With a license to solve problems — Peerox transforms knowledge management in production 

31 Mai 2023

The shortage of skilled workers is a merciless reminder that human expertise is essential, regardless of the degree of automation in a production plant. Demographic change and increased fluctuation rates pose an even greater threat to smooth production processes. Because with the employees, often many years of experience knowledge go into retirement, to another company or even just on vacation – to the chagrin of the “survivors” when an unexpected problem arises. This is where Peerox GmbH steps in. Peerox is a spin off from the Fraunhofer-Institut für Verfahrenstechnik und Verpackung IVV. With this license-based software solution, the start-up wants to completely redesign internal knowledge transfer and increase efficiency in production. For this purpose, process and machine data are analysed using machine learning algorithms and linked to expert knowledge that colleagues document in an associated knowledge database. If the system then registers a malfunction in the production process, the employee receives suggestions for solutions based on similar incidents and can rectify the error immediately. The Peerox founders also demonstrated a high level of problem-solving competence, building up their company during the pandemic despite adverse conditions. Their resilience has now been rewarded with an investment from Saxony’s TGFS Technologiegründerfonds. MBG arranged the financing in its function as management partner of TGFS. Previously, it had already provided Peerox with capital from the Corona-Start-up-Hilfsfonds (CSH).

Peerox GmbH was one of the first companies to raise venture capital from the newly launched third generation of TGFS funds. The responsible investment manager Paul Eppinger accompanied the development of the start-up over several years: „The overall package at Peerox GmbH consisting of the founding team, the product as well as market feedback in the form of significant sales with very well-known customers was absolutely convincing. The two founders, Andre Schult and Markus Windisch, complement each other perfectly, both personally and professionally. With the help of the growth financing that has now taken place, the planned expansion efforts can be implemented.“ Sächsische Beteiligungsgesellschaft (SBG) also participated in the latest financing round as a co-investor. The capital raised is to be used primarily for the recruitment and further development of personnel. Andre Schult puts it in concrete terms: „Our aim is to strengthen our personnel in marketing and sales and to build up the necessary expertise in-house. In addition, the investment gives us the freedom to decouple the project business from short-term capital requirements.“ In this way, promising customers can also be accompanied through more complex POCs and introduction processes. This will only pay off after some time has passed. With TGFS and SBG, the company has found investors who support this long-term strategy. The predominant financing form of silent partnership also fits the vision of the founders — after all, it preserves their decision-making authority. „We want to still be at the helm in 30 years and hopefully be able to hand Peerox over to our children’s generation one day,“ Andre Schult clarifies.

Peerox’s core product is the MADDOX software solution, which combines artificial intelligence and human expertise to create a new dimension of knowledge. The first major pilot customer was Bayer AG, whose feedback was incorporated directly into product development. Paul Eppinger from MBG is impressed: „We consider the MADDOX product to be extremely promising. Because it represents an innovative solution to the shortage of skilled workers and knowledge transfer in manufacturing companies. The successful use in the production of one of the largest pharmaceutical companies in the world illustrates the potential of the software.“ In the meantime, the product is ready for the market and has been able to generate initial license revenues in further pilot projects. Paying industrial customers include the Dresden-based packaging machine manufacturer Theegarten-Pactec and national corporations such as Henkel. Getting to the first sales was not an easy road. Peerox had just been founded when the pandemic threw a spanner in the business plan — and the lockdown made acquisition virtually impossible. In this predicament, Peerox approached MBG, which managed the Corona-Start-up-Hilfsfonds(CSH) in Saxony as an intermediary. In early 2021, the first financing deal was sealed with funds from the CSH; the following year, they again received equity capital from the relief fund. This „straightforward cash injection,“ as Andre Schult describes it, ensured the young company’s financial ability to act during the pandemic. It also allowed the team to concentrate fully on optimizing their product.

Originally, the Peerox founders pursued a bootstrapping approach. They deliberately avoided money from investors seeking quick exits. Andre Schult explains his financing philosophy: „Our vision is to build a sustainably successful, medium-sized company in Saxony. We are not looking to sell Peerox in a few years at the highest possible valuation.“ In discussions with potential investors, he said, it has always been important for him to emphasize what values Peerox is pursuing. „At MBG, we met with acceptance and encouragement with our attitude. This has allowed us to build a trusting relationship characterized by mutual appreciation.“ He also treats the 18-member team that he and his co-founder have gathered around them with appreciation and value. In terms of team leadership, Andre Schult and Markus Windisch also have clear principles: They want to create a working environment in which everyone can develop according to their interests and „already looks forward to Monday on Sunday.“ As entrepreneurs, they feel it is their responsibility to change society for the better — and they start doing so on a small scale at Peerox. For them, economic activity and ethical standards are not mutually exclusive. Quite the opposite, as Andre Schult aptly puts it at the end: „It takes capital to implement our idealism.“

Deal team TGFS
Tobias Voigt and Paul Eppinger

The article was published by the MBG Sachsen — management partner in TGFS.
Image source: Peerox GmbH