Case: CaddieON

CaddieOn LogoProfessional athletes use all available information to improve their performance. In golf, collecting the data requires a load of statisticians who follow the players and record each shot. Amateur golfers would love to have the same means to improve their performance as well. However, all the prior solutions either require too much concentration on manual data collection or one needs to pay big money for a live caddie to do the job. CaddieON allows automated golf data collection. The patent pending product enables the round events to be recorded shot by shot, shared and broadcasted in real time. Even better, player can compare his performance with other players and compete in all game details, not only with total round score. Instead of gadgets, you get to focus on game and play better. Now, that’s a strong value proposition for a golfer.

The CaddieOn wristband automatically detects the strokes and the club used for it. There's no easier way to keep track of your golf game play.

The CaddieOn wristband automatically detects the strokes and the club used for it. There’s no easier way to keep track of your golf game play.

CaddieON has launched the product and starting the sales in Finland during summer 2013. Prior to investment it has already announced cooperation with half a dozen golf courses in Finland and collected crowd funding from Finnish golfers worth 13 thousand euro.

”There are 60 million golfers in the world. CaddieON will lead the way in giving the golfers most value for their golf and making golf more rewarding, enjoyable and interesting than ever. The international market potential is worth several hundred millions. We wanted to have an investor who can help us with business models as well as finding the right partners. Butterfly was our best choice and shares our passion for lean customer driven development.” (Tuomo Lalli, CEO of CaddieON, Inc.)

In addition to automatically created golf game play record the CaddieOn mobile app has all the features you would expect from a golf app and there's many more coming up.

In addition to automatically created golf game play record the CaddieOn mobile app has all the features you would expect from a golf app and there’s many more coming up.

Butterfly invested into CaddieON because the patent pending product concept allows superior ease of use and thus stronger value proposition for golfers in a market worth of several hundred millions. Furthermore the business model offers several avenues for monetization. The CaddieON team has shown both the ability and commitment. Finally their ongoing crowd funding campaign has already gained significant traction among their future customers. Butterfly investment will be used to validate value proposition and establish the required metrics to leverage the valuation up for follow-on financing rounds.

Case: Fourdeg

Fourdeg_logo_RGB_1280x1549pxEvery property owner knows that heating costs are rising year by year. Most means to save the costs are either too expensive or do not save enough to make sense economically. Sounds depressing, doesn’t it? But not for long; Fourdeg is developing a product for water radiators heated buildings that will ensure both the energy savings as well as improved comfort temperature control with a superfast investment payback. Even better, the product can be installed within minutes and installation doesn’t require professional training. If something, that’s better with less.

Fourdeg system allows energy savings in heating up to 30% through intelligent self-learning cloud driven heating optimization algorithms. In addition customers benefit from full control of the system through web and mobile as well as better living comfort through significantly improved temperature accuracy.

Fourdeg system allows energy savings in heating up to 30% through intelligent self-learning cloud driven heating optimization algorithms. In addition customers benefit from full control of the system through web and mobile as well as better living comfort through significantly improved temperature accuracy.

Before the investment Fourdeg had built first prototypes and secured first pilot customer.

”We saw from the beginning that our smart heating control system and evident demand combines as an inspiring market opportunity. But that’s not enough for a successful start-up. To thrive through the growth phase startup needs to have right kind of expertise and sufficient resources. Butterfly makes us a perfect partner by providing the both; financial resources as well as the competence.” (Markku Makkonen, CEO of Fourdeg, Inc.)

Intelligent cloud controlled thermostat that is easy to install, even by end customers, is at the core of the Fourdeg offering.

Intelligent cloud controlled thermostat that is easy to install, even by end customers, is at the core of the Fourdeg offering.

Butterfly invested into Fourdeg because of their clear value proposition, huge market potential and because the product allows use of truly revolutionary distribution channel. The Fourdeg team is leanly operating well balanced mixture of talent and it has shown commitment and ability to learn fast. Butterfly investment will be used to develop the first product version for the pilot and to validate value proposition, especially the cost savings related to the product.

Case: Cadfaster

Cadfaster LogoUse of 3D information is growing and the models used are getting more complex. Furthermore it’s not just the designers running heavy duty workstations, but many different kinds of interest groups, such as construction workers at the construction site, who need to access and collaborate with the models. CadFaster enables this in real time with a Dropbox type of business model. Their technology is more efficient than any other on the planet, enabling the use of even the most detailed models also on mobile devices such as iPad.

Due to its cloud based optimizations MyCadbox is the fastest 3D visualization engine on the planet. It can handle gigabyte level models also on mobile devices such as iPad.

Due to its cloud based optimizations MyCadbox is the fastest 3D visualization engine on the planet. It can handle gigabyte level models also on mobile devices such as iPad.

Already before the investment CadFaster had launched MyCadbox service, secured a partnership with Vectorworks as well as significant number of beta users, including some from organizations such as Foster and Partners.

”CadFaster is employing a modern business model and lean customer centric product development methods. Therefore we also needed an investor who really understands these. The real added value investor makes the difference. The role of Butterfly while creating our business model and moving towards lean startup practices has been instrumental already before the investment.” (Raimo Kuismin, Chairman of CadFaster, Inc.)

Cadfaster's MyCadbox facilitates easy sharing of 3D models and collaboration with them.

Cadfaster’s MyCadbox facilitates easy sharing of 3D models and collaboration with them.

Butterfly invested into CadFaster because they’re able to answer the customer need of real time 3D data collaboration with technologically advanced low barrier of entry product that is built on modern business model. This allows introduction of new customer segments into real time 3D data collaboration and thus significant growth potential. Reference customers and install base as well as proven 3D technology knowledge and a balanced team with experience were important factors as well. Furthermore, there are plenty of potential exit targets that have a history of acquisitions. Butterfly investment will be used to validate the new Dropbox like business model as well as establish the required metrics to leverage the valuation up for exit.

Startup selection, agility, performance and trust

There has been plenty of discussion about the startup performance. One stream of such discussion relates to the selection of good startups and methods used for such selection. In my opinion there is a need for a combination of several different tools, including the heuristic analysis of the startup and its market potential, action driven cash flow models as well as portfolio risk analysis models.

Heuristic analysis should be useful because the traditional economic forecasting models cannot accurately predict the performance of a single startup due to many unknown factors in play. Action driven cash flow models help to understand the business model and market dynamics, and to identify the key metrics, customer conversion funnel as well as pin point the conversion problem areas once invested early on. From the portfolio point of view it is important to maximize the exposure to non-capped upside, i.e. positive black swans (Taleb, 2010), but limit the downside risk, both in terms of single failure, as well as interdependent systemic failure point of view. This should be great area for mathematical portfolio risk analysis models, such as the value at risk or shortfall (Goldberg, Menchero, Hayes, Mitra, 2010).

I believe that from the perspective of startup performance, however, what happens after the investment is much more important than before the investment, especially in the early stages of the startup life-cycle. In my opinion, the ‘trust’ between the venture financier and start up founders is vital. I made my thesis on the topic a few years back and formulated the ‘trust’ model in it (Risku, 2010). The model suggests that the ‘trust’ could explain the effectiveness of the relationship between venture financiers and start up founders and that the ‘trust’ could be the essential catalyst for startup performance. Behind this thinking is the premise that the ‘trust’ promotes agility. Interestingly, the recent ‘lean startup’ ideology proposed for example by Steve Blank (2007) and Eric Ries (2011) and ‘trust’ both point towards the ‘agility’.



Taleb N (2010) “The Black Swan, The Impact of the Highly Improbable”

Goldberg L, Menchero J, Hayes M, Mitra I (2010) “Extreme Risk Analysis”

Risku J (2010) “Trust Ecosystem: The Foundation of Startup Performance”

Blank S (2007) “The Four Steps to the Epiphany: Successful Strategies for Products that Win”

Ries E (2011) “The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses”

Building bridges

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Silicon Valley with Mikkel Svane

Juho Risku discussing with Mikkel Svane the CEO of Zendesk in Silicon Valley. Zendesk had just closed $60 million round.

One of our key ideas is to actively build such bridge ends that will ease up the market entry of our portfolio companies. Our trip to Silicon Valley was very productive. In addition to number of VC funds and accelerators we met entrepreneurs, such as Mikkel Svane from Zendesk. Zendesk btw. is an excellent example of a modern startup which has built their business around the customer centric idea of creating a great product above anything else.