In wind energy, as in many other industries, the next wave of innovation will be driven by sensors and information. We spoke with the young Munich high-tech company fos4X which, with its “Rotor Blade Sensing” technology and software, provides the basis for this development.
The digitalization of the energy industry is progressing rapidly. The demand for clean electricity will continue to rise sharply, not least due to electromobility. fos4X aims to help shape this transformation with its fiber optic measurement technology solutions. In the wind energy industry, the traditional methods of optimizing yield through cost reduction and increased efficiency have largely been exhausted. While wind turbines use sensors, there are hardly any standard sensors where the wind hits the turbine.
fos4X founder Lars Hoffmann says:
"We expect that in a few years, every new rotor blade will be equipped with a multitude of sensors ex works. This means that it is already a dynamic market with a very dynamic niche.
And we have a fantastic starting position in this niche.”
Optimization of wind farms through sensors and software
Due to lightning strikes and high mechanical loads, obtaining information directly at the rotor blade, i.e., where the loads occur, is a challenging technical challenge. It is even more difficult to measure reliably and precisely over the entire service life of a wind turbine, which may be over 20 years.
The founder expects his company to become one of the major players in this niche, as fos4X can solve the technical challenges cost-effectively and reliably. In addition to the sensor technology – the hardware – the Munich-based tech company also offers edge computing software. Data evaluation is based on algorithms that analyze the recorded data on the system itself, generate information, and use it to generate instructions for action, thus controlling the system.
Cost savings and reliable measurements
Let's use an example: If ice forms on the rotor blades in winter, turbines are no longer allowed to operate due to the risk of ice shedding. Once the ice melts, the turbine can start earning money again. However, this only works automatically if the ice mass can be measured directly on the blade. How does this work? Lars Hoffmann explains:
"We do this based on the characteristic vibration properties of the rotor blades. This allows the system to be automatically shut down and restarted safely. With this application alone, many turbines with our solution generate more than 10,000 euros in additional operating costs per winter."
From Munich to the customer quickly
At the company headquarters south of Brudermühlstraße, developers can directly test the vibration behavior of the rotor blades and the company's proprietary sensor technology in the spacious courtyard. Right next door is the laboratory where the sensors are prepared for the wind turbines and the company warehouse, from which the sensors are shipped all over the world.
Is Munich such a favorable location for a company in the wind energy industry? While not a single fos4X customer is headquartered here, Munich offers quick access to customers in Hamburg, China, or North America. A good service provider system guarantees fast service. In Germany, the successful start-up will have its products in series production with all three wind turbine manufacturers by the end of 2017, with the major international turbine manufacturers following in 2018. So, everything is feasible from Munich. Suppliers are also nearby. And a large talent pool of highly trained engineers is available, from which many excellent employees have joined the company.
Benefit from the unique financing landscape
Last but not least, the financing landscape in Munich is outstanding. fos4X has also benefited greatly from this. The founding team had been conducting research in the field of optical metrology at the Institute of Measurement Systems and Sensor Technology at the Technical University of Munich since 2005. After completing his doctorate, Lars Hoffmann joined a consulting firm but rejoined the team in 2010 to launch the spin-off. The company was initially funded by Exist Research Transfer.
The startup really took off in 2012. By that time, it had received the necessary seed financing of €800,000 from the High-Tech Gründer Fonds (HTGF), Bayern Kapital, Unternehmertum Venture Capital Partners, and business angels. Initially, the founding team consisted of four people: two more technically oriented founders, a computer scientist, and Lars Hoffmann, who had studied business administration.
The founders developed the product step by step, following the market's lead. One financing round followed the next just as gradually: In mid-2013, the second round of financing was completed, with €1.4 million, with Unternehmertum Venture Capital Partners as the lead investor. Two years later, in 2015, another financing round totaling €2.7 million was completed, with Falk Strascheg Holding GmbH becoming the lead investor alongside other investors.
The financing was an important milestone for the young company. It enabled them to advance market development and product innovations, while simultaneously expanding their business operations. Successfully so, with annual sales of €3.1 million in 2016, the young company has doubled its sales year after year.
Team successes, milestones and perseverance
The founder was always optimistic about his company's success. When asked what constitutes sustainable corporate development, Lars Hoffmann replied:
"Building a startup means dealing with constant uncertainty. If that's not your style, you should stay away from it. But even if you have thick skin, the following three pieces of advice will help:
- Share the successes and especially the defeats with your team,
- Set yourself milestones that will allow you to measure the company’s development as objectively as possible and
- Make perseverance one of your core principles.”
“We were a really good team”
Unlike his fellow founders, he also followed the last point. Of the original founding team, only one remains today: our interviewee Lars Hoffmann. He says:
"WWe were a really good team to take the first steps with.”
This means building the first prototypes, eliminating the technological risk, getting to know the market, addressing customers, understanding customer needs and implementing them.
But when it came to truly operational work, the first founder left the team. The two other co-founders left last year to leverage their strengths, which they saw in the company's early stages, and founded a new company together.
An encouragement: Every change is an opportunity
“Viewed from a distance, history is instructive,” says Lars Hoffmann today. Personally, however, it was a very moving and difficult period. He lost his most important companions, with whom he had experienced the highs and lows of the early days. Fortunately, the 50-person team now includes several employees who have been with the company almost from the beginning and who now form the management board together with founder Hoffmann. Lars Hoffmann now realizes:
"Every change, even within the founding team, can be used for the better. It should be seen as an opportunity. The departure of the others wasn't a sign of weakness for us, but rather a step toward professionalization. That's an encouragement I can pass on."
After all, it's perfectly normal for a founding team to have friction and even arguments. And it can also happen that a team splits up. However, leaving himself was out of the question for him. Because:
"The prospects for fos4X were and are outstanding. I don't think any of us four founders ever seriously doubted it. Otherwise, the story would probably have turned out differently."
Highly innovative – a patent is registered every month
What the young entrepreneur says sounds convincing. The company's innovative prowess is demonstrated not least by the more than 80 patents filed, of which over 20 have been granted. On average, one patent is filed every month. In-house innovation workshops bring about inventions in all areas—hardware, software, and service. Lars Hoffmann is proud of his company's culture of invention. But there's also a calculated approach. The patents secure the niche, position the company against the major players in the market, and, of course, also for a potential exit.
When asked, Hoffmann explains:
"As a VC-backed company, it's all about increasing the company's value. Our shareholders ultimately want to sell their shares at some point. Personally, I really enjoy what we do: building our own corporate culture and achieving specific goals. Whether that's breaking even or breaking the €10 million sales mark."
And adds:
“But if the game is such that at some point the shares are sold, then of course we’ll play that game.”
There's still time for that, though. This year, the company aims to be cash flow neutral. And from this good starting position, further growth financing could come, according to the young entrepreneur. Because the company doesn't want to limit itself to developing the wind energy market alone.
"With our measurement technology and our software, we have a good chance of making a difference beyond wind energy. We could support the digital transformation of the entire energy technology sector – from energy management to its use in electric motors and energy storage systems."
According to Hoffmann, fiber optic measurement technology will offer advantages over conventional electrical sensors wherever magnetic fields, high voltages and currents, or long distances are involved. This year, the successful young company will also be using its technology in electromobility for the first time.
We're excited to see where the company's journey takes us. One thing is certain: the founder and his approximately 50 employees at fos4X certainly won't be bored.
