Startup produced rapid tests for horses
Until the outbreak of the COVID-19 pandemic in the spring of 2020, the Bern startup livet AG had little to do with human medicine. The company specialized in the diagnostics of respiratory diseases in horses and was planning to enter the market in the fall. To do so, livet completed field studies across Europe, in which rapid tests were carried out on horses.
Lockdown as the impetus for the change of direction
But then the lockdown in March shook up the startup's plans. "The field studies require a lot of supervision and had to be put on ice when the COVID-19 pandemic led to restrictions in public life," the company's CEO Tim Pfister explains in the 2020 SME study. The planned launch was suddenly at risk and livet was facing great uncertainty.
At the same time, a new opportunity arose for the company. "Owing to our technology and expertise in infectious diseases in veterinary medicine, we saw great growth potential in human diagnostics," Tim Pfister explains. Just two days after lockdown, the company finally decided to change course to COVID-19 rapid tests, and by April a new company – ender diagnostics – had already been formed.
For recruitment, the startup relies on its own network
The change of direction created formidable challenges for the young and still relatively small company. To overcome these, Tim Pfister and colleagues opted to separate the new business financially from the existing company. "We didn't want to risk the financial and other resources that we had invested in livet on the new project," say Tim Pfister to explain this decision. To the delight of the CEO, investors were quickly convinced by the project, as ender diagnostics was positioning itself in a very promising growth market.
However, in contrast with financing, the recruitment of new staff proved more difficult. Expanding the workforce in the midst of the COVID-19 pandemic was no easy undertaking. Tim Pfister: "We were a newly formed company with little recognition. And so for recruitment we relied on our existing network – and that was successful." Within a very short space of time, the team grew from nine to 30 employees.
The aim is to further expand the offering of rapid tests
When making its strategic change of direction, livet benefited not only from its own network but also from a simplified approval process of medical products. "Demand was high and this made it easier for us to put reliable, rapid tests on the market," says the CEO. Ender diagnostics has already launched two products, the COVID-19 tests "ender LAB" and "ender MASS." In addition, a mobile COVID-19 test "ender MOBILE" was launched, which can be carried out in any location.
Further changes to the business model are planned for the future. In collaboration with partner laboratories, the company wants not only to further expand the product range but also to build up laboratory capacity in Switzerland and worldwide. "I think there are still many areas of application that we can develop," says Tim Pfister optimistically.
Startup benefits fully from change of direction
And so, all in all, the strategic change of direction paid off because the founding of ender diagnostics also had a positive impact on livet. "The insights we gained will also be useful in the development of rapid tests for veterinary diagnostics with livet," says Tim Pfister. In addition, he says that ender diagnostics had also grown relatively quickly, meaning that administrative, ordering, and client processes had to be developed further. As a result, certain development steps at livet could now be skipped.
However, despite this win-win situation, Tim Pfister still sees potential for improvement. "Looking back, I would invest more resources even faster in the change of direction," the CEO reflects. For this reason, Tim Pfister advises any company that wants to adapt to implement its prepared plan systematically from the outset.
Mr. Steiner, how do you see the business relationship with livet?
The startup business is a world of its own. It's great fun to support a company like livet in this environment. New technologies and innovations bring a continuous stream of interesting challenges on the product side. At present, the business relationship with livet is based primarily on advice and providing support with regard to capital increases and finding investors. We always strive to find the best possible solutions that match the agility and spontaneity of the company.
The COVID-19 pandemic forced many SMEs in Switzerland to look for new business models. What advice would you give to a company that wants to adapt?
It's worth being inventive in order to discover new opportunities in the market. If there is a market for a change of direction, agility and flexibility help a company to establish itself there. In this regard, smaller companies such as livet often have an advantage. As a bank we also always check whether the change of direction planned by the company makes sense. I advise our clients on all strategic changes and projects. Because strategic dialogue is very important to me.
When a startup changes direction, financing is a major challenge. What options exist for a small company to finance a change of direction?
Traditional financing is not possible in the startup area. However, Credit Suisse is actively involved in the startup environment through the TOP 100 Swiss Startup Award and other investor and networking platforms, for example. We provide help with finding investors and making a network available so that synergies with other companies can develop. In this way, we have so far been able to ensure that most financing rounds for these companies can take place – whether through venture capital companies or with the support of individual investors.