturing budget increases will drive additional sales in new markets.
SpaceClaim is betting that CAD executives are making a major miscalculation by pushing ala carte CAE. We believe simulation technology will sell better than CAD this year (in percentage growth)—since CAE offers more potential for competitive advantage; SpaceClaim is best poised among CAD products to exploit simulation growth.
It is too early for either SpaceClaim or its venture capital partners to have a specific exit strategy, but not for us to speculate. The IPO market will continue to be crap, so we foresee a bidding war in 2012 between ANSYS and a revitalized, privatized MSC.Software. MSC will bid to protect its status with its
largest customers; ANSYS will bid to insure continued double-digit growth. The CAD vendors won’t join in out of pride.