Predictive Maintenance for the Elevator Service Industry: Why We Invested in Digital Spine
We are excited to announce our investment in Berlin-based Digital Spine. Alongside two successful German Mittelstand companies, Phoenix Contact and Goldbeck, we have co-led this €6.7m Series A round. Digital Spine provides a predictive maintenance and management platform for the elevator service industry, and this marks our fourth investment in the building automation space. Here’s why we invested.
Europe forms the largest market share in terms of density per elevator with approximately 6 million elevators. The DACH region makes up 1.1 million of these elevators, of which 800k are in Germany. In this oligopolistic market, consisting of several large Original Equipment Manufacturers (OEMs), elevator owners are facing a principal agent problem through asymmetric and intransparent access to information: Since OEMs show little ambition to share elevator performance data, owners are currently unable to verify or challenge increasing maintenance costs and must therefore rely on the maintenance companies’ assessment.
Digital Spine is digitizing an industry that has been slow to innovate
Simon Vestner, CEO of Digital Spine, saw an opportunity to create efficiencies and value for building owners by developing a data-driven approach to this problem. Using a smart IoT device and its proprietary software, Digital Spine is able to increase elevator uptime and save building owners up to 15% in service costs by utilizing its online connection to check elevator status — all without the need for a site visit. As opposed to using data generated from sensors, Digital Spine utilizes the data originating from the elevator’s controller and harmonizes this data across different OEMs and product types.
With this vast amount of data, the company applies its proprietary AI model, which enables it to make predictions on failures and uncover the underlying reasons for these breakdowns. Through predictive maintenance, Digital Spine defines optimal maintenance schedules and provides greater transparency to owners on their elevator portfolio.
Digital Spine’s primary focus is on elevators in commercial buildings, like clinics, offices, hotels, shopping malls and industrial buildings. In these commercial cases, the operator or owner of a building profits directly from cost reductions. For this reason, the residential market will only be a secondary focus. In residential buildings, the tenant bears the cost of the elevator. For landlords, elevator costs are only transitory. Nevertheless, as with all operating costs — especially rising energy costs in housing — landlords are concerned that increasing operational costs limit their ability to increase rents. Therefore, they, too, have an interest in keeping elevator cost as low as possible. They want elevators to function 24/7 so that tenants are happy and there’s no need to hire personnel to handle complaints.
Why we invested in Digital Spine
“With the current pressure on elevator owners to keep elevators in operation and reduce maintenance costs, Digital Spine’s smart IoT device and proprietary software are perfectly poised to offer tangible value and save building owners up to 15%,” says Jan Borgstädt, Join Capital Founding Partner.
“We were impressed by the team’s vast experience in the market, as well as their technology and independent business model, which allows them to service the entirety of the market. We are happy to support this team by leading a Series A round to enable its expansion and development across the DACH region”
Our motivation to support the Digital Spine team is based on the following criteria:
- A $140 billion global opportunity, with the DACH region representing a €3.6 billion addressable market.
- Significant traction with top-tier customers, including leading construction and residential companies in the DACH region, with large Annual Contract Values (ACVs) in the 7-figure range.
- The business model enables a data play and network effect in building optimization. This can be leveraged beyond elevators, as performance optimization is possible for other systems contributing to CO2 emissions such as heating, electricity and water. The importance of digitizing these areas is enhanced through the EU’s aim to be climate-neutral by 2050.
- Furthermore, the business model is characterised by high synergies for all market players from building owner, to facility manager and OEM, while excluding the possibility for competitive friction.
- The key stakeholder (the building owner or manager) gains valuable data insights to make informed decisions on a key contributor to the cost of building management.
- Finally, we strongly believe in backing domain experts. Simon has over 25 years of experience in this sector and thus knows the key pain points of market participants. In addition to that, the senior leadership team consists of experienced industry insiders.
For more information about Digital Spine, please visit www.aufzughelden.com or drop us a line at hello@join.capital.
