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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.

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