Impactful Startups V.007

This series provides weekly insights into my top startups (Pre-Seed // Seed) that are striving to make an impact across the globe.

Source: openbionics.com/

Today we’re talking about Open Bionics, a robotics company creating affordable 3D-printed bionic hands for amputees, researchers and makers. A Bristol, UK based startup working to help amputees with advanced robotics arm. Now that’s seriously cool. Found in 2014 by Joel Gibbard, Samantha Payne, Open Bionics has progressed over the years to offering a very unique bionic product.

The Hero Arm, the world’s first clinically approved 3D-printed bionic arm, with multi-grip functionality and empowering aesthetics. Engineered in Bristol, UK, the Hero Arm is a lightweight and affordable myoelectric prosthesis, available now in the USA, UK, Europe, Australia and New Zealand, for below elbow amputee adults and children aged eight and above. You’re able to grab, pinch, high-five, fist bump, thumbs-up.

Really this is a pretty amazing company. This problem they’re solving exists all across the world. This is truly a global problem. Advanced bionic arms are certainly not in my investing wheel house, but I don’t need to be an expert to see how much impact a product like this can have.

Limb loss is much more common than many people realize, and the numbers are growing. There are 2.1 million people living with limb loss in the USA, and that number is expected to double by 2050. 185,000 people have a amputation each year. This means that 300 to 500 amputations are performed every day. Around 30% of people with limb loss experience depression and/or anxiety. Lifetime healthcare costs for people with limb loss is $509,275 compared to $361,200 for people without limb loss.

Given all of the above facts, it’s nearly impossible to say this company isn’t making the world a better place. The founders of the company have an inspiring background as well. Joel was recently named ‘Britain’s Design Engineer of the Year,’ and awarded the Limbless Association’s ‘Prosthetic Innovation of the Year’ award. The background to how they started is also impressive. At age 17, Joel began tinkering with robotic hands. There was something about the movement of a disembodied humanoid hand that captured his imagination. Hundreds of prototypes and many crates of failures later, in 2014, Joel co-founded Open Bionics with Samantha Payne. The Open Bionics co-founders were recently named as the 2018 Hottest Startup Founders in Europe, at The Europa Awards. With the help of an awesome team and the support of the limb different community, they’re pioneering a new bionic age inspired by science fiction.

Source: Crunchbase.com

Over the course of 5 years there have been several funding rounds as well as grants. All well deserved in my opinion. Strategics and funds alike have invested and the break out funding round really came in ’19. The Series A led by Foresight Williams really injected a fair amount of institutional capital into their business and likely propelled research and production to the next level.

I’d imagine another funding round is coming up soon due to the capital intensity of a business in this vertical. The research and production is where a lot of the funds will have to be allocated. Constant improvements and innovation will always be put in place. Just because there is a version right now doesn’t mean the end. Updated versions will continue to be released as advancement is made.

In 2015, Disney and Open Bionics announced a partnership to create superhero-themed prosthetics for young amputees. In the same year, the company won the 2015 James Dyson Award in the UK for innovative engineering and Tech4Good’s 2015 Accessibility Award. In 2016, it won a Bloomberg Business Innovators award.

In January 2019, James Cameron and 20th Century Fox partnered with Open Bionics to give 13-year-old double amputee Tilly Lockey a pair of Alita-inspired bionic Hero Arms for the London premiere of Alita: Battle Angel. Lockey lost both of her hands when she contracted meningococcal septicemia at 15 months of age.

So who is the right investor for this opportunity? With the Series A complete, I don’t believe it will be incredibly difficult to find investors. Along side that, well known investors are on the cap table. Groups like Techstars were early investors and continue to support the business. I’d imagine UK funds will continue to pursue this opportunity, maybe even family offices with the continued pursuit of grant funding.

Exit Strategy: Open Bionics has countless exit opportunities. Whether it is a major strategic healthcare player or a government agency. Maybe a private equity player or a sponsor backed business. Really the opportunities are out there and scaling is the main issue at hand right now. Manufacturing these complex units can be very financially intensive and I think a strategic acquirer could make a lot of sense in this scenario.

Modeling out case scenarios based on the ultimate goals and progress thus far will allow for some clarity on a potential exit horizon. Next, calculating the impact multiple of money (IMM) will put pre-deal impact evaluation on par with financial evaluation. To calculate IMM, simply take social benefit ($) / invested capital ($) = IMM. Be sure to account for partial ownership depending on ownership within the cap table. At a high level successful investors within impact investing can expect investment performance to be inline or even stronger than traditional venture investments. Cambridge Associates in 2015 published its first impact investing benchmark. Their study shows just how attractive the returns can be.

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