TEC4MED is producing the Nelum Box, for all kind of medications, which require cooling or heating. During the interview, Nico Hoeler  – Managing Director TEC4MED (https://www.linkedin.com/in/nico-h%C3%B6ler-7a203283/) tells us how his “side project” turned into a full-time job as co-founder of a medtech startup, now with 13 people. The idea was developed, while one of the founders had a job to transport doping samples for a global sports event.

We talk with Nico about the regulations and certifications you need to produce a medical product. We also talk about their market entrance in the United States. They build in only 6 months a quality management system for medical products for their certification in the US.

During the interview Nico tells us their approach, how they tested the market fit in Japan and the US, without any coding, to keep it as cheap as possible.

LinkedIn: https://www.linkedin.com/company/nelumbox/

Website: https://www.tec4med.com/

Crunchbase: https://www.crunchbase.com/organization/tec4med

Idea seen at Entrepreneurs Club Darmstadt https://entrepreneursclub-darmstadt.de/

Transcript below

Announcer: Welcome to Startuprad.io your podcast and YouTube blog covering the German startup scene with news interviews and live events.

Joe: Hello and welcome everybody. This is Joe from Startuprad.io today, your startup podcast and YouTube blog from Germany. Today I’m bringing you again, an interview from a startup here in the Rhine-Main-Area this time as a Google Hangout because, there’re things that keep me from visiting all the startups, especially traffic. Therefore, I’m very happy to have Nico here from Darmstadt. Hey, how you doing?

Nico: Good. How are you?

Joe:  I’m doing great, thank you. And you are here because you are one of the founders of Tec4med, right?

Nico:  That’s totally correct.

Joe:  Okay, before we get into what you guys actually doing, can you tell us a little bit about you?

Nico: Yeah sure, so well I’m one of the three founders of Tec4med and actually yeah, I’m a mechanical engineer or had a double major, like both in mechanical engineering and Econ. And here I’m one of the two managing directors, actually being responsible for the financials for the purchasing and also for the quality management right now. So that’s my basic function here, which is why I can get a lot of input from my experience in and both double majors that I just mentioned.

Joe: I see and you, you had some, some experience before, right? So at least some internships and some serious jobs. I see you’ve been even a; you’ve been even I’m an intern in Shanghai.

Nico: Yes, that’s right actually I didn’t get that much experience before founding this company, so actually I did it just right away from the university. Of course, I did a couple of internships in several companies, but once being there, I found out that working in a large corporation this actually not what I want right now. So that’s why I was more into founding my own company and that’s why I’m sitting here today.

Joe: I see and your company is right now in existence for approximately two years, right?

Nico : Yes, it’s totally right so actually,  the idea came up a little bit before that but the company now is all around two years before that it was more like a founding project at the very beginning I did it as a side job during university I was finishing my master’s degree writing my master thesis and during this timeframe, I’m actually met one of the other founders with this idea in a student consultancy or no, in a student club that I founded, which was called the entrepreneurship, entrepreneurs club here in dumpster. And he, they’re one of our founders was pitching the idea of the Nebulous box. And I was wondering wow, that’s an incredible idea and I can’t believe that this is not existent today, so I joined him, during the master thesis face and we applied for a couple of internships.

No, say scholarships and that’s how we took off the ground. So got the first smaller amounts of funding. I’m like in a scholarship and that’s how we actually funded our first 18 months, I guess with I think in total three scholarships that we got and then after the scholarships and after having like, you know, a little bit more mature business plan and a little bit more or let’s say a little bit better working prototype, then we applied for investors,  like after around one and a half years and that’s where we got our initial funding and now we almost, no actually we just hired all thirteens another team member.

Joe: Congratulations. That means you’re right now 15 guys to two founders and 13 team members.

Nico: Actually, no we’re 13 in total so, we have 10 employees and 3 founders.

Joe: And your product is now, ready to be used to be sold and, that’s why you guys actually found us Startuprad.io on Twitter and you asked: “Hey, can we do an interview?” And I said: “Okay how about remote?”

Nico: Yeah, right so no we are not yet on the market, so we are very close. I’m getting to it we just started the production. We just, you know went through all the certifications that we needed to do to actually get so we are actually coming from the medical sector which is under high regulations and high regulatory. So, it was a big hassle to get through all the regulations, which we did almost the last six months, only so we had a lot of testing, a lot of quality management stuff going on, especially in the US. But since we wanted to start internationally from scratch, that was our way and so we’re just having like one or two last tests and we already started mass production so in June like or July latest, we will ship our first products.

Joe: I do have a few more questions because what surprised me the most was the most of testing was going on in the United States. Usually you would assume Germany with its regulations and all that stuff, you would need to do more and actually, the administrative effort was greater in the United States.

Nico: Yes, if something goes wrong in the US, you don’t want to get sued and that’s why we went through a lot of regulations in the US. I think we’re very special case here because, you know, definitely I need to get a little bit more into detail about our products. We are a small medical refrigerator, actually not just a refrigerator we can also heat, so actually we are a temperature control unit but I’ll come back to that later and in Germany actually have some standards which actually apply to this only functionality, so we just needed to match a couple of very specific standards in the US, there wasn’t like a specific set of standards for the medical fridge, which is why we needed to apply for a much more generic standard, which on top has a lot more regulations than this specific one in Germany. So, in the US, we are, we’re classified as a class two medical product, which is a lot of regulations to go through, a lot of testing and then, also a lot of testing in terms of how safe is the product, can it burn? Can you get an electrical shock? Can you get any, mechanical damage from the device? So in the US, it’s, it’s,  it’s much tougher from the point of liability that you need to get to your customers yeah.

Joe : I see so if I would wrap this up in Germany it was the regulation and in the US it was not necessarily the regulation but, the potential to get a very expensive lawsuit that you wanted to avoid. And that’s why you went through all the hoops and loops and crossed all the t’s and dotted all the i’s and all that stuff.

Nico: Yes, at some point that’s, that’s, that summarized totally correctly because a lot of certifications are not really necessary to bring the product to the market, as long as nothing’s happening. But once your device starts to burn because you made a, I’m actually a mistake designing the device and like a whole house burns down to the ground and then the authorities come back to you and asked for the paperwork that you did to get this product a certified, then you have a big problem because then you have the big lawsuit, which can kill your company immediately so  you don’t do it in the first place just to get the certification. You just don’t want to get sued in the case that something’s going very wrong. Yeah, very wrong and you will damage someone or someone’s property or someone’s health. So, it’s just for the worst case, for the most part, or for the biggest part, but you really want to have that covered, especially in the US.

Joe: I personally have never had the experience of, applying for something medical related, even though I was an EMT back in the days you’re in my draft service, but admittedly the only thing you have to deal there is getting all the medical equipment to keep it running. So basically, it should function properly and that everything you have to do about it has to be certified. And the question is, how did you approach those processes? Did you have a plan in Europe and in the US and is it like, still one application here in Germany and you can sell all over Europe or is It still a patchwork?

Nico: That’s a very good question, so.

Joe: That’s why I’m asking.

Nico: If you, if you dig deeper into international regulations. You will see different kinds of standards. So for example, there are the IC standards, which are global standards and if you’re lucky, you can apply those kinds of standards to your device, meaning you have the global IC standard and then you need to register your device in each of the countries that you want to sell it to and then in each country you have some special regulations on top of these IC standards but I would say in total they are 99.5% the same. So you start from the very high top and then you get it certified as an international yet product, in some kind of way and then you go to the US or authority, say you have designed the device to the IC standard and they apply a couple of Us norms basically in the US, it’s mostly about different plugs and the different voltage just for example, which are different in the US from, from the European Union for example and, and then that’s it and then you have it certified if you can apply such a standard, that’s very easy because you just do the general regulation. Then you go to each country and ask for the approval in each country that you go to, If you don’t find something that is based on an international standard, then you need to go through each country. You need to get it registered, as the device that is actually appropriate to the national standards. Then that’s, that’s a lot of work because of course, you don’t have the knowledge in each country for its dots. Like one country that’s very difficult as Japan for example, because you have a lot of standards that you can’t even read.

So the first step would be to translate some kind of standards, which is very expensive and then you just find out okay, now I actually paid like 2000 euros just to translate the standard and it doesn’t even apply to my device. So,  for the first couple of years or for the first one or two years, we actually don’t get our product up and running in Japan because the certification is so difficult but luckily we have one standard that applies on the IC regulators and that’s how we got it certified in the US and European Union  at once.

 

Joe: Wouldn’t, didn’t know that before, It’s pretty interesting because you always think,  financial services, medical services, health care, it’s very regulated, very much patchwork apparently it’s, it’s just getting better and we already touched a points or you once saw a  presentation in your life because you’re mechanical engineer you, you didn’t touch too much of the medical field before and you just saw this product and thought okay, I got to do business out of that.

Nico: Yeah so, luckily I didn’t know what was lying ahead of me once I started the company because otherwise I would never have started it especially in the medical field because at the beginning, you know, I, I just recently looked at my first business plan that we made and I think it was telling me I’m like, okay we start the company now and then, and then six, six to eight months, we’ll have the first product out on the market and then one and a half years we’ll have the second product out of  on the market. Now it took us from the initial idea to market lounge around four years and from founding the company where actually we just really started working with a little bit of money to the final product launch.

It took two years so it was a long period to get here and it took an actually quiet, yeah, I wouldn’t say huge, but it took a decent amount of money to get here. And Luckily I didn’t know all of the regulation, regulatory stuff before I started because it’s very complicated. But if you’re forced to dig deeper into this kind of a thing and into this topic you have to do it and that’s what we did, I think there are not that many companies that actually build a whole quality management system in the medical field in the US in less than half a year as we did, but we were forced to so that’s the way it had to go.

Joe: And, do you need a legal entity in the United States in order to do that?

Nico:  Luckily not, but you need a representative, so there’s one person that is contacted once for example, one of our devices starts to burn then this representative is contacted first and he is the legal representative in the United States, but we don’t have to found a legal entity so luckily we didn’t have or we don’t have to do that.

Joe: And before we get into the product, where are you guys actually producing?

Nico:  That’s also, very good question. So, the way we designed or we went through the whole design processes that we didn’t want to start, like very big mass production right from scratch because how we designed the product was always very close to the customer so we visited our customers, very early on just with a pdf and show, showcased three d renderings and told them how we would actually, build a device but never showed anything in real or nothing really worked at the very beginning so we went to customer, to customer, to customer. I think we interviewed more than 100 different B2b customers right now. So that’s a, that’s quite a lot because it’s not that easy to talk to the right people in different businesses. And that’s how we designed the product and still, even though we launch in eight weeks, we all already know that the device we manufacturing right now, will not be the best device we have ever built.

It will be the best device for now, but there will be a better one. So that’s why we said we want to get market feedback as early as we can do or as early as we can get it so we started with a small number of devices right now and then we want to get bigger and bigger and bigger because I think even with a couple of devices selling very quickly, we can learn a lot from the marketing again even though we iterated the device already very closely with our customers. So coming back to your questions, we’re actually building the first capital of hundred devices in our own office space here.

Joe: It’s real handwork.

Nico: Yeah, so basically we just do the assembly so I think that’s something very different than building the whole device. We don’t do injection molding, we don’t do printed circuit boards so all we do is we get all the different parts here and most of them are not even single assemblies, but sub assemblies. So I think what we assemble here is like maybe 20 sub assemblies, which can be done in less than an hour. And then the devices built here in our workshop and then we also do all the quality testing in-house so we can have our thumb on the quality management system, which is needed, especially in the US and also in the European Union. So, we are responsible, and we can be, I’m sure that we hope the quality that we’ve promised, yeah.

Joe: And now that we went through the idea and the assembly process, can you show us the big box we’re talking about?

Nico:  Yeah, sure so basically, what we are doing is we are building a temperature control unit for the medical sector. So, what do you see here is the Nebulous box so what is the Nebulous box? SSC right now it’s basically a small fridge for your home, just imagine you’re taking medication that is temperature sensitive, for example, that needs to be stored at two to eight degrees Celsius. How do you store it? You can store in your fridge, within the fridge you have a various temperature, temperature ranges for example in the door, it’s too warm in the back your medication might start to freeze in between milk and your cheese that you don’t want to have contact to your medication.

Joe:  And don’t forget every time you open the door at the temperature

Nico:  Drops yeah, yeah.

Joe: Or depending on how you see it. So, if it’s cooled, it goes up because all the hot air from the apartment gets in and when you close it and it takes some time until it is back again. Right.

Nico: That’s totally true so it’s not the best, it’s not the best way to start your medication. So, for this case, you would have your small medical fridge at home, which can be just connected to your power supply and then you have, a device just for your medication, which keeps your medication exactly at the right temperature range. But imagine you’re going on vacation now. So how do you bring your medication to your hotel and even on a flight so therefore it’s also a mobile unit? So you just flap the handle here and then you can carry it around basically running the device with two batteries here in the back so with each battery we get right now more than 12 hours of runtime. So with one device, you have 24 hours, 24 hours, a run time if you bring two more batteries, you have 48 if you find any electricity source, for example, in the car or in your hotel room you can extend the run time for good. So that’s how you have always the safest cooling unit with you.

Joe: I, I just saw this little, this little like hole in the center Is that where you click in? Is it a fingerprint scan of what is it?

Nico: Okay all right, so basically you have a small display here, so this is just an older prototype is not the zero production product. So you have a display here showing you the internal temperature showing you the battery status and, showing you if it’s connected to the cloud so,  we this device, like for example, in a clinical trial because we don’t only use it with private patients, we most of the time use with, use it with professionals and the B two B sector. They want to have our temperature data, not just on the device but also in the cloud so they can have real-time tracking of all the parameters so we track.

Joe: They can prove they never violated any of the cooling cycles. So basically, always stayed at the same temperature.

Nico: That’s, that’s true so because, in the B2 B sector, it’s not just unnecessary to have a safe, the safest cooling solution on the market. You also need to prove that and how can you prove that? Well, you need to track each parameter that the authorities want to see. So basically, it’s the inner temperature, it’s the outer temperature, it’s in and out of humidity. It’s the battery status that we track. We track GPS and triangulation. So, we get the Geo-position of the device we have an electronic lock, so not anybody can just open the door. You need to swipe and RFID card or RFID token to get it unlocked so this is basically like a small safe and once you press the button you can open the device.

Joe: I see, I see and who did, did the color changed?

Nico: The color changed yeah, so also the buttons can change showing you if you have authority to unlock the device if there’s any temperature warnings or battery warnings, if the device is cooling right now or if it’s not cooling so chose everything that you need to know what’s going on with the device.

Joe: I see and, who is your usual customer? Because for me or with my very limited medical knowledge, what came to mind are patients for diabetes, for example, they need to call their, if they have certain forms of insulin they need to cool it and what, what is your customer because you most necessarily have a more dedicated if you have the fields, right?

Nico: Yeah so, well we started actually not with a private customer, so we started with the B Two B sector. So how the idea originally came up was, that one of our founders, Martin was delivering doping samples for big sports event in 2014 from Brazil to an aggregated laboratory in Switzerland because those doping samples needed to be cool at a certain temperature range and what’s out on the market today is just passive shippers, meaning even though very expensive and high valuable and goods, I just transported like Styrofoam box with cooling packs in the inside so that is basically a technology that’s more than, I don’t know, 500 years old using ice to cool stuff so luckily in the food sector, and we are already got ahead of this trend and we have electrical Fridge’s, but for the mobile use, we don’t have electrical fridge’s, we still cool stuff in the way that it was done 500 years ago.

So he was transporting the doping samples in a Styrofoam box with ice packs and it was very unsecure , it wasn’t temperature stable, anyone could open the device so because it was just a couple of arcs, you know, so, each of the staff at the airport would actually open the box and exchange doping samples. So that’s how we came up with the electronic lock and it, it was barely made in the timeframe, during which he delivered the samples. So he was thinking, so we are living in the 21st century why isn’t there any electrical device that runs, in mobile mode that I can cool my stuff with? So with the background of a mechanical engineer, if he was thinking, thinking during one of his long term flights, and then he came up with a solution building electrical Fitch so we went to the garage, actually we’re a garage startup and he built the first prototype.

So I’m building the first prototype. He actually discovered why it’s difficult to have a mobile cooling fridge that runs on battery because cooling takes a shitload of energy. So, just to give you an example, I don’t know if you’ve ever used this camping boxes for, for the beach for example and I don’t know if you’ve ever connected this device to your car battery. It can draw down your battery, which is like this size like almost the size of the hole Nebulous Box it can get your battery empty in less than two hours so they see and your food is not even cool or your beer. So then you see that using electrical power to cool something down takes a lot of energy. But building his first prototype, he actually noticed an effect of how we actually regulate femoral electric cooling elements which we use.

And with this effect, we can actually extend the run time of the batteries by a factor of three to five. So, now we get 24 hours run time out of two of these small batteries and not just two hours of run time out of such a battery so that’s what we patent on, we are holding three patents on this very, energy efficient cooling technology and with this knowledge we said, okay, now we have USP which no one had before now we are the one company that can build electrical fridges for the mobile usage and now we can actually lift the market for Mobile Cooling units to the 21st century, which wasn’t done before yet so that’s how we actually came up with the whole stuff. And, as I joined the company we figured how big is the doping sample market?

Should we start a startup based on doping samples? And of course, yeah there are a couple of hundred transports a year, but actually, you won’t make the Unicorn valuation with this market. So, then we checked

Cross talking.

Nico: Not yet, but we are, what we’re trying hard so, then we looked at other markets and which one market that was very obvious is, of course, the pharmaceutical market because there’s a lot of stuff needed,  needed to be transported to at a certain temperature range. So, the whole B two B sector and  the pharmaceutical market came up which was blood samples, organs we deliver a lot of stuff or clinical trial materials so from the hospital to our laboratory, from laboratory to laboratory, we also deliver on the last mile for pharmacies so if you are a pharmacy delivering directly to the patient and you grab our device you don’t need to train anyone.

You just have one switch, you switch it on and it cools down at the right temperature range and you have real-time tracking all the time another market is OBC so onboard careers as Martin was doing his studies, so people delivering very urgent deliveries on the plane or on the car which can be used or which can be done with already bias, and then we had, cross-talking.

Joe:  Actually my memories from the Red Cross there was also a car which was used to transport blood can this also usable for blood.

Nico: Yes, so in Germany, we even read a fully certified as a block blood bank or blood refrigerator and also in the US. So blood is very highly regulated, but we made it through the regulations and this is also blood fridge. So basically,  that can be done as well what we’re also doing is the whole hospital logistics. So in between hospitals, from the hospital pharmacy to anywhere else, we’re currently running a very big test for example in France with the hospital where we use it in ambulances and ambulance helicopters. So for the adrenaline, adrenaline and, for all the other temperature sensitive drugs within the vehicle, if you use it right now,

Joe:  And we might add that especially the university clinics in Germany, not one big building like they’re 15, 20 big buildings there’re like an own suburb on their own. So if you do transportation there it can take 30, 45 minutes by foot. So then also a very good place because you’ve been referring to the pharmacy of the hospital and everybody thinks well they’re in the basement you get into an elevator and that it, nope, that’s not it.

Nico: Yeah, that’s right, so that’s also one very good use case for us what else do we have?  yet we have the whole third-party logistics providers so specialty logistics that carry temperature-sensitive drugs around the world. So that’s one use case and basically, everything that is in the pharmaceutical market. So we also have like, for example, bone marrow or yeah, like some smaller organs that could be transported so basically anything you can imagine that is somehow temperature sensitive but not just.

Joe: Yep, yeah, I do, yeah I just have a very crazy idea. Have you ever thought of building like a vending machine that you put in all the transfer areas of big airports and you just swipe the RFID from your a nebulous box and you get a charge batteries out of it and you just drop the use ones in?

Nico: Yeah, actually that could be one solution as well I mean, it’s very difficult to have that in yeah in each airport but yeah. Why not?

Joe: Just, just thinking of the big ones like Frankfurt, like JFK, not Laguardia, London, France, right. Cross talking.

Nico: Why not? I mean, the future we can think of a lot of use cases

Joe: That is but it’s pretty cool and calls them the Joe machines if you ever do them. To get two more questions that are noted during my, my typing because they always do like notes, actual notes and most of it owes actually going to end a belt into show notes for everybody who’s watching this on YouTube on a video podcast or who is listening to this audio track on a any device on our audio only podcast. You can go down here in the show notes in there, people will find the website of you guys your personal LinkedIn profile so people can reach out to you directly as well as other things we just talked about at, at least important ones where do you have referral links? And, before I would wrap up this a little bit, I have two more questions. First of them is funding how you guys are funded?

Nico: Okay, so as I, I’m already stated in the beginning we had a lot of scholarships and luckily you have that in Germany because the government and also the European Union actually invest a little bit and startups like especially in the early phases where it’s very difficult we are pretty much have nothing. So,  especially for hardware or medical startups, this is very important because you know it takes a little bit longer to build such a device then to do your, to do the next e-commerce shop and

Joe : 33: 33 ( Inaudible) did the interview.

Nico: Right so, for that, it’s very good I think we got even a, not a mid-sized six digit number but a lower six digit number out of these scholarships in total. So it was enough to get a team up and running for a couple of months to even almost two years. And this was very important to, to, to get it off the ground. And then, once we had our first prototypes or running prototypes, we had offers very promising interviews with cus, customers. And then we had, our business plan, everything already, we started to look for private funding, like real equity funding. We found that the company and then we got one strategic investor, which was the first investor I’m investing a six digit number. And then we got a classic venture capital fund investing another high six digit number with another round of funding with a strategic investor who was invested in before and totally erased now a seven digit number. And, yeah, that’s, that’s what we got so far in terms of funding. Now we’re also,  negotiating debt funding, with a couple of banks for rolling out the mass production or supporting the mass production with this so this, this is also running very good. And, yeah, we’ll do our next round of funding within the next couple of months for sure as well.

Joe:  Great and when will be the launch date?

 

Nico: Launch date so far will be July this year.

Joe: And for everybody who’s seeing this wiggle time, this interview to be released shortly before the actual launch date of your tool but we may add that this video was actually taking Biggie,  beginning of April. So some things may have changed in the meantime, but there’s just a very simple reason to do that. Well, they, there are two simple reasons that we did it this early,  reason number one, I’m moving house. Reason number two, I’ll be a dad in July and so we just couldn’t make it work,  work any other way.

Nico: Yeah, for sure.

Joe: Great, so thank you very much, Nico. Best of luck and hopefully we’ll hear much more from you guys very, very soon.

Nico:  All right. Thank you so much for having me.

Joe: It was my pleasure. Thank you.

Nico: Thank you. Bye, Bye. Bye guy and remember, sharing is caring

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