Despite the pandemic, it’s been a big year for SG Papertronics. The startup recently won the Flinc Pitch Camp and received substantial early stage funding from the Investment and Development Agency for the Northern Netherlands (NOM) and the University of Groningen Holding Company (RHM). CEO/CTO Maciej Grajewski and COO/CMO Richard Rushby discuss this year’s milestones, their investment process, the commercialization of a patent and the cool things on the horizon.
SG Papertronics’ Beer-o-meter helps artisanal breweries maintain high levels of quality for their craft beers. With their simple plug-and-play testing system, the device will be able to register and analyze color, bitterness, acidity, sugar and alcohol levels, on site and within minutes. This testing system drastically reduces costs and also helps brewers develop new craft beers faster. The analyses will help the growing number of artisanal breweries produce innovative new beers of both high and consistent quality.
Let’s start with the beer-o-meter. What’s the idea behind it and how does it work?
Maciej: “Quality control and assurance is absolutely vital for the brewing process. Large breweries producing on an industrial scale can automate this beer testing for quality control, but for smaller craft breweries, it can be an incredibly time consuming and labor intensive process. So we wanted to develop a device that’s portable, affordable and above all, easy to use, without needing a background in chemistry to be able to understand the results.”
Richard: “Our beer-o-meter uses capsules or pods, as we’d like to call them. In that sense, it’s very similar to a coffee machine. They’re single use and we’re currently testing two different types of pods that can register different things, based on what breweries like to measure.”
Did COVID-19 change a lot for you guys?
Maciej: “Fortunately, the operational side can be done remotely. It’s not ideal of course, but manageable. Our office building also has a limited capacity, but that doesn’t really affect us, which is the big advantage of being a small company.”
Richard: “For the breweries we’re testing with, it’s a different matter of course. They’re focused on survival and innovation hasn’t really been a priority this year. But I spoke to one of the brewers recently and fortunately, because they’ve shifted from kegs and wholesale for bars to bottles and cans for consumers, they’re now incredibly busy right before the holiday season. So that’s a good sign at least.”
Let’s talk about the early stage funding you guys got.
Maciej: “Sure. That all starts with the question of whether or not your company needs outside investors. When we started, we looked at things like government subsidies and our own money. But when I started crunching the numbers and took everything into consideration, like patent licensing, I quickly realized it was virtually impossible to continue without financing. We got ourselves as far as we could without investors at that point.”
And talking to investors and the whole process of growing, what was that like?
Maciej: “For me, I think one of the more challenging things was that it felt like I had to learn a new language. But it’s also something I wanted to learn. Coming from an academic and research background, you’re used to explaining things in a certain way. And while that might be relevant or self-evident for fellow scientists, that’s not necessarily the case when talking to entrepreneurs or investors.”
Richard: “Maciej is actually selling himself a little short here, haha. He’s really good at explaining how the beer-o-meter works. I can explain the basics, but quickly run into trouble when people start asking questions. Working with the University of Groningen and NV NOM as investors is also very different from working with a more traditional VC, I think. It’s much more of a collaborative arrangement and you get a lot of support and mentoring.”
Richard: “And looking back on this year, well, nothing has gone horribly wrong... haha. A lot can go wrong of course and there’s quite a lot that needs figuring out. And for every step, there’s always an added layer of complexity. This year I had to hire two people, which was something I had never done and it can definitely feel intimidating at first.”
You mentioned licensing a patent. Is it difficult to build a business around that? And does that also mean your idea is well protected?
Maciej: “Well, the University essentially takes care of a lot of the initial work that’s involved, like the application, legal wording, etcetera. That is, if the invention originates from one of the RUG research groups. They don’t do it as a business. The patent is theirs and we license it and can make commercial and strategic decisions.”
Richard: “What makes matters complicated is that you would need to register it in every country you want to do business in, so we’re talking six figures comfortably for that. If you want to be fully protected in the EU, the upkeep alone is enough to bankrupt your company if you don’t plan properly. So it comes down to leverage versus finance and you have to be really smart about how you use it and where you register.”
What will 2021 and beyond look like for you?
Richard: “Assuming of course everything goes according to plan, the rose-colored version is we’ll be running a pilot for our prototype with Bax and Martinus breweries in February and March. In April we’ll be giving a talk at one of the country’s biggest craft brewers conferences, which is very awesome. At that point we’ll probably be open for pre-orders, with a soft market launch in Q3 or Q4, with two test pods. After that, so the second year, when hopefully all the kinks are worked out, we’ll work on further testing that will ultimately add up to 10 different types of tests relevant for brewers.”
Maciej: “And after that, we’ll be looking at developing testing kits for other industries as well. The principle behind it can also be used for checking the quality of the ground water in the agricultural sector for example, or testing the quality of drinking water in developing countries or disaster areas.”