The Friese Ontwikkelingsmaatschappij (FOM) invests more than just money in a company. With an intensive process that starts even before funding begins, there is time to spar about strategy, market approach and financial models. 'FOM makes you face the facts,' says Edwin Muller, managing director of Let Things Talk from Drachten, which sought capital for scaling up.
Let Things Talk (LTT) makes smart sensors that help healthcare professionals in healthcare facilities work more efficiently while improving client care. The sensors use radar technology to accurately map the presence and position of people in a room without invading privacy. A single sensor in an upper corner of a room even recognizes behavioral patterns, which can prevent falls out of bed, for example, as well as quickly detect nighttime wandering or restless sleeping. The signals are relayed to existing nurse call systems so caregivers have little need to change their routines. The system does reduce the need for nurses to make preventive rounds at night.
Multidisciplinary management team preferred
After successful regional pilots, LTT wants to offer the sensors to healthcare facilities on a larger scale. However, this requires certification to comply with healthcare laws and regulations and more staff, such as for project management and marketing. For the necessary expansion of working capital, Edwin Muller came into contact with Reno Minnema, investment manager at the FOM. The latter quickly saw the potential of the proposition. 'When we speak with LTT customers, they confirm that this technology provides demonstrably fewer false alarms than other solutions.' This is important in healthcare, where false alarms lead to unnecessary workload and a decrease in confidence in the system. 'The company's radar technology also gives it an AVG-proof product with great market potential beyond the healthcare sector.'
He found four experienced founders at LTT with complementary roles in engineering, finance and commerce and a CEO with an overarching role. He says FOM prefers to work with a multidisciplinary management team of at least two, and preferably four people. 'You then automatically get that they sharpen each other. A single founder is very often going to try to make the ultimate product. If there are four of you, someone does say, 'Well, I want to go to market because I also have to have money to pay the wages this month.' So a product that has 80 percent of all the potential is also marketable.'
The reason for us looking for a funder is that we needed out of pocket money for example for project management and marketing. From the FOM you learn a tremendous amount because of the way they look at your company; what is and is not valuable. That definitely helps us, also for the future.
Edwin Muller managing director of Let Things Talk
If FOM decides to proceed with due diligence after the intake, an intensive process begins with the entrepreneurs even before any investment is made. The business case is then critically examined and further refined. The investment managers bring a lot of experience from other funding projects and can often help to improve the business model and make more realistic plans. Reno Minnema: "I think we have been working on LTT for almost a year. Sometimes it was also at a standstill. For example, the management team also looked for other funding options. That's fine by us.' In such a year of start-up time you also slowly grow together, is his experience.
Joint interest of company and investor
Reno Minnema says that as FOM's investment manager, he remains closely involved with the company even after the investment. FOM sometimes provides loans, but also likes to work with participations. 'At that point we have the same interest together, namely that the company becomes successful. We as FOM can actively contribute added value with our knowledge and experience, as well as with our network.
Edwin Muller likes the fact that FOM, as a development company, is not a competitor to the partners LTT works with. That risk is greater if a company from its own chain were to step in as an investor. 'I also like working with FOM because it is a Frisian party, so it has local familiarity, knows the culture well and knows how people think and act.' He also experiences the interviews as sharp and honest. "They ask questions like 'What have you thought about well?' and 'What do you need to think about more carefully?' Surely some things came up that we could do better or smarter, for example in the area of marketing. Reno Minnema therefore sincerely believes that entrepreneurship is not only about building your business, but about realism and cooperation. 'With the right partner, such as the FOM, you can achieve more than funding alone.'
The reason for us looking for a funder is that we needed out of pocket money for example for project management and marketing. From the FOM you learn a tremendous amount because of the way they look at your company; what is and is not valuable. That definitely helps us, also for the future. Edwin Muller | managing director of Let Things Talk.
- The province of Friesland is a 100 percent shareholder in the FOM and sets policy.
- FOM focuses on five spearhead sectors: HTSM, ICT, Water, Agri and Circular Economy.
- The investment is for innovation, economic growth and employment in Friesland.