In the private sector, the subscription economy has already arrived with Netflix, Amazon and Spotify, and it is almost impossible to imagine life without it.
For a long time, attempts have been made to successfully implement the idea of this model to the industry. Although the basic idea is similar in the B2B sector, the implementation is much more complex.
A successful project between Findustrial GmbH, Erste Bank und Sparkassen Leasing GmbH, Sparkasse Oberösterreich and Inocon Technologie GmbH proved in just a few weeks that theory can quickly become practice if innovative people from different areas pull together and are convinced of the idea of pay-per-use machine financing.
The first Pay-per-Use financed machine
Within only 6 months, the first Pay-Per-Use project of an industrial machine was successfully financed, connected to the Findustrial platform and put into operation. Since October 1st, the machine is continuously delivering usage data to a cloud-based data platform, backed up by the secure data-sharing technology of the company Tributech based in Linz. This data is used to calculate the flexible repayment rate for the financing and is automatically available to all stakeholders in periods until the investment is finally repaid.
The repayment period is not precisely defined right from the beginning, as it depends on the use of the equipment. This helps the equipment operator, especially in good market environments. Even in times of weaker economic periods for example in times of Corona, as repayment rates automatically decrease. Conversely, more is paid back if the business is going well!
Inocon in the spotlight
The equipment company Inocon Technologie GmbH deserves a special thank you in this context. Due to an innovative and practice-oriented collaboration this project was successfully brought to a conclusion. It is particularly noteworthy that the financed equipment is a completely new type of technology for the global LED industry. Thanks to the collaboration with Findustrial, Inocon is well prepared to offer its customers innovative usage-based financing solutions, which are becoming increasingly important especially in times of crisis.
This also makes a business model conceivable in which the equipment remains the property of Inocon and customers only have to pay for units produced(piece, m2, etc. ). and all services such as maintenance, spare parts or consumables are already included.
Moving away from one-off sales
In the long term, these new business models (often referred to as “equipment-as-a-service”) are leading machine builders to move away from the one-off business of selling equipment to continuous business with long-term customer relationships. The direct data connection also enables manufacturers to serve their customers even better than before and thus offer value-added additional services.
Existing financing solutions from the banking and leasing sector can hardly cover the flexible requirements of such new business models at present.
A Platform with many features
That’s why Günter Hehenfelder and Martin Gruber founded Findustrial GmbH at the beginning of 2020. With their Fintech start-up based in Schörfling am Attersee they are developing innovative financing solutions specifically for usage-based business models and makes them available on a digital platform.
A highlight of the platform is the so-called “matching” for investment projects. In just a few minutes equipment manufacturers or operators can upload the essential information of their projects on the platform and then receive financing offers from the financiers for in a very short-term manner. The platform is to be gradually expanded to other European countries, and later to the USA and Asia.
In order for such innovative financing to work at all, partners are needed on the financing side who not only recognize the potential for the future, but who also want to actually turn this potential into reality.
First and foremost, Erste Bank und Sparkassen Leasing GmbH, which is a pioneer in Austria in terms of pay-per-use financing solutions, should be mentioned here. Special thanks to Oliver Hedl, Herbert Rumpfhuber, the team of Erste Bank und Sparkassen Leasing and Nada Augustinovic from Sparkasse Oberösterreich that a pay-per-use leasing project with automated and flexible billing was realized for the first time in Austria.
But who bears the risk?
In addition to pure leasing financing risk capital has been added to the financing structure. Pay-per-Use financing projects often face the challenge of who should bear the risk of utilization for the machine.
With the involvement of venture capital investors, a new type of mixed financing was developed that enables operators to better compensate for fluctuations in utilization and thereby secure liquidity in difficult times. This model enables investments in companies that would be difficult or impossible, especially in times of the corona pandemic.
What the future holds
It could be shown that usage-based machine financing and business models not only have great potential for the future but have already arrived in the present.
We are all looking forward to further exciting industrial projects that will enable equipment manufacturers to provide usage-based machine financing, including the associated services.