Laser based Direct Energy Deposition (DED) systems using metallic powder feedstock are recognized as a promising manufacturing method for their ability to shorten production cycles and create complex part geometries. Components are built by generating a melt pool with a high-power laser beam while material is coaxially injected and left to solidify. An impediment to large scale use of DED lies in poor powder catchment efficiency, the condition in which a portion of injected powder escapes the melt pool resulting in a ratio of decreased printed material mass to mass of supplied feedstock. The wear state of a coaxial nozzle on a DED system within a hybrid manufacturing machine tool has been observed to decrease catchment efficiency over time. This study investigates this effect by adapting flow visualization techniques to an in-situ process monitoring format, the implementation of a Computational Fluid Dynamics (CFD) simulation, and deposition testing. Nozzle geometric defects due to wear are identified and categorized, and the impact of nozzle tip wear, resulting in axial tip reduction, on powder catchment efficiency is proven by multiple calculation methods. A linear correlation between catchment efficiency and powder stream diameter is identified, causing a 15–20% loss in efficiency sustained over incremental nozzle tip reduction up to − 1 mm. These results provide a foundation for further study of wear effects and Zero defect manufacturing solutions for powder fed DED systems.