A Middlesbrough start-up which could 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 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.
Enterprise Ventures Limited is authorised and regulated by the Financial Conduct Authority (FRN: 183363). EV Business Loans Limited is authorised and regulated by the Financial Conduct Authority (FRN: 443560).