Easing the passage to market

Q: What does D-Simlab do?

A: We offer simulation-based software that helps companies make decisions in their resource and operations management. Our clients are in the aerospace and semiconductor industries.

Our software can simulate, in 10 to 20 minutes, the outcome of various actions that can be taken in response to a situation. The clients can then look at these simulated results and make an informed decision to optimise their workflow, to save resources or to produce faster.

For example, a German semiconductor manufacturer uses our software to synchronise its equipment maintenance with material flow. When a machine breaks down, the company can look at our simulations and find out which is more productive - to repair the machine immediately, to postpone it or to move the production elsewhere.

Q: How were D-Simlab and its solutions created?

A: The company was spun off from the Singapore Institute of Manufacturing Technology, part of the Agency for Science, Technology and Research (A*Star), where all three of us were researchers.

We were part of a team looking at discrete event simulation - basically, software analytics to help companies manage production. We saw the potential to get the solution out of the lab and productise it, not only for local companies, but also for the global market, where companies of large scale can benefit more from what we offer.

A*Star was supportive of our ambition. D-Simlab was then created in 2007 and we were incubated for 18 months by ETPL, which is the agency's unit to commercialise its research projects. Our solutions were licensed from ETPL.

Q: How has A*Star supported D-Simlab in the early stages?

A: The partnership between A*Star and its incubated firms is at arm's length, with no direct monetary support. But we had a lot of help nonetheless.

To begin with, A*Star provided us with an office and convertible loans, so that we could focus on building the technology and creating the market traction to attract customers and investors.

Once we showed results, A*Star converted the loans into shares in D-Simlab. The agency is now a 20 per cent shareholder.

Meanwhile, we were offered very good terms for the intellectual property. We will not have to worry about down payment for the rights and we will not have difficulties negotiating for rights extension.

The intangibles are just as important. When D-Simlab goes out to meet its clients and mentions that we're a spin-off from Singapore's government research lab, that adds scientific credibility to our company.

A*Star has also provided us access to people we could never have reached ourselves, such as the chief science officers of blue chip companies and private investors. We still have to make our own case, but just getting us those meetings is a big boost to us.

Q: So you did not have any issue crossing over from the lab to the business world?

A: There were still many things that we could only learn hands-on, when we are in the reality of the business world. The lab world is always "ideal", but the reality of, for instance, the manufacturing operations in a semiconductor fab or spare parts management in an aviation company always turns out to be more complex. That also means the time it takes to make sure our system gets the right results is always longer than expected.

So, one of the key challenges we had to overcome was to shorten our product deployment time. It used to take around 11/2 years; now, we can deploy in six months.

Another surprise to us was the complex sales processes involving large clients, due to their very complex legal, contracting and accounting policies. Navigating these issues was not easy for new entrepreneurs, and a small and medium-sized enterprise like us.

Q: Please describe the company's current size, market reach and performance.

A: D-Simlab is still a growing company. We have around 15 people - including the three founders - spread across three offices in Singapore, Germany and the United States.

Our revenue is 70 per cent generated from overseas and around half of our clients are in Europe. We are also in Malaysia, where we have a couple of clients, and a couple more in Singapore.

We are set to become cash flow positive by the end of our current financial year in March, due partly to margins improvement that came from a recent restructuring. This performance will mark the best year of our company so far.

Q: What are your growth plans for D-Simlab?

A: Right now, we are only in semiconductor and aviation industries, but we have a few more domains where we think our solutions can fit. Rail companies, maritime industry and healthcare - industries with a lot of assets and resources to manage.

The other focus is geographical expansion. We want to do more in China and the US. That will require having a local team because our services must come with local support, which our currently small team cannot always cope.

We have a two- to three-year time frame for our next phase of growth and we think we have a good chance of raising a couple of million dollars from our current investors - mostly high-net-worth individuals - in our next round of fund raising.

Q: What are the lingering concerns as you seek growth?

A: Manpower will remain a big issue for us. One reason why D-Simlab is a small company is that it has been difficult for us to attract talents, especially the local ones. That means we cannot expand our team properly to grow our business.

But it is not a problem unique to us. SMEs are all struggling to bring in, or retain, people because we cannot compete with the big companies for talents.

Salary gap is a problem, but SMEs also have a profile issue because we do not have the resources to drive recruitment strategies and build an attractive image.

This article was first published on Jan 13, 2016.
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