We are excited by our investment in Laserhub and set out our thoughts on why we invested.
Within a few years, Laserhub has become the leading digital marketplace for the procurement of custom-made parts in Europe. Laserhub is a digital procurement solution for medium- and large-sized enterprises from virtually any manufacturing industry, requiring some form of custom-made metal or plastics (soon) part for their products, production line or prototypes. Manufacturing customers upload a digital design file of the required unique metal part to the platform, Laserhub’s algorithm generates an accurate instant quote and commits to providing the part, while identifying the optimal supplier from its supplier base to build and ship the part.
Digital Marketplaces are evolving to serve increasingly complex customer needs
Digital marketplaces continue to transform new industries after becoming a main engine of commerce in the consumer space (for example in the B2C travel, food and fashion industry). Consumer marketplaces have evolved from simple listings platforms (digital classifieds like Craigslist or Gumtree) to providing a whole host of value-added services, such as product authentication, quality checks, invoice financing or logistics services. These more “managed marketplaces” have become a trusted intermediary through which businesses and consumers transact goods with increasing price tags such as luxury watches, cars and even real estate. Yet, there remain large sectors, particularly in the B2B space, that continue to transact predominantly offline.
Technological advancement creates new market opportunities
Marketplaces are now deepening their penetration in B2B interactions, as technological advancement has enabled marketplaces to transact even more complex products such as custom-made parts, calculating prices and showing expected production duration in real-time. In contrast to consumers, businesses often already use enterprise resource planning (ERP) software. Digital marketplaces often integrate with existing resource planning tools, making the ordering process entirely seamless for the procurement manager. Building a solution that brings value to its customers not only requires technical know-how but also requires founders that know an industry well to help procurement managers.
B2B marketplaces are poised to transform established industries which enables exponential growth
Digital B2B marketplaces give modern procurement managers more supplier choice, greater supply chain stability, pricing advantages and efficiency improvements. As the value provided by a marketplace in a value chain goes beyond that of a software-only solution, they take a margin on the transaction instead of charging a flat fee. Facilitating and streamlining a transaction by digital means allows for greater growth as a marketplace adds value to both the buy- and supply-side in every transaction and is more integrated into the supply chain than a software-only solution. The growth of a marketplace is hence directly correlated to the growth in value for the participants of the marketplace.
The enormous market size of many B2B markets, their greater complexity and hence need for specialisation, combined with operating leverage presents the opportunity to become a valuable business with a defensible moat.
Laserhub is changing the way the industry sources parts
In our view, Laserhub is one of those industry-transforming marketplaces. Customers previously spent days finding the right supplier for an ever-changing array of custom-made metal and plastic parts in industries as diverse as transport, energy, construction, or medical devices. Laserhub’s easy-to-use digital procurement solution is saving them both time and money.
How does Laserhub’s platform work?
Laserhub’s platform lets customers upload industry-standard 3D models of the desired custom part that are then analysed in real-time by a proprietary algorithm that determines prices and offers a selection of delivery dates.
The platform uses various data points such as machines needed, estimated production time, and raw material price fluctuations to determine prices. Furthermore, it analyses suppliers’ inventory levels of raw material, lead times, production capacity and proximity to the customer to allocate the order to the best-matching supplier.
More intelligent customer-supplier-matching also reduces material waste. By choosing suppliers based on their production specialization, the algorithm allocates orders in an intelligent way that enables suppliers to make full use of the material used in the production process which presents a strong opportunity to reduce industry-standard material waste of up to 40%.
Our investment thesis
In addition to outstanding operational KPIs, Laserhub meets the criteria that we believe to be vital for a successful B2B marketplace. It:
- Brings transparency to an opaque and “offline” market: it is the largest European B2B online marketplace in a market worth more than €150bn in Europe alone, connecting a large and highly fragmented supplier base to customers from virtually any industry.
- Provides significant value to its supplier: Free additional lead generation enables its suppliers to increase their machine up-time from 60% to up to 100% at no extra cost which generates incremental revenues.
- Improves customer’s procurement processes: It entirely eliminates the laborious quoting process by automatically choosing the most suitable supplier and provides higher supply chain stability to customers by increasing the number of potential suppliers while offering lower prices.
- Is an automated end-to-end platform: managing the entire transaction process, including delivery and logistics, and enables greater control and value-add in the transaction allowing for margin-optimizing order allocation.
- Has international potential: Already operating in 5 European countries with strong potential to build out its European leadership position.
- Experienced team: The founders’ combined ~30 years of operational experience in the industry shows in the level of service quality compared to Laserhub’s global peers.
Finally, more than anything, we truly enjoy our interactions with Adrian, Christoph and the team, as founders who are passionate about what they do, experienced in the industry and seeking to build the best business they can to provide value to all participants in the value chain.