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The industrial world is currently undergoing a global transition toward more connectivity and digitalization also commonly referred to Industrial Internet of Things (IIoT) and Industry 4.0. These trends are forcing almost every business to innovate and optimize earnings by exploiting data and information-driven decisions provided by an IIoT architecture.

Since the core architecture of IIoT is based on data-driven decision making, sensors play an “enabling” role in such architecture. The need for sensor solutions will therefore growing exponentially for many years to come. There is however, a problem.

Sensors have historically been designed for confined and very well controlled applications mostly in manufacturing and transport. The IIoT trend however requires sensorisation of products, processes, and structures which have never been considered before. Meanwhile, the massive implementation scale challenges the price point of sensors currently available on the market. This creates an inherent challenge in adaptation of the conventional sensors to the new IIoT applications.

One such example is position or displacement sensors. Displacement sensing is one of the most sought features in the growing field of unconventional IIoT applications. Monitoring crack expansion in bridges, suspension monitoring of a mobile machine, or inline quality control of aggressive manufacturing tools are a few such examples, where conventional displacement sensors have proven to be either too fragile, too expensive, or simply cannot function in such environments.

The company has developed a portfolio of industrial displacement sensors, based on a patented technology, which are specifically designed and proven to overcome the shortcoming of existing sensors (LVDT, potentiometers, and encoders) both in functionality and cost. Large international companies such as Grundfos, Bouygues Construction, Mahindra Tractors, Severstal, ArcelorMittal, and Halliburton are a few pilot customers who have purchased Company’s products to sensorize their products or processes to become more IIoT compliant.

Company, based on input from customers and distributors, have identified factory automation, structural health monitoring, and off-road machinery as the three market segments where Company’s products add most value and are competitive to existing solutions. These segments are the focus of Company’s growth strategy.

Company’s management and board, based on the abovementioned market input, have developed a growth strategy and implementation roadmap targeting to become a sensor component supplier in the value chain while exploiting partnership with distributors and larger sensor OEMs as the main channels to market. The growth roadmap has defined two expansion scenarios – one mainly targeting the abovementioned three segments with niche applications within, while the second scenario also includes servicing the established displacement sensor market where Company’s products can be offered as an alternative to existing ones used in the traditional applications today. These two scenarios forecast a turnover of 123m DKK and 270m DKK in 2025, respectively.

Company’s management team currently consist of the 3 co-founders (CEO, CTO, and Product Manager). The CEO has a degree in engineering and Industrial Ph.D. within the technology in question. The CEO has over 7 years’ experience in business development including strategy development, funding, operational sales and marketing, establishment of distribution network, financial control, IPR control, and team management.

The CTO has a degree in Engineering Physics and has over 14 years technical experience in design and development of products and systems with focus on Company’s core technology. The CTO has also been involved in strategy development, customer support, and HR administration.

The 3rd co-founder has a degree in Industrial Design and a Ph.D. in Company’s technology. This co-founder has also extensive experience as sales engineer supporting the team with customers development, operational sales, and marketing.

In addition to the management team, the company intends to appoint a technical resource before end of 2020.

The Company board consists of 3 members. The Chairman has been co-founder of successful start-ups. The Chairman has also held positions as business development director in a large Danish organisation, and sales director in a large industrial processing company. The Chairman currently operates own business consulting large corporation in strategic business development, sales, and marketing.

The 2nd board member is CEO of a scale-up industrial component company in another Scandinavian country. This member has decades of experience in management and business development from industrial companies.

The 3rd member of the board is representing the Company’s investment organisation.

Company has previously raised over 10m DKK in multiple rounds which has facilitated product development and initial marketing. The company has a fully developed product portfolio with pilot customers and a distribution network consisting of 16 distributors in 14 countries across 4 continents. Company is currently expanding its product portfolio to better serve the three industrial segments which will initially be targeted in the growth plan. Funding this step in the product portfolio expansion is secured.

Company have financial liquidity to operate the next 12 months. However, to implement its growth strategy, Company needs additional investment (a venture round). Based on Company’s detailed operational budget, 12m DKK investment is needed to realize Scenario 1 of the growth strategy, or 27m DKK to implement the more aggressive growth of Scenario 2. Breakeven in both scenarios is expected before 3rd year of investment i.e. investment tranches are expected in first 24 months.

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Company needs sparring on the following subjects:

Fundraising:

- Which type of investors would be best match for the Company profile and its investment needs?

- How to scout and outreach them?

- And what pre-requisites need to be fulfilled in order to interest such investors?

- What would be a more convincing company valuation approach toward the new investors?

Growth strategy:

- Which growth scenarios (semi-organic , or aggressive growth assumpitons) are most attractive to investors? Both scenarios have pros and cons.

- How should the needed organisational/team expansion be planned and presented to reflect a more reliable execution plan?

- What advice do you have for Company about to embark on a significant hiring effort for the first time in its formation.

Distribution and partnerships

- As Company’s growth plan is heavily based on access to market through distributors and partners, what risk do you see in such approach?

- How can this go-to-market approach be validated on a convincing level for the new investors.

- What type of internal resources would be needed to nurture and support the distribution network which is forecasted to account for a large part of company’s forecasted turnover?

Investor pitch (The Company will pitch to you as if you were the investor.)

- What should be improved, added, removed, as content of the investor pitch?

- What other type of investor material should be produced to establish communication with potential investors and make them interested in the case?