The biggest objection that value investors have to blockchain-based investments is that most of them are not backed by real products that make real money in the real world.
There is a new blockchain token and platform that meet some value criteria. SyncFab’s Ethereum-based platform is designed to create a market for some decidedly unsexy services such as computer-numerical control (CNC) machining, Swiss lathing, CNC milling, CNC grinding, CNC EB Welding, CNC Wire EDM, CNC Sinker EDM, CNC mill turns, and CNC laser cutting.
CNC machining is the use of computers to control machine tools. In CNC machining, factories and machine shops turn out parts for manufacturers and other customers. An automaker might use CNC to order components such as brakes or transmissions.
Many modern CNC systems use the internet to send plans and specifications to machine shops. Machines connected to the cloud receive the plans, and make the components to the specifications sent. The components are shipped to the customer – often via UPS or FedEx.
SyncFab wants to sell machine shop services on the Blockchain
“SyncFab revolutionizes the manufacturing supply chain by connecting buyers directly to hardware manufacturers through blockchain,” the SyncFab website claims.
Value investors will find SyncFab interesting because it has at least one machine shop in San Leandro, California, up and running and filling orders. The company is selling some CNC services from it right now, SyncFab’s website claims.
SyncFab claims to have filled orders from Alphabet (NASDAQ: GOOG), Tesla, Lockheed Martin (NYSE: LMT), Amazon (NASDAQ: AMZN), LAM Research, and the U.S. Department of Energy’s Lawrence Livermore National Laboratory. Customers put orders on SyncFab’s platform and machine shops bid on them.
The platform is designed to connect manufacturers in places like Silicon Valley with machine shops all over the USA. Ideally, SyncFab’s platform would allow a machine shop in a place like Canon City, Colorado, or Janesville, Wisconsin, to fill orders from tech giants such as Tesla (NASDAQ: TSLA) and NVDIA.
Is SyncFab a Blockchain Platform designed for the Real World?
The truly interesting; and potentially groundbreaking aspect of SyncFab’s business plan is that its platform seems designed for the real world.
Machine shops that use its platform can get paid in US dollars via ACH bank transfers, or gasp boring old paper checks, rather than MFG if they wish. SyncFab claims those payments can be instantly over its system. That implies a high level of cash flow and float.
Buyers are promised approved inspection reports sent to them over the SyncFab platform before shipping. All shipments will be shipped and insured through top carriers like UPS (NYSE: UPS) and delivery can be tracked via in-app updates.
The buyers will be notified of all incoming quotes and have the ability to pay for services directly online. They would also be able to organize parts by project and track parts production with instant updates if SyncFab’s system works as advertised.
Is Syncfab a Blockchain for Hardnosed Entrepreneurs?
This looks like a blockchain-platform designed for hardnosed businesspeople that operate in the real world.
An example of a SyncFab customer would be a small-town machine shop owner who has a payroll to meet and bills to pay. Such an individual wants fast payment in cash. The machine-shop customers have to get paid fast because they need the parts to keep their business running.
That leads to real cash flow or what Uncle Warren would call “float.” It also sounds a great deal like some of the boring industrial companies that Berkshire Hathaway (NYSE: BRK.A) owns – such as TTI and CTB.
Such companies have a huge advantage because there is almost a market for their services. No matter what the economy is doing there will always be a demand for machine shops to make components.
Even if the technology; or consumer demand, changes machines will still be needed to make the products. Somebody will have to manufacture the machines, and the components used in the manufacturing process – that is where SyncFab comes in.
Demand is likely to increase because Silicon Valley has been investing heavily in large-scale industrial projects that will require vast amounts of machine-tooled components in recent years. Examples of such projects include Tesla Motor’s cars and trucks, Amazon’s robots, Amazon fulfillment centers, data centers, Tesla Energy’s Lithium-ion battery Powerpacks and solar panels, drone’s, SpaceX’s rockets, the proposed Apple Car, flying cars, the Hyperloop, and the Alphabet and NVIDIA’s self-driving car projects to name just a few.
All of this will require lots of machine-tooled parts, and SyncFab might be there to provide them. It also points to a classic Buffett value-investing strategy; don’t buy the company that makes the final product. Buy the company that supplies the raw materials or components to that company.
An Unproven Speculative Investment with Value Characteristics
SyncFab is still an unproven speculative investment but its business model has some intriguing value characteristics. Yet interest in it in the blogosphere and elsewhere is strong.
The company reports that it was able to build a strong following and expects to reach its targets ahead of schedule. Some of its social media channels, such as Telegram, have over 10,000 active users.
Various ranking sites and experts have recently praised SyncFab and its expansion into blockchain. TrackICO gives SyncFab a 5/5 rating, and Angel Blog (Amr Shady) gave the company an Inception Score of 97%.
Investors seem to like SyncFab the company has presold 85% of its 15,000 ETH soft cap (around 12,750 ETH) for the ERC20 Ethereum MFG utility tokens sold in partnership with Smart MFG Tech Ltd, a 15 February 2018 SyncFab press release indicates. If those figures are correct SyncFab and Smart MFG Tech raised around $11.96 million from the presale. That means SyncFab’s presale is over so investors will have to wait for the Token Generation Event.
The prestigious ICO Bench gave the company a 4.3 ranking. Meanwhile, SyncFab is preparing to make several announcements on partnerships in the upcoming weeks.
Despite the Silicon-Valley hype, SyncFab has some serious value characteristics. SyncFab’s business is unsexy, cash-intensive, industrially focused, and rather boring. That sounds like something Warren Buffett would love – if it actually made money.
For more information about SyncFab’s business see: https://syncfab.com
SyncFab is planning a Token Generation Event (TGE) for the MFG ERC20 Token. You can learn more about them and the MFG Token here: https://blockchain.syncfab.com/
Disclosure your friendly neighborhood blogger holds a small position in Ethereum (ETH).