Price optimisation platform raises £650k for growth
A start-up which aims to revolutionise the way companies price their products has raised £650,000 from NPIF – Mercia Equity Finance, which is managed by Mercia and is part of the Northern Powerhouse Investment Fund, and private investors.
Bubo.AI’s platform uses artificial intelligence (AI) to analyse customers’ behaviour to understand what they are willing to pay, then recommends the optimum price to sales staff. The company also supports sales staff to avoid them giving unnecessary discounts.
The platform, which is designed for wholesalers and distributors such as builders’ merchants and food services, allows them to base their prices on customer value rather than cost or other methods, yielding on average a 3 per cent increase in profit.
Bubo.AI, which is based in Middlesbrough, has been co-founded by serial entrepreneur Alan Timothy and Polish data analyst Marcin Lisowski who had previously worked together to create a pricing system for a global autoparts supplier. After failing to find a solution on the market that satisfied their need, they decided to build one themselves. As a result, the company increased profits by almost £2m in just six months.
The two men joined forces with leading AI expert Professor Huseyin Seker of Staffordshire University, and ex-Microsoft marketing veteran David Shell to develop their ideas and create an off-the-shelf solution. Bubo.AI, which was launched in 2019, is now used by clients including Tarmac, while the company has partnered with Teesside University and other institutions to promote the use of AI in pricing. The funding will allow the firm to scale its operations rapidly across Europe and North America.
Alan Timothy, who is CEO of Bubo.AI and who is also founder of software firm i-snapshot, says: “Pricing has previously appeared like a dark art, and traditional approaches are problematic and not very effective. Trying to price match with competitors can lead to price erosion, especially in a downturn, while sales staff often resort to discounting to meet targets.
“Now for the first time our solution means companies can use customer value-based pricing, which could be key for them to recover revenue and build a roadmap to profitability in the post-Covid world.”
Simon Crabtree, Investment Manager at Mercia added: “Research shows that smart pricing is the most effective way to increase profits. However getting it right is difficult, especially for big distributors or wholesalers with many different products and branches. Bubo.AI could help companies to revolutionise their approach to pricing and transform their profitability.”
Tees Valley Mayor Ben Houchen said: “Bubo.AI is a great example of an amazing digital company that’s gone from strength to strength right here in Middlesbrough and just goes to show just how much digital talent Teesside, Darlington and Hartlepool has to offer. Our tech and digital firms are helping our businesses, and those across the country, with the problems they face with practical, innovative systems that allow them to get more business done. This will be even more important as we begin to focus on economic recovery following the coronavirus pandemic.
“I wholeheartedly support our innovators, job creators and entrepreneurs, and thanks to the money invested via NPIF, Bubo.AI can continue its successful growth across the globe.”
Sean Hutchinson, Senior Investment Manager at the British Business Bank said: “It’s great to see high-growth companies like Bubo.AI in Teesside using NPIF funding to accelerate their growth globally. As a new software platform, Bubo.AI has the potential to boost regional and economic prosperity which is exactly what NPIF set out to do.”
The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.
For more information, please contact:
Head of Marketing and Communication
Mercia Asset Management PLC
+44 (0) 330 223 1430
+44 (0) 161 860 6063
+44 (0) 780 163 9816
About Mercia Asset Management PLC
Mercia is a proactive, specialist asset manager focused on supporting regional SMEs to achieve their growth aspirations. Mercia provides capital across its four asset classes of balance sheet, venture, private equity and debt capital; the Group’s ‘Complete Capital Solution’. The Group initially nurtures businesses via its third-party funds under management, then over time Mercia can provide further funding to the most promising companies, by deploying direct investment follow-on capital from its own balance sheet.
The Group has a strong UK regional footprint through its eight offices, 19 university partnerships and extensive personal networks, providing it with access to high-quality deal flow. Mercia has circa £8-00million of assets under management and, since its IPO in December 2014, has invested over £90million across its direct investment portfolio.
Mercia Asset Management PLC is quoted on AIM with the epic “MERC” and includes the following wholly owned subsidiaries –
- Mercia Fund Management Limited is authorised and regulated by the FCA under firm reference number 524856
- Enterprise Ventures Limited is authorised and regulated by the FCA under firm reference number 183363
- EV Business Loans Limited is authorised and regulated by the FCA under firm reference number 443560
About The Northern Powerhouse Investment Fund
- The Northern Powerhouse Investment Fund will invest in Microfinance, Business Loans and Equity Finance sub-funds which will offer financing ranging from £25,000 to £2m, specifically to help small and medium sized businesses secure the funding they need for growth and development.
- The Northern Powerhouse Investment Fund is operated by British Business Financial Services Limited, wholly owned by British Business Bank, the UK’s national economic development bank. Established in November 2014, its mission is to make finance markets for smaller businesses work more effectively, enabling those businesses to prosper, grow and build UK economic activity.
- The Northern Powerhouse Investment Fund is supported by the European Regional Development Fund, the European Investment Bank, the Department for Business, Energy and Industrial Strategy and British Business Finance Limited, a British Business Bank group company.
- The NPIF covers the following LEP areas: Tees Valley Combined Authority, Greater Manchester, Cheshire and Warrington, Cumbria, Liverpool City Region, Lancashire, Humber, Leeds City Region, Sheffield City Region, York, North Yorkshire and East Riding
- The project is receiving up to £140,359,192 of funding from the England European Regional Development Fund as part of the European Structural and Investment Funds Growth Programme 2014-2020. The Department for Communities and Local Government is the Managing Authority for European Regional Development Fund. Established by the European Union, the European Regional Development Fund helps local areas stimulate their economic development by investing in projects which will support innovation, businesses, create jobs and local community regenerations. For more information visit https://www.gov.uk/european-growth-funding.
- The funds in which Northern Powerhouse Investment Fund invests are open to businesses with material operations, or planning to open material operations, in, Yorkshire and the Humber, the North West and Tees Valley.
- The British Business Bank has published the Business Finance Guide (in partnership with the ICAEW, and a further 21 business and finance organisations). The guide, which impartially sets out the range finance options available to businesses and provides links to support available at a regional level, is available at www.thebusinessfinanceguide.co.uk/bbb