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bm|t newsletter Q3 2019

Set­ting the price of an entirely new offer­ing can be quite com­plex and awak­ens asso­ci­a­tions with the clas­sic game show, The Price is Right, where con­tes­tants, with lit­tle infor­ma­tion, tried to guess the price of a prod­uct and inevitably exposed how sub­jec­tive price/value per­cep­tion is by giv­ing such wide-rang­ing estimates.

In this Newsletter

The Price is Right

Star­tups can have very dif­fer­ent goals and thought processes con­cern­ing pric­ing when ini­tially try­ing to get trac­tion in a mar­ket.  Some star­tups might be so focused on gain­ing a foothold in a mar­ket and get­ting a crit­i­cal mass of cus­tomer feed­back that they are will­ing to give their solu­tion away at first while oth­ers might be highly focused on cash burn and feel com­pelled to get to breakeven with their first customers.

While we are far from aca­d­e­mic experts on the sub­ject of pric­ing, and every sit­u­a­tion is clearly unique, we decided to write down some of our thoughts and gen­eral guide­lines that we hope will be useful:

  • It is eas­ier to lower price than to raise it. And price anchor­ing is an actual phe­nom­e­non.  How­ever, piv­ots can pro­vide excel­lent oppor­tu­ni­ties to rethink pricing.
  • Early cus­tomers are usu­ally highly-inter­ested in the solu­tion and are often will­ing to fund fur­ther devel­op­ment, either as a sep­a­rate charge (NRE/Installation fees) or in the form of higher prices in the early days of the rollout.
  • Cus­tomiza­tion requests should be priced extremely high, espe­cially if the degree of cus­tomiza­tion is so great that the cus­tomer-spe­cific devel­op­ments are dif­fi­cult to trans­fer to future poten­tial cus­tomers.  One-time rev­enue oppor­tu­ni­ties are often more dis­trac­tion than they are worth, espe­cially when fac­tor­ing in oppor­tu­nity costs – which are often overlooked.
  • If the solution/technology is truly unique, it should not be nec­es­sary to employ low pric­ing as the means to win cus­tomers. The extra time spent look­ing for first cus­tomers who truly value the offer­ing is well spent, as opposed to reduc­ing price just to con­vert the first deal.
  • The closer the solu­tion is to its large-scale roll­out state, the more pric­ing should already be set at a level that will allow for broad adop­tion. SaaS offer­ings are often in this cat­e­gory. Addi­tional devel­op­ments are bet­ter included in upgrade pack­ages or sold as Add-on mod­ules, as opposed to dras­ti­cally alter­ing the core price over time.
  • Usu­ally price is highly-vis­i­ble, prob­a­bly much more vis­i­ble to most stake­hold­ers than a company´s long-term plan to pen­e­trate a mar­ket.  Star­tups should set price at a level that gives employ­ees and part­ners a sense of pride and secu­rity that the busi­ness has the poten­tial to cre­ate sub­stan­tial value and reduce its reliance on investor fund­ing over time.

With many early-stage Investee-Part­ners now enter­ing the com­mer­cial­iza­tion phase, we have recently enjoyed engag­ing in numer­ous pric­ing dis­cus­sions. We hope we have been able to offer some valu­able assis­tance in this area and that “the price is right”.

Your bm|t Team

Welcome to the Family

neu­ro­Care Group has an ambi­tious and achiev­able plan to become for men­tal health what Fre­se­nius is for renal care: a global, ver­ti­cally-inte­grated patient care and tech­nol­ogy leader. The company’s ther­apy offer­ing is per­son­alised and evi­dence based with the sci­ence being done inhouse. neuroCare’s core tech­nol­ogy brand neu­ro­Conn comes from Ilme­nau (a spin off from the TU Ilme­nau and its largest loca­tion in terms of employ­ees) and is a world-leader in neu­ro­mod­u­la­tion. Founder, Thomas Mechter­sheimer, a 15+ year Fre­se­nius vet­eran, has assem­bled a tremen­dously tal­ented and moti­vated man­age­ment team, and they are work­ing hard on achiev­ing his bold vision. We are thrilled to have joined sev­eral pri­vate investors in this growth-focused invest­ment and are expect­ing great things from neuroCare.

For over 20 years, ZILA has been a tech­nol­ogy leader in mea­sur­ing, test­ing, and con­trol­ling prod­ucts focused on pres­sure, atmos­phere, leak­age, and ven­ti­la­tion. The com­pany expe­ri­enced a rebirth in 2014 when new own­ers pur­chased it from the retir­ing pre­vi­ous manager/owner. Since then the com­pany has dou­bled its sales and has an ambi­tious plan, includ­ing cap­i­tal­iz­ing on sig­nif­i­cant organic and non-organic growth oppor­tu­ni­ties. bm|t invested through our indus­trial fund in order to sup­port a spe­cific acqui­si­tion, which has now been suc­cess­fully completed.

MOIO aims to greatly improve patient care using IOT-enabled devices to track patients well-being and report sta­tus and events to clinic staff, greatly improv­ing the effi­ciency of care. Patients wear a nearly imper­cep­ti­ble light and thin sen­sor in the small of their back, and this sen­sor reports data on the patient’s move­ments. Firstly, MOIO will address nurs­ing clin­ics and sub­se­quently the com­pany plans to broaden its reach into other care set­tings, includ­ing home care. bm|t joined sev­eral busi­ness angels with this invest­ment, which is focused on final­iz­ing the tech­nol­ogy and dri­ving ini­tial mar­ket entry.

Follow-on Investments

In Ger­many, hos­pi­tals are legally required to find place­ment in a nurs­ing home for patients that are unable to safely return to their home after a hos­pi­tal stay. The search for an avail­able and appro­pri­ate nurs­ing home place­ment is extremely time inten­sive for both hos­pi­tals and nurs­ing homes. Pflege­platz­man­ager has built a user-friendly and easy to oper­ate cloud-based soft­ware plat­form that allows hos­pi­tals and sur­round­ing nurs­ing homes to quickly iden­tify avail­able and appro­pri­ate facil­i­ties for patients. Early results show that Pflege­platz­man­ager is reduc­ing the aver­age time required to match a patient to an appro­pri­ate nurs­ing home bed from days to under two hours, and con­se­quently avoid­ing much frus­tra­tion for facil­i­ties and fam­i­lies and sav­ing the sys­tem sig­nif­i­cant sums of money. With this invest­ment from bm|t, the MBG Thürin­gen, and an expe­ri­enced busi­ness angel, Pflege­platz­man­ager has the resources it needs to fur­ther increase its cus­tomer den­sity and cre­ate a pow­er­ful net­work effect.

ifesca´s intel­li­gent cloud ser­vice enables energy com­pa­nies to bet­ter fore­cast demand for elec­tric­ity, gas, or heat in near real time. These insights allow energy com­pa­nies to make bet­ter deci­sions regard­ing their own gen­er­a­tion oper­a­tions and/or energy trad­ing, cre­at­ing sub­stan­tial sav­ings for cus­tomers. In this 2 Mio. EUR invest­ment round focused on ramp­ing up mar­ket­ing and cus­tomer ser­vice, bm|t was joined by a group of renowned pri­vate investors with sig­nif­i­cant soft­ware and energy indus­try experience.

Mas­ter­PIM con­tin­ues to gain trac­tion with its sleek and cloud-based Prod­uct Infor­ma­tion Man­age­ment (PIM) soft­ware that allows man­u­fac­tur­ers, traders, retail­ers, and mar­ket­places to effi­ciently man­age com­plex prod­uct infor­ma­tion datasets and effort­lessly project the processed data into online shops and cat­a­logues. Cur­rently, over 90% of mid-sized man­u­fac­tures do not have a PIM solu­tion, so the mar­ket is largely a green­field oppor­tu­nity. bm|t joined mul­ti­ple investors, includ­ing a highly sat­is­fied cus­tomer, for this invest­ment round focused on scal­ing up mar­ket­ing and cus­tomer service.

If your part­ners or col­leagues might be inter­ested in our reg­u­lar updates,
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ALSO SEE OUR OTHER NEWSLETTERS

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Q3 2019 | Octo­ber, 17 20019
Q2 2019 | August, 14 2019
Q1 2019 | May, 3 2019
Q4 2018 | Feb­ru­ary, 4 2019
Q3 2018 | Octo­ber, 16 2018
Q2 2018 | July, 23 2018
Q1 2018 | May, 24 2018