You might think that an industry like manufacturing would have its own software stack, but in many cases a huge amount of manufacturing orders is managed through Excel spreadsheets. The thing is, spreadsheets are great for a lot of things, but for manufacturing, and HR management in particular, they’re easy has to be a better way, AG5 believed. A handful of investors agreed, adding 6 million euros to the Dutch startup’s coffers as it begins ramping up.
“Manufacturing workers are the largest group of workers,” says AG5 CEO Rick van Echtelt in an interview with TechCrunch. He claims there are 2.7 billion of them worldwide. “At the macro level, the current pace of technological development, rising sales and an aging population means that the shortage of skilled labor is worsening every year, making the equilibrium in which our economies find themselves more and more precarious. I love the idea that we can make a difference in this big challenge.”
The company was bootstrapped in the early years of its existence and built an early product/market viability to prove its idea before selling it to institutional investors. Headline came in as the leader, along with Acadian Ventures and a handful of other investors rounding out the round. The company intends to continue its internationalization beyond the Netherlands, starting with Germany, and expand its integration ecosystem to allow more customers to use their existing tools to integrate with their HR and learning tools.
The company raised $6 million at a “considerable” valuation, though the company declined to disclose the exact terms of the transaction.
In a previous start-up, the founders of AG5 worked on the same problem from a different angle, developing tools for emergency responders, including firefighters.
“Firefighting requires highly specialized training. Just as operating different fire engines requires vastly different skills, so does it happen on a factory floor. Each machine and task requires specific know-how. I was shocked to see how manual and inefficient the whole process was,” says van Echtelt. “On a much larger scale, organizations struggle to keep track of which frontline workers are qualified to operate a particular tool or work on a particular production line. You use large HR systems, but this software is not designed for competency management. So every company creates its own spreadsheets. It’s cumbersome, doesn’t scale, and is error-prone. We help companies get rid of them and offer them a turnkey skill management solution that integrates with the software they already use.”
Macroeconomics may be on their side because education is the name of the game.
“The European Commission has declared 2023 the European Year of Skills. There were shortages in 28 occupations, from construction and healthcare to engineering and IT, which indicates a growing demand for both high and low-skilled workers,” says van Echtelt. “The problem is such a threat to the way we live that the Commission has earmarked €85 billion of investment to develop digital skills in the workplace because it is such a serious issue that it receives disproportionately little attention. This is a particularly felt problem in Germany, where 19% of the country’s GDP comes from manufacturing.”
Over time, the company wants to establish itself as a competency management system for its employees to ensure teams are trained and deployed efficiently.
“Ultimately, we want to lead to happier and healthier workers, whether they work at a fixed desk with a computer or on the factory floor with heavy machinery,” explains van Echtelt. “This leads to increased personal empowerment, more job opportunities and a reduction in work-related injuries and illnesses.”
The company currently has 31 employees and an impressive array of early customers including Douwe Egberts Coffee and Beverages, KLM Air France, TataSteel and Toyota Boshoku.