Enabling a paradigm shift for the mechanical engineering industry.
Our investment rationale for Synctive.
The world of manufacturing is changing, and fast. The global US$ 3,200 Bn mechanical engineering industry has been subject to significant innovation over the past decades due to trends such as IoT (enabling machine connectivity), predictive/preventive maintenance (prolonged machine lifetime and output), and digitalization (increased organization and efficiency).
The claim for dominance of the Asian machine manufacturers has grown, with an initial positioning for cheap prices, but long since shifted to increasingly modern and high-quality machines.
These developments apply increasingly higher pressure to machine manufacturers’ margins and force them to adapt or fall behind.
Equipment-as-a-Service (EaaS) is the latest innovation in the field of manufacturing as it provides a promising outlook for the existing players in the field. EaaS addresses the core business model of the machine manufacturers and promises new ways of selling/receiving (e.g. through pay-per-use) a machine whilst driving value propositions such as new revenues and higher margins for the machine producer, and more flexibility and a shift from CAPEX to OPEX for the machine consumer.
The core value propositions of EaaS are:
- The closer alignment of the machine users’ expenses to revenues
- A shift from CAPEX to OPEX, slimming out the machine users’ balance sheet
- Enabling the machine producer to access a larger market, that can now afford the machine
- A Focus on multiple lives of the machine, creating a larger more efficient secondary market
- Aligning incentives on the machine servicing side, e.g. the owner only earns money if the machine is functional
- Allowing the ecosystems stakeholder to play to their strengths, e.g. machine producer, manufacturer, financier
These developments are strongly supported by market analysis that predicts Global EaaS market growth at a 35% CAGR from US$53.6 Bn in 2022 to US$131 Bn in 2025 and an almost doubling adoption of EaaS within the global manufacturing world from 3.5% in 2022 to 6.7% in 2025.
To pave the way for this paradigm shift, it is required to bring all stakeholders together and create a seamless environment for this future meta market — this is where Synctive comes into play.
Synctive is a fleet management solution for equipment providers that pulls various live machine data such as location, temperature, usage, production, etc. from existing or retrofitted machine connectivity into one place. The Synctive user can view all onboarded assets in a control center and market them with desired rules such as pay-per-use, pay-per-time, classic leasing, and more to their respective customer. Synctive manages all invoicing so the machine owner can economics on a fleet, client, and machine level.
Additionally, Synctive allows the machine owner to monitor their fleet from a distance, and to trigger maintenance or service events based on real-time machine data.
With growing maturity, the ecosystem will expand from machine producers and users to financiers and insurers leveraging ever-larger growing network effects.
As is usually the case with early-stage investments, the most important block of our investment rationale is the team behind Synctive. The three dedicated co-founders Albert Gorlick, Alexander Wunder, and Manuel Rüsing, who despite their early careers have managed to build a smart and bootstrapped solution that already provides impact for its customers and convinced heavy-hitting industry names such as Josef Brunner to mentor the team on their journey.
We at Capnamic are proud to welcome Synctive to our family and are looking forward to the next years of building a value-driving solution that disrupts and innovates the mechanical engineering industry.
