British startup Bubo.AI, which aims to revolutionise the way companies price their products, has raised around €720K from NPIF – Mercia Equity Finance, which is managed by Mercia and is part of the Northern Powerhouse Investment Fund, and private investors. It’ll use the funds to accelerate development internationally, focusing on North America and the rest of Europe.
Bubo.AI, founded in 2019, uses artificial intelligence to analyse customers’ behaviour and 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% increase in profit.
Bubo.AI, which is based in Middlesbrough, was 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 auto parts 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 €2.2 million 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.
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.”
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.