Manufacturing is changing at a rapid pace and Industrial Tech startups are popping up everywhere. What do you need to benefit from these developments and to ride the wave of change in manufacturing.

1. Ride the wave of change in manufacturing

2. 2
“Isn‘t tech a bubble anyway?“

3. 3
This will be your factory

4. 4
We are going from easy to hard problems
From buying cars online and build
up a database
to building cars driven by data and
software
Source: Ben Evans (A16Z), Autoscout24, Tesla
First 20 years of Connectivity
Low penetration, low capital plays
Low touch goods
Selling tools
Information arbitrage
Next 20 years of Connectivity
High penetration, high capital plays
High touch goods
Full stack
Information business

5. 5
Some sectors are more advanced than the others
Energy
Buildings
Food &
Beverage
Industrials
Marine Materials
Automotive
Utilities
Retail
Telcom
Finance &
Insurance
IT
Source: Morgan Stanley Research
Plateau &
decline
Maturity point
Early
Adoption
phase
Financial Services shows the way
and normally is always a bit
ahead of the rest
New businesses and
technologies pop up on top of the
S-Curve that were not imaginable
at the beginning

6. 6
Or who would have thought 10 years ago
That this financial service company
Market cap: EUR 17.7bn
Source pictures: Wirecard, Deutsche Bank, Apple
Market cap: EUR 13.5bn
is worth more than this
financial service company?
And that this is the way you pay
your groceries for breakfast after
a Sunday run!

7. 7
Industry is next
Energy
Buildings
Food &
Beverage
Industrials
Marine Materials
Automotive
Utilities
Retail
Telecom
Finance &
Insurance
IT
Source: Morgan Stanley Research
Plateau &
decline
Maturity point
Early
Adoption
phase
Industrial sectors are moving up
the S-Curve very fast
Some sectors faster than others -
more than 40% of the global IT
spend in the next 10 years will
come from the manufacturing
industry

8. 8
We still do not know what the S-Curve brings
Source pictures: Uber, Volkswagen
But this will probably be your taxi
from Berlin to Copenhagen
and this will be your car picking you
up while you are having lunch

9. 9
What it will change
Source pictures: Forbes
How will workers look like, what will their tasks
be and what tasks will be carried out by
humans, …
How will cities look like, how will airports
look like, how will transport be organized, ...

10. 10
And what the outcome will be
Technology will create complete new ecosystems - new business models will be created on top of those
The outcome of individual
mobility enabled by cars
were also shopping centers
and the outcome of
smartphones were also
snapchat filters

11. 11
§ From design to engineering to
production to a fully automated
supply chain
§ Product customization will be
feasible and better match
customer demands
§ Automation, analytics, digital
tools will enhance workforce
productivity
§ This will lead to enormous
efficiency gains
§ New business models and new
software enabled services will
be created
§ Technology will lead to better
knowledge of customers needs
and can increase customer
loyalty
§ New sales channels will open
up
§ Based on data goods and
services will be better priced
(pay per use etc.)
The way we
produce things
But change is for sure
Two things in manufacturing will change fundamentally
They way we
make money

12. 12
And will transform manufacturing
Manufacturing will
become self-
organizing and more
autonomous due to a
new class of factory
workers or a highly
connected and smart
shop floor
Value chains will be
seamlessly connected
end to end, allowing
manufacturers to drive
product innovation
twice as fast as today
Supply chains will
connect to a broader
supplier ecosystem
that will function as a
single platform,
enabling business-to-
business integration
Data will drive the
creation of new
services and
innovations in
business models
2 3 41
Autonomous
manufacturing
Seamless Connection of
Value Chains
Connection of
supply chains
New value-added Services and
Business model innovations
Source: World Economic Forum

13. 13
Driven mostly by technological breakthroughs
One key driver is the increasing availability of cost-efficient devices
Instead of just retrofitting machines complete new use-cases become feasible if we think about 2050
387 000 Industrial robots
sold in 2017
>75bn devices installed by
2025
6.7m shipments by 2020
>1m industrial drones by
2050
Industrial
robots
Sensors
3D-Printer
Industrial
Drones
Cost per unit 2007 2013 - 2014 2050
$ 550 000 $ 20 000
$ 40 000 $ 100
$ 40 000 $ 100
$ 1000$ 100 000
?
?
?
?
Source: GP Bullhound, Smart Manufacturing (2019)
27,5X
400X
400X
100X

14. 14
And a lot of data!
§ Manufacturing stores 2x more data
than governments do
§ Most manufacturing companies still
do not know what do with it
à Therefore more than 90% of data
in manufacturing is not being used
and completely unstructured0
200
400
600
800
1000
1200
1400
1600
1800
2000
M
anufacturing
G
overnm
ent
Com
m
s
&
M
edia
Banking
Retail
ProfessionalServicesHealthcare
Securities
&
Investm
entservicesEducationInsurance
TransportationW
holesale
Annual new data stored by sector (2010, petabytes)
Source: Morgan Stanley Research

15. 15
But doing it right unlocks enormous potential
And those trends will lead to dramatic efficiency gains in manufacturing
We will do leapfrogs in efficiency gains from 2017 until 2022
Source: Morgan Stanley Research

16. 16
So what do you need to capture this benefits
Four main capabilities will be crucial for global success
Ability to use data Domain knowledge Access to capital Vision & Culture
§ Data collection is
straightforward -
processing and
interpreting big
amounts of data is
not
§ You need a deep
understanding of the
technologies and
your markets
§ This requires
investment – whether
that‘s R&D, M&A or
talent acquisition– so
capital is needed
§ Companies
embracing and
leading change are
the ones to succeed
§ The ability to move
quickly without being
certain will require
new ways of working
Source: Morgan Stanley Research

17. And Speed
17
“If you’re good at course correcting, being wrong
may be less costly than you think, whereas being
slow is going to be expensive for sure!” Jeff
Bezos

18. 18
You have to innovate fast
Fast companies are nearly six times more likely to be digital leaders
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Bain Speed Index <70% Bain Speed Index > 70%
Percentage of companies that are digital leaders
Bain Speed Index is based on:
§ Making decision fast enough
§ Executing plans at the required
speed
§ Having an IT organization that
can operate as quickly as
needed
Source: Bain & Company
6X
It is not necessary and often not possibly to know exactly where are you going - companies that are able to act quickly
and then adapt have best change of shaping and suceeding in the future.

19. 19
Because the early ones take the winning prize
Faster AI adoption and absorption by front-runners can create larger economic gains
-30
-20
-10
0
10
20
30
40
50
60
70
80
90
100
110
120
130
2017 2020 2025 2030
82
135
122
-77
-18
Econom
y-wide
output
gains
Output
gain/loss
from/to
peers
Transition
costs
Capital
expenditure
Total
Front-runner breakdown
% change per cohort
11
- 49 - 23
19
- 4
Econom
y-wide
output
gains
Output
gain/loss
from/to
peers
Transition
costs
Capital
expenditure
Total
Laggard breakdown
% change per cohort
Frontrunners
(absorbing
within first 5 to
7 years)
Follower
(absorbing by
2030)
Laggard (do not
absorb by 2030)
Source: McKinsey & Company
122
10
-23
Relative changes in cashflow by AI Adoption cohort,
cumulative & change per cohort

20. Are you too late for the party?
20
“It ain‘t over til it‘s over!“ Lenny Kravitz

21. 21
Most companies are still at the beginning
Global penetration of Technologies in 2018
0%
10%
20%
30%
40%
50%
60%
70%
80%
Smartphone
penetration of
population
public cloud
penetration of
workloads
eCommerce
penetration of
retail sales
A//ML penetration
of businesses
8%
à only 8% of
businesses are
already using AI/ML
applications in their
daily work!
Source: Morgan Stanley Research

22. 22
But some already took important measures
Good IP and cybersecurity
policies maintain effective
security to mitigate risk while
enabling collaboration
Leaders have an IoT
architecture built for scale-
up and interoperability
Leaders are investing
in capability building
(employees, digital
native managers, etc.)
Workforce engagement (workers are
actively involved in the development
and deployment of use-cases)
Leaders are part of an innovation
environment that involves
universities, start-ups and other
technology providers
Source: McKinsey & Company

23. 23
And started investing heavily into Industrial Tech
691 1382
3816
19316
7247
1420
19 20
25
49
38
32
2013 2014 2015 2016 2017 2018
M&A transactions by number and value (in
EUR m)
Disclosed Deal Size Number of Deals
556
1377
1726
3747
4712
5895
110
168
220
287
321
233
2013 2014 2015 2016 2017 2018
Venture investment transaction by number and
value (in EUR m)
Disclosed funding
Source: GP Bullhound, Smart Manufacturing (2019)

24. 24
As well as acquiring companies
Strategics are expanding footprint via investments and M&A - most transactions in this sector are driven by large
strategics further building out their platform capabilities
3
9
5
1
8
2
2
17
9
9
13
9
4
4
4
2
3
13
12
12
6
7
11
4
4
4
23
11
10
15
2
1
5
5
2
9
19
8
7
7
10
16
16
10
9
1
Wearables Data & analytics Simulation & desgin Robotics & (additive) manufacturing IIoT platforms & hardware
Source: GP Bullhound, Smart Manufacturing (2019)

25. 25
“The leaders of the future are probably out there
already!“

26. 26
Working with startups is crucial to be competitive
Because startups can bring unique added value in several ways
Increased flexibility and customization to manufacturers
Startups bring an outside view and are not dependent on legacy structures
Significantly lower prices than full fledge IT projects
Multidisciplinary teams of entrepreneurs, enabling them to provide end-to-end solutions
Agile and responsive to changes and able to adapt to larger platforms
Startups are a puzzle to attract good tech talent
Startups think global from day one

27. 27
»Become the preferred
partner of the entrepreneurs
building tomorrow‘s industry
leaders.«
Andreas Schwarzenbrunner, Principal
Niklas Fip, Analyst
Speedinvest
Praterstraße 1, 1020 Vienna, Austria
www.speedinvest.com