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From March to November 2020, in the midst of the COVID-19 pandemic, the NASDAQ-100 Technology Sector Index has shown an impressive growth of 23%. Looking closely at the top-performing companies, eight out of 10 are software-based companies. When large parts of the world are homebound due to quarantine and social distancing, software – which is distance agnostic – is thriving. All you need is an internet connection and you are good to go.

In the Industry 4.0 sector, despite the rising need for automated manufacturing solutions, things are quite different. Most startups in this sector combine hardware and software-based solutions, and therefore require installing on-premises. The inability to travel during COVID-19 has therefore posed a problem for the sector, which is threatening its sustainability. However, Israeli Industry 4.0 startups responded by adapting their strategies, and have managed to continue servicing their customers during this time.

This article will focus on one unique challenge industry 4.0 startups are facing – remote, on-premises installation. Augury, a provider of machine health diagnostic solutions, is one of the startups that tackled this obstacle in an innovative way. “We employed augmented reality (AR) tools to guide the customer through the installation, seeing what they saw in real time,” says Gal Shaul, cofounder & CTO of Augury. “We also created a network of third-party partners who can assist in installation; in addition, we’ve developed new training materials and a certification program for third-party installers.” This allowed the company to actually increase its installation rates above pre-COVID levels, and enabled it to raise a recent $55 million D round, one of the highest recorded rounds for this sector.

Here are some of the novel approaches the Industry 4.0 sector is using for remote installations:

Focus more efforts on the local industry

Many Israeli startups have leveraged the COVID-19 forced localism by shifting their efforts to markets where they have an existing presence. An example of this strategy is working with Israeli manufacturers and increasing technological development and productivity within the local industry.

Razor Labs, an Israel Industry 4.0 startup that provides AI-based data analysis solutions for manufacturers, has done exactly that: “Since the beginning of the pandemic, we have witnessed an increase in local demand for our AI technology,” says Raz Roditti, CEO of Razor Labs. “Combined with travel restrictions, it is more appealing for us to put more focus on the Israeli market.”

Provide global customers with DIY installment kits and digital training

Startups have adapted to the new COVID-19 reality by delivering their products overseas with online training kits, so their clients can do it themselves. To use this strategy, startups send a kit with instructions, digital training, and provide online support. This method has the added advantage of enabling easier scaling in the long run.

One example is VocalZoom, a developer of advanced vibration sensors used for machine health monitoring. According to Tal Bakish, CEO & Founder of VocalZoom, “working with kits has helped us scale faster in several ways: for the customer, it is cheaper, and a decision to start a POC is made faster; we get to work with many customers simultaneously, and they do most of the work; and, since it is less capital intensive, the success rate for possible next steps is much higher.”

Develop capabilities for remote installation with local integrators

The typical process for an early-stage Industry 4.0 startup is to use its in-house team for the first installments, and only then leverage this knowledge to train integrators at the target market. COVID-19 has broken this natural cycle and forced startups to work with integrators from the start.

Leo Bakman, CEO & Founder of Halo Digital, a developer of a digital twin solution for manufacturers, says the company has “redesignated half of our development team from the development of our product towards building capabilities for remote installation with third-party integrators, with the understanding it would impact our advancement and release of new features of our product.” He added that the startup is “now building an in-house team to support that shift; these developments were originally meant to occur only a year from now.”

In conclusion, COVID-19 creates great demand for Industry 4.0 startups, but at the same time raises obstacles to seizing these opportunities. Those startups that can adapt quickly and overcome these obstacles will thrive. Nowadays, the difference between success and failure may be entirely dependent on who can adapt best to new methods of customer acquisition. Based on Start-Up Nation Central’s analysis, the Industry 4.0 sector is expected to boom in the coming years. But this won’t mean much if startups don’t take the necessary actions to adjust.

To learn more about these strategies and others, register to attend our virtual Industry 4.0 Global Leaders Summit on Dec 1-3.

The following experts contributed to this article: Leo Bakman, Cofounder & SVP of Business, Halo Digital; Amir Kaufman, Cofounder & COO, WonderLogics; Amir Bahalul, Business Development Director, Augury; Tovit Neizer, VP Business Development, Nanofabrica; Tal Bakish, Founder & CEO, VocalZoom; Evyatar Meiron, Founder & CEO, Fieldbit; and Adam Tabor, Cofounder & COO, Kitov.ai.

Yuval Engelstein is the Industry 4.0 sector lead and research analyst at Start-Up Nation Central, responsible for researching Israeli innovation and world market activity relating to the strategic development of the Industry 4.0 and Smart Mobility sectors. He's in close and continuous contact with innovators and entrepreneurs from these industries. Mr. Engelstein supplies the organization with knowledge and insights regarding both the technologies and the corporate or socioeconomic challenges they could help alleviate. Previously, Mr. Engelstein served as an analyst in the research divisions of the Bank of Israel, and of the Ministry of Transport. He holds a Master’s Degree in Financial Economics and a BA in Philosophy, Political Science and Economy, both from the Hebrew University of Jerusalem.

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