Hello, and welcome, everybody. This is Joe from start up rate dot o, your start up podcast and YouTube blog from Germany, bringing you another interview together with Hessen Trade Invest and the enterprise Europe network Hessen. Before we go into that, I would like to welcome our returning guest, Rafael. Hey. How are you doing? Hello. Glad to be here. Totally my pleasure. We have 2 service announcements before we get started. We have a new partner exclusive for start up radio listeners.
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pieces. And, of course, Hessen Trade and Invest and the Enterprise Europe Network Hessen, this recording was made possible by HDI and the E and Hessen. These organizations have made tremendous contributions to helping start up businesses succeed and thrive, providing a range of services from helping to find grants to ongoing partnerships. By taking advantage of these resources, Starbucks companies can network and develop innovative strategies for
success on the international stage. The dedicated support of HDRI and the EEN is paramount in providing start up businesses with the tools for lasting success. Look for our dedicated sub podcast in partnership with them called Tech Startups Germany. Now that we got this out of the way. Rafael, I already said that you are a returning guest. Can you but can you give us a little brief introduction to who you are and your company, ComPredict, what it does?
Sure. So I'm, Rafael. I'm the CTO of ComPredict. I did a PhD at the Technical University in Darmstadt, and together with my colleague, we founded them ComPredict. It's all based the basic idea is based on his PhD thesis. And what ComPredict does, are virtual sensors. So this is a piece of AI software which can be used to replace hardware sensors
in vehicles. So for instance, replace TPMS sensors, which measure the pressure in tires or, lip lip replace a pitch angle sensor, which, measures, the the pitch of the vehicle and is used for headlight leveling. Virtual sensors can also be used to enhance the measurement capabilities
of the vehicle. So for instance, you can measure forces and torques at different points on the vehicle with virtual sensors, or you can, use this more for predictive maintenance use cases like, measure the remaining tire thread depth and, measure how thick the brakes are and how thick the brake pads are. I have to admit, I didn't know that there is even something like a pitch angle sensor in the car, which kind of outed me as a non engineer and not a
car aficionado. I get in the car. I drive. I get out of the car. Yeah. In in order in order not to blind people, you have to measure the pitch angle of of the vehicle. Mhmm. Because headlights nowadays are much more powerful than they used to be 10, 20 years ago. So if if the car has the wrong pitch angle, it will blind people. So there's a sensor for that. And this sensor costs around €15 per vehicle, and this can be replaced by a by a
virtual sensor, for instance. See, that that we are already at the business case because you guys do it cheaper. But before we get into that, yes, you're a returning guest. Yes. In the past, we interviewed you because, BlackBerry and Michelot invested in you. But this time, you announced a series b funding of, am I right, 15,000,000 US dollar US dollar something like 13, 13 something €1,000,000? Yeah. So something like that. Yeah. I think I think almost 14.
Almost 14 in June this year, 2024, and we already introduced you to our audience in September 2022. It's already 2 years ago. And you believe it. It's incredible. Yeah. Time flies here. Yeah. Time flies. That's true. And the the the main anchor point is now, that you invest that you got an investment, series b. And we'll talk a little bit through what this changes for you, what you're planning to do with the money and all that stuff, especially given
the current, environment. At the time of recording this on the 25th of September 2024. There is a big discussion out there, especially, Germany's largest car manufacturer, VW, is even considering to, close plants, which is something nobody thought about even a year ago that something like this can happen. So there is at least the idea of a crisis in German car manufacturing. So that's something we would touch.
Let's let, the the we skip all the introduction and contradict, but we'll link down here in the show notes our amazing interview 2 years ago. With Michelin, BlackBerry, and newly woven capital among your investors, Has this impacted your market position and credibility in the automotive industry? Because everybody in the automotive industry knows, oh, Michelin. Yes. Yeah. Maybe most people don't don't know that, behind woven
capital is, Toyota. Mhmm. So so, of course, having the biggest automotive manufacturer interested in in your virtual sensors, this gives us a lot of credibility. So, yeah, this is this is this is great for for us. Yeah. And and we work together with, Toyota closely and then, of course, with the Woven Woven team as well. So, yeah, this gives us a lot of credibility and a lot of traction, which we have have also used, to to get our 1st series application
deal. So, our virtual sensors will be in series production vehicles. Can you already tell which manufacturer? Maybe Toyota? No. No. It's actually, our first, series production deal is with, Renault, Alpine, and Dacia, so the whole, Renault group. So, these vehicles will get virtual sensors for, tire wear and brake wear, and, we will be providing them. So so this this
has also given us a lot of, credibility and traction. So and I think, we're the we're the 1st virtual sensor company to have such a major deal. That is pretty cool. First heard it on Stuttgart Radio, by the way. We we we've been already sliding in our second question about product development and expansion. So, if you go into the the serial production of cars, this is a totally different ballgame than, for example, when you have, just just some experimentation of small series.
What what was different for you? Because that is something you're talking about, the tires. I'm talking about the brakes. It's it's not just like you hear a strange sound when you are responsible for the audio, but this is really essential to keep the car secure and keep it keep keep it on on, the road. So, what have been some of the challenges, and what did you learn there in order to get, like, into serious
production of cars? Yeah. So so so, of course, the the main challenge is is to be able to guarantee the precision across of millions of of of vehicles. Yeah. So this this can all be only be solved by extensive testing. This is this is what what we have done, and, there was a lot of work put in from from the team. So so thanks to the team. Yeah. This was a lot of great work and a lot of testing. So there's no there's
no shortcut into into getting a deal like that. The the product has to be good, and it has to deliver precise results with millions of of vehicles. Yeah. You now do have quite a lot of funding on the company account. Right? But by the way, I I talked once to somebody who got a really big investment, and he said, with a small investment, you buy something like a PlayStation and a kicker table for your office. And do do you also buy
something, like, really small for the team from there? And what are you planning, to do with all the money, especially given the current situation in Germany? I just listened to the news this morning, and it kind of looks like a zero growth stagnation here within Germany. Yeah. So so we we've already bought a a billiard table, but a couple of years ago. Yeah. So so so you have you gotta have some startup cliche thingy in the office. So that's beanbags? No. No. No. No.
Not not so much. We we just have have the the billiards, the pool table. Yeah. So so, yeah. Regarding the the the second part of of your question, yeah, so so the, if I understood correctly, you were asking about, the the times in in in in the market for for VC funding is a little bit more tight than, 2 years ago or 3 years ago. Right? Mhmm. Yeah. So, we, of course, see that, and we we, of course, adapt our growth plans according according to that. So so,
we will, of course, we will hire new people. This is this is what what, what the money is is for, but maybe not as quickly as as we, intentionally planned. But but be a little bit more cautious because, you always have to, take into account with this market situation that rising the next round will take longer probably. Yes. Series c is also a pretty serious step because then you're big, then you're thinking about buying other companies, merging with other
companies, going going really big. That is a serious step. But, also, series b is a pretty serious step. Usually, rule of thumb is, 10,000,000 annual recurring revenue, and then you're good to go. I was wondering when you've been planning for this because, most people who are listening will know this because more than 90% are listening for professional reasons to start up radio according to our audience survey. If you do so, please go down here in the show notes and leave us
feedback. There is a new feedback form that we just set up, 2024. But for the people who are not that familiar with it. So, basically, you have an idea what you wanna do. You have an amount of money, what you wanna do with it. Did you also work with different scenarios like best case, mid case, worst case? What were the minimum amount was you were willing to raise and the maximum amount you could work with? Were that some thoughts
that went through your mind in the preparation of the fundraising? Yes. Of of of course, we we had to be the extensive discussions about about that. Yeah. So so, how to structure the the round. You you don't want to you you just want want to raise the exact amount you you need for for the next 2, 3 years. Yeah? So so you if if you raise too much, you're, you're basically given away too too many shares at a too low price. If you raise too little, you cannot reach reach
your goals. Yeah. So so we did some extensive planning and also also talking with with the investors to to be at what we think is is the right spot for for our journey for the next, 2 or 3 years. Yeah. That was one of the important points that I want to make here because you said you talked to your investors, so the already existing investors. You guys know us. Is this realistic? That is something you should definitely do because otherwise go ahead.
I mean I mean, yeah, they they they have a lot of experience. They talk to a lot of startups. They they have experience for the market. They know what, it's possible to to raise. So so yeah. To to talk to to to to your investors as much as possible in when preparing around. You already said you took some steps due to the current,
condition. You're not hiring at fast. Did you also do some stuff to reduce your burn rate, for example, limited or cut plans for international expansion or something like this? No. We we'll still do do international expansion, especially in in, of course, since Toyota invested in Japan and, also the US, but, with smaller teams. Mhmm. So so yeah. But but, yeah, we we are pretty pretty strong in Europe. We we also have a a a good foothold in in Asia.
We start to get traction in in the US, but we need, as you say, boots on the ground, especially in in Japan and the US to to really scale there as well. Nothing really substitutes personal contact. The That's true. The the the that we are actually sliding into into the next question I have for you. You plan to hire in the coming month. Can you give us an idea of the roles and focuses? Because we're not going into too much detail because
Yeah. Everybody who's interested in joining Compriddick, you'll find, links to your career website down here in the show notes wherever you're listening to this or watching this. And if you are listening on our Internet radio station start up dot radio, Google for our blog. Alright. Yeah. I I can give you a short overview on who we, who we plan to hire. Of course, we we, plan to hire in key technical tech positions. Yeah. We always look for for good tech people.
And as I said Since we do have usually SaaS and AI software startups here, technical positions for you are more automotive engineers, or are they real tech talent like coders, developers? No. It's it's it's kinda multifaceted, with us. So so we we have real, we have we have automotive engineers. Like real engineers? That's not what what I meant. So we have automotive engineers who who have experience in vehicle dynamics and and really know the
the physics of of of the vehicle. And then we we have a strong, AI and machine learning team who who really know the ins and outs on how to structure models, how to prepare the data, and and things things like that. So so so these are these are the the two groups who work together. And then we have also, like, a a team which is also more focused on on the product and everything which is needed for the product, like, data engineering, DevOps, front end, and and things things like that. But,
yeah. So so we are basically looking for people in all positions, especially since since we we also go into serious production. We look for, people who, have experience in in the whole software act architecture of the vehicle and also, prolific in in c coding, which is still the main, main thing if you want to run something on a vehicle since it's so efficient. And Go ahead.
Sorry. And, of course, since we, start building our sales organization, we're looking for for people, salespeople in Japan and and, also also the US. I I was wondering because we we're now touching the point geographic spectrum, which we actually already discussed. I was wondering, were you planning to set up base? Because everybody who thinks about automotive in the US thinks about Detroit, or is it for you more
important to be in a software environment? Think Silicon Valley, San Francisco Bay Area, or the Silicon Alley in in New York City. What are your decision points here? Yeah. This is this is not this is a tough question, actually. So so there's still still a lot of big players in Detroit, of course, and they catching up quickly to to, I would say, the, more software players like Tesla or Rivian or or or things like that. So, there's no clear
answer to that. Yeah. You you have to be everywhere all at once. Yeah. So, yeah, there's no easy answer to that. Yeah. We talk about virtual sensors here. They're evolving quickly. How do you stay ahead of technological advancement and ensure you stay competitive? What we're seeing right now in in the news is something like Intel is is really fighting to stay competitive, and they have been the epitome of innovation, of technology
for decades. So it could happen to everybody. And I was wondering, how do you start already implementing this into your, company culture? Yeah. You kind of answered your own own question. You have to heavily invest invest into into, innovation, of course. And, this is this is what what we do. Yeah. So so we we have a a big research and and development team always always work to improve our virtual sensors to, on the one hand, make them, smaller so so, that they can run on
ECUs directly in the vehicle. On the other hand, make them more precise. So, yeah, innovation is absolute key in this in this area. Yeah. I'm always interested in how you get your customer acquisition, your clients. But I do believe it's it's also since you're b to b, like like, 99% of our guests are b to b, so it's always a little different game. You cannot just spam those people. That usually doesn't work and get you get you at least with the IT administrators on
the naughty list. That's true. So and also in terms of car manufacturing, there is not, like, a gazillion of them. So you you cannot really step on their toes and annoy them too much. How how do you approach sales there? Yeah. So, it is also a very good question. So so net networking is my best. Networking is is, you have to build your your your network, and you have to, reach people who are high up in in the hierarchy at the
automotive OEMs. So so this is this is the key to to making a successful, b to b sale. And this just takes time. Yeah. That, as I said before, there are also no shortcuts in in this area. So so you you have to be present at the most important conferences. You you have to, work your way up to to, to the top of the high hierarchy so so you get really good
contact. What what really helps is is, what we also discussed at the beginning that you get more credibility, because, you have great investors and you you get more credibility because you you have, signed big deals like a like a serious production deal. So so this help helps to put you on the map of the important people. Yeah. You said conferences. And after corona, I had, for a few month, the impression that conferences
are almost something of the past. You know? You had all those Hangouts, all those virtual digital meetings, but, actually nothing really substitutes, direct contact. Not to mention specific events here, especially in in the car manufacturing area. They are also in the news when new models are introduced and stuff like that. But how did you, from the start, approach your research? What conferences are important? Yeah. This is a so so, there there was a lot of
trial and error. Yeah. I cannot I cannot say that this this is what was like a master plan from from from the beginning. And this is also dynamic. Yeah. A conference can be good the 1 year and, not so good the year after. So, there's a there's a lot of of trial and
errors. And, I think right now, we we have found a a set of conferences which which, where we meet the right people, but but it's also good always to try something new as as well because, there's always also luck involved, yeah, that maybe you go to a conference which is a little bit off topic, but you find somebody somebody there who could really, help you out or discover a field field of collaboration you you haven't thought about
before. So so it there's always in in conferences, it's it's always a little bit trial and error, and there's always a little bit of luck involved here. But we try also to plan this as as good as possible. But, yeah. I I know that you try to plan an event, what you do, the people you wanna meet, it all goes out the window at least, 2 hours in the conference. And, usually, when you have a few, like, overarching goals, you still,
reach some of them. What I have to admit, WOOD is an awesome tool are all those apps in conferences so that you don't need to look around always on the batches who is the person, who is this person. But you can also get directly in touch with them. Plus, I became a big friend of even reaching out to people after those conferences and send them just basically Calendly link, let's talk, if if
I haven't haven't had the chance to meet them in person. Yeah. So, of course, once we decide to go to go on on a conference, we we really plan it. So so we really look look up who's who's there, who we wanna talk to. We use these those apps as well, yeah, as as as you said. Yeah. So so once we decide on a on a on a conference, it's it's, it's, well organized as well from our side.
I'm talking a little bit about the competition here. How do you differentiate your company from something like similar offers, maintenance, virtual sensors, or something like that? Because you're always in competition. Yes. Of course. All all there's always competition. Yeah. And, as I said before, yeah, we are ahead because of our, you know, innovation potential. So so we do a lot of r and d on virtual sensors. We believe we we have the most precise and, virtual sensors, which,
are able to be embedded directly in vehicles. So so and I think our strategy, paid out since since we, as far as I know, are the first to to to get a serious production deals for for for for this topic. I've I've read, with many, many companies that they do have a certain set of rules for innovation, a certain innovation culture. Do you read a lot about this and try to implement it, combined with a trial and error? Is this something that works for you?
So so we always try try to, especially regarding AI, we always try try to to read, all all the interesting publications and papers in in our fields to so so so to be really up to date there and and know know what's what's going on, who who has developed, this, yeah, for for for us. They're very important. It's all all things around AI for time series applications. So this is where we'll we'll really try to stay,
stay ahead. Yeah. We we already get close to the end, and you're holding up pretty well here. Thank you very much. Do you in terms of working in real produced cars that are out on the street, you do have to comply with the regulations. Do did you face some hurdles in the past? And how how do you overcome them? I mean, you have to have some some certifications, and and, each certification is is is, is kind of a hurdle which requires a lot of work from,
a lot of people of of the team. And, also, once, you have gained a a certain certification, people have to also stay on it. Yeah. You have to follow the processes, which, of course, makes you makes you a little bit slower, but makes you also, safer on the other side. There's always always a trade off. Yeah. Fast and break things just doesn't work if you're in regulated business. Yeah. That's that's that's true. Yeah. The software, we deliver to to series production vehicles just has just
has to to work. Yeah. We we cannot risk, having a big failure in in the millions of of vehicles. So so, of course, certification is very important, especially regarding this. And and since you're working with tires and brakes, there are literally life at stake, so I totally understand. They cannot accept. Yeah. I mean, you can you can be a little bit more creative and and break things when it comes to to research topics. Yeah. And and and you you try
out things. But but as as soon as we talk about serious production, things get more serious, of course. Ah, wordplay. I have not intended. We we we're now getting in towards the end of the interview. Before we get into our usual questions towards the end, there's just one more question I have prepared. The future road map, what do you must what milestones are you looking at in the next 2 or 3 years except for raising a CERC funding?
Yeah. Be before raising a CERC funding, you have to bring yourself into the position to be to be able that that you're interest interesting to the investors. And, so our main goals are basic basically get more serious production deals for different different virtual sensors. Yeah. Get more, automotive manufacturers on board, sign more serious production deals. And once we have that, I I I I'm quite positive about the series c. But, yeah, it's it's, it's still a long way to go.
Thank you very much for for, like, all the questions you had. A very, very busy time, and I've seen you, very, very sleep deprived before we, before, in the discussion we had before this. Thank you very much, nonetheless. We'll end up with our usual questions. I do believe, question number 1, we already answered. You're always looking for talented people, and we link down here in the show notes your, queries website. Right? Yes. Yes. And not only the developers are welcome, but also
the automotive engineers. Just out of curiosity And also salespeople. Yeah. Sales of course. Always salespeople. They'll give the the greatest applications at all. Nonetheless, just out of pure curiosity, would you only be interested in people, like, with car background, or would you also be open to somebody who is experienced in motorcycles? No. So so so, if if you if you like like a domain expert or an automotive engineer or company, of course, you you have to have have the domain
expertise. So so you have to know about cars for other positions. If you if you're an AI expert, you don't really need so so we already have a lot of, automotive experience. So so the AI experts don't really need that much automotive experience. It's already in the company. It's always good when they have that, but it's not a prerequisite also for other positions. Yeah. If if
yeah. Let let me do some mind reading. One of the ideal candidates would be an experienced AI engineer who has a private table for cars. Of course. Yeah. But, as as I said, it's not a it's not a prerequisite. We have also, people working here who are not very much interested in cars, but, they they do a great job, in in, in in in their field here. So They come to work with the bicycle? Yeah. There there's yep. Some people don't own cars. Not not
everybody here. You're on on on cars. Yeah. So you don't have to be a a a a petrol head. Okay. We already talked also about, open to talk to new investors. DFC is at one point on the horizon, and I do believe you would be open to talk to potential new investors. Right? Yes. So so of of course, we we we are always open to to and talking to to investors. This is also a way to build our network there. So so, of
course, we will always open to to talk to new investors. Since we closed the the financing round right right now, there is no no need to to talk about raising the next round. But, it's so good to be in contact, because raising financing grounds takes takes a lot long time, and, it's always good to to start early. Yeah.
And the last question since this is in our series with the Hessen Trade Invest and the Enterprise Europe network, is there something like a question and concern and idea you would like to address to the political decision makers here in our amazing state of Hessen? Yeah. So, we have we have a lot of people working for us who who are not from Germany, so so are from from other countries. Especially outside of of Europe, it's hard to to, get, get people employed with with a blue card.
It takes forever to get an appointment at the, government agencies like the like the Auslander. So this is like a tedious and slow process which could be, really sped up. Yeah. So so this would help us because there there are also a lot of capable, people in other countries, who are interested to to to to, come here and and help a startup like like, us. So, all this process could could be much more streamlined. Great. Rafael, it was a pleasure having you here, by the
way, your 35 minutes with question and all that. Best of luck. Hope to have you back when you raise CERC funding. Yeah. Thank you. It was a pleasure talking to you. It was all mine. Have a good day. Bye bye. Bye bye.