Why we invested in Cube RM
About a year ago, I thought about promising opportunities created by the pandemic in various markets. One of the obviously interesting areas was the life science industry, impacted by two trends:
- Boosted budgets. People acknowledged the value of healthcare vendors like vaccine producers. Governments put health into the spotlight and approved more significant long-term spendings for life sciences.
- New software wave. Life science enterprises are generally conservative firms (like banks) with business processes lacking automation. Increased workloads and remote work should push them to upgrade internal IT infrastructure and accelerate deploying modern software.
However, finding a fast-growing tech startup, which solves a massive and painful problem in this industry, was not obvious at all. And a few months later, I was lucky to discover it in an atypical tech location — Athens, Greece.
In May 2021, I was approached by George Tziralis, Partner at Greek seed fund Marathon, who introduced me to its portfolio company Cube RM (thank you, George!). The seed fell on prepared soil, so today, we are proud to announce that Runa Capital led its $8M Series A round.
Cube RM has developed SaaS for tender discovery and management at large enterprises, mainly pharmaceuticals and medical equipment producers. Given that these two markets represent ~$750B out of $4.3T global annual volume of tenders, this is a vast opportunity to capture.
But it is not the easy one. Companies in these industries are complex clients — with long sales cycles and advanced requirements. Not every team can handle these challenges and gain large recurring contracts with high retention and scalability. Fortunately, Cube RM founders have an excellent fit for this.
Meet Costas, George and Philip — a cohesive team of 3 Greek entrepreneurs, having vast experience in the enterprise software business. They managed to build a holistic AI-based solution for tenders based on the Salesforce platform, diligently satisfying all involved business units at life science corporations. I was impressed by how it affects all main components of its customers’ P&L:
- Revenue. It tender discovery product automatically finds opportunities at portals, scores them and put the best ones into the CRM. It increases the sales pipeline, thus, indirectly revenue. Surprisingly, some counties even have “tender analytics agencies” that sell XLS files with relevant tenders to corporations (the software will substitute this mini-industry quite soon).
- Gross margin. Its intelligent pricing allows finding a better compromise between expected gross profit and the probability of winning the tender. This is a typical game theory problem, so no wonder that AI trained on market data can outperform humans and increase effective margin.
- OPEX. Finally, the tender management module automates the workflow and reduce costs by freeing employees from redundant paperwork. And it can be really massive — for instance, one of Cube RM’s customers has 1400 employees using its software regularly.
There are around 300 global life science enterprises having $1B+ revenues, which can enormously benefit from Cube RM’s solution (potential value can reach tens of $M per customer). As a result, the company had an impressive growth in 2020–2021 and onboarded many Fortune 500 customers like Boston Scientific ($59B market cap) and Takeda ($47B market cap).
While the life science industry is a bit separated from the other tech sectors, it can nurture billion-dollar software companies too. A good example is Veeva, which is also a revenue-related software based on Salesforce and focusing on the pharma market. It was founded in 2007, went public in 2013 after raising just $7M in total, and currently has a $40B+ market cap and $2B ARR.
Building a company in this domain is not easy, but it can be very rewarding, as Veeva’s case shows. We at Runa are thrilled to support Cube RM founders in this challenging and exciting journey.
