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Table of Contents

• Why Robert decided to build Fibrecoat

• How university spin outs work

• Founding a business 2 weeks before COVID-19

• Scaling amidst the Russia-Ukraine induced supply chain crisis

• Advice on how founders should prioritize investor meetings

• What does the future look like for Fibrecoat

• How Intercom can support your startup

Founding Fibrecoat: How Robert Brüll, Richard Haas, and Alexander Lüking Came Together 

Academic roots and industry frustrations: Fibrecoat began in the research labs of Aachen, Germany, where Robert Brüll and his co-founders, Alex and Richard, were pursuing their PhDs. Despite developing groundbreaking materials and technologies, they faced constant frustration as the industry was slow to adopt their innovations,  often buying them only to shelve them away. 

This inertia drove the trio to take matters into their own hands. In early 2018, they decided to transition from academia to entrepreneurship, applying for an EXIST grant—a German startup funding program for university spin-offs. By early 2020, they had secured the grant and embarked on their entrepreneurial journey. This transition marked their shift from academic research to practical application, focusing on bringing high-performance materials to market efficiently and affordably. 

🏃 Tackling Real-World Problems: Making High-Performance Materials Affordable

Fibrecoat's mission is to democratise access to high-performance materials by making them affordable. High-performance materials, like carbon fibre composites, are typically reserved for high-end applications due to their prohibitive costs. Fibrecoat aims to change this by innovating the production process to reduce costs significantly.

Fibrecoat aims to expand the addressable market for high performance materials by significantly lowering costs. Their approach involves combining multiple steps of the traditional production process into just one or two steps, drastically cutting down costs. For example, their aluminium-coated basalt fibre, which they pivoted to during the COVID-19 pandemic, costs significantly less than traditional metal fibre composites. This affordability opens up new applications in automotive, defence, and other industries where cost has been a barrier. Fibrecoat offers a range of advanced materials designed to meet the needs of various industries including ALUCOAT (Aluminum Coated Fibres), Yarn, Chopped Strands, etc.  

🧑‍🎓 The Spinout Journey: Navigating Academic and Commercial Waters

Spin-out culture in Europe: Universities and labs are particularly good places to find deeptech startups with easy-to-defend competitive advantage, yet European university spin offs (USOs) have historically lagged the US and Canada by almost 50%. For example, the US and Canada produced c.1,200 USOs in 2021, while Europe only produced c. 600. However, Robert strongly believes that Germany actively promotes spin outs through increased grant support for technical universities, yet, Robert agrees that unlike the US, Europe USOs are still riddled with unfavourable equity structures and complex legal disputes that hinder progress. 

Institut für Textiltechnik (ITA) and RWTH Aachen University provided Fibrecoat substantial support, from rewriting complex engineering documents into accessible language for grant applications to negotiating the transfer of intellectual property (IP). However, this came at a cost - as RWTH and the IP transfer agency held the IP for Fibrecoat’s technology.

Clawing back IP from RWTH Negotiating the IP transfer was a year-long process, initially set at a seven-figure valuation but eventually the Fibrecoat team were able to negotiate to a more manageable six-figure sum. This was crucial as it allowed Fibrecoat to own its innovations fully and leverage them commercially without the burden of excessive equity dilution. Additionally, the university's transfer company actively facilitated this transition by providing necessary legal and economic advice

🥇 Their Firsts!

First Investor Fibrecoat's first significant financial backing came from the €1.2Mn EXIST grant provided by the German government. This grant provided a three-year runway, enabling them to focus on developing their technology and business without immediate pressure from private investors. The grant application process was rigorous, requiring detailed project plans and economic viability assessments. The university's economic advisors played a pivotal role in ensuring their application was successful by helping them present their technical achievements in an accessible and compelling manner. 

First Customer Their first major customer emerged from their outreach at conferences for potential private investors. A plastics company that was in discussion as an investor for Fibrecoat recognized that Fibrecoat's material could solve several of their own production problems. This led to a joint development agreement where they funded a substantial portion of Fibrecoat's development costs in exchange for being the first to receive the material at scale. This partnership was critical not just for financial support but also for providing validation from an established industry player. 

First Production Milestone By early 2021, Fibrecoat achieved a production scale of one ton per month, a critical milestone in the material production industry that signals to customers and investors that they have the capability to produce at a scale necessary for commercial viability. 

🌱 Seed: Scaling Amidst A Global Pandemic

Fibrecoat outlined several Seed stage targets across: (i) Technical performance i.e., the efficiency of the machine, process stability, (ii) Commercial performance i.e., number of paid pilots, pipeline health, and (iii) Production performance i.e., 1 tonne per month production capacity. However, the path from seed funding to Series A was overshadowed by one goal: survive

Pivoting during COVID Fibrecoat was founded 2 weeks before the first COVID-19 lockdown. The ability to build a polymer-based product vanished overnight as plastic suppliers were unable to work and lead time for heavy machinery grew by over 10x. The Fibrecoat team shifted its focus to metal coating, specifically aluminium coating on basalt fibres, which was less dependent on disrupted supply chains. The lockdown period allowed the founders to apply 100% of their energy to the product and create a product that is 20-30x cheaper than the industry average and achieve a production scale of one ton per month by 2021. 

Charging early customers for everything: Fibrecoat insisted on charging customers for everything including  sample materials - this helped qualify serious customers and provide early cash flow to support operations. The approach ensured that only genuinely interested customers engaged with them, helping the team prioritise their efforts effectively. 

What your customer feedback can mean for your product: Early failures with customers provided valuable learning experiences, helping them refine their product and approach. Robert identified 3 distinct types of signalling from customers: 

• Positive Signal: requesting additional development,  there is evidence for product-market-fit (PMF) with additional development cycles required, 

• Neutral Signal: client claims technical mismatch, the material is not applicable for this customer, but there might be PMF in another vertical, 

• Negative Signal: material not operating as expected, there should be PMF but the material is not operating as expected 

Robert ensured that the Fibrecoat team did not view these failures as a step-back but as a moment to pause and make bold product adjustments.

🏭️ Series A: Raising $3mn to increase production capacity 

Securing the Series A: By mid 2021, Fibrecoat had grown to a team of 12 (i.e. with 6 FTEs, and 6 university students), achieved significant technical milestones (1 tonne per month production capacity), and built a strong pipeline of potential customers. While revenues had reached $1.25mn - most of it was from sampling and R&D, as Fibrecoat only had 1 full scale customer with a small ticket. 

As Fibrecoat required capital to scale quickly, raising a series A became Robert’s top priority. 

In April 2021, Fibrecoat embarked on a focused fundraising effort. They conducted over 150 investor meetings, with 90% of Robert’s time focused on closing a round. Ultimately the team secured a term sheet by June 2021, with the round closing in October 2021, providing the necessary capital to scale production and expand their market presence. 

From one global shutdown to another The war in Ukraine in 2022 also resulted in supply chain uncertainty for Fibrecoat. Several partner suppliers went under as they couldn’t operate at elevated prices anymore, resulting in the iteration process of Fibrecoat significantly slowing down as they couldn’t produce samples. 

The founding team had to take decisive actions to prevent Fibrecoat from halting all progress: the team raised  a bridge round to move production to Georgia with support from existing investors. This strategic decision making and investor support was critical for Fibrecoat and has allowed them to pivot to a more de-risked supply chain. The team has now achieved several production milestones: 

• 10 tonne per month production capacity in Georgia (which is already sold to customers)

• 2 additional plants in Poland and Germany (Aachen) 

SCALE ADVICE COLUMN

📈 Looking Forward: Closing a $15-20Mn Series B to fuel a global expansion

As Fibrecoat prepares for its next phase, their goals are clear closing a $15-20 million funding round to:

1. Scale production within Germany to 10 tons per month by increasing investment in line capacity

2. 3x revenue while maintaining profitability in the next 12 months

3. Expand into the US and India over the next 2 years

If you are an investor that is interested in learning more about Fibrecoat’s Series B please reach out to [email protected]

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