Buddy-Watcher | Overview

Dear Companists,

We are pleased to provide you with our pitch deck, which summarizes Buddy-Watcher`s business model and strategy and illustrates our company’s potential.

As always, you can find all information on us, our team, and Buddy-Watcher in our company profile.

 Your team of Buddy-Watcher

Please click on the picture above to open the pitch deck of Buddy-Watcher.

A diver is diving in Australia's Great Barrier Reef. The underwater scenery completely mesmerizes him and he is enjoying the silence that engulfs him. All of a sudden, a school of barracudas appears and he naturally wants to share this spectacle with his diving buddy and tries to get his attention. But as he turns around, he realizes that he has lost sight of his partner and cannot find him anywhere.

After talking about a joint dive, diving buddies often realize that they apparently missed out on something spectacular. Sometimes the only reason is that someone was looking in the wrong direction at the wrong time and did not see the partner's signal. This is quite surprising as you would think that there should be modern and simple ways to communicate under water nowadays.

Michael Feicht and Eduard Sabelfeld, the two founders of Free-Linked GmbH, and at the same time the developers of Buddy-Watcher, know this feeling all too well. They have been passionate divers for many years and can relate perfectly to the problems and needs of divers. Michael Feicht came up with the idea of developing a specific product to simplify underwater communication after a memorable experience in 2008 when he lost sight of his buddy while diving in Australia.

We developed Buddy-Watcher specifically for all underwater athletes, including divers, snorkelers and free divers. The device is the first product that enables intuitive underwater communication. Divers wear the device on their wrists or forearms, making it very simple to operate. The devices communicate with each other via ultrasound and trigger a vibration in the partner's device at the press of a button. Ultrasound is the only method of communicating across long distances under water. The signal itself is silent and has a range of up to 80 meters.

Range is of critical importance for divers. There are many reasons you might need to quickly communicate with your partner under water, such as drawing attention to a worthwhile motif or problems with equipment and ensuring that your buddy does not move too far away. Communication via Buddy-Watcher is extremely simple and opens up entirely new possibilities for divers.

The product's innovative features have already received numerous awards and development grants.

More than 170 specialist retailers sell our product around the world. The US market in particular has proven to be extremely promising. The share of American divers is relatively high and there are already many distributors with good access to the market. In 2016, we were able to increase our global revenues by 300% in comparison to the previous year. However, we are far from done as there are 9.5 million active underwater athletes around the world who have yet to discover Buddy-Watcher.

According to a study commissioned by German diving industry association (Tauchsport Industrieverband), vigorous divers invest up to EUR 1,000 per year in diving equipment. Their purchasing power and willingness to spend money proves how lucrative the diving market truly is. Buddy-Watcher can also profit from this sales potential in the diving industry that generates USD 8 billion per year globally.

Buddy-Watcher is also absolutely in line with the wearables trend, or electronic devices that are worn on the body. According to the International Data Corporation, sales of wearables increased by almost 30% between 2015 and 2016. Accordingly, approximately 185 million wearables will be sold in 2019. Due to these circumstances, Buddy-Watcher can benefit from strong growth in the market as well as from the increasing popularity of these types of devices.

As passionate divers, we want to transform Buddy-Watcher into an essential component of every underwater athlete's standard equipment and at the same time, make diving safer and more enjoyable.

Our goal is to use our initial role as a niche provider to standardize the technology for ultrasound communication and to implement it in other areas, including industrial underwater applications.

We will primarily use the crowdfunding resources to improve the product, enter into the East-Asian market and for measures aimed at increasing brand awareness.

Buddy-Watcher makes it possible to communicate with your diving partner under water. Buddy-Watcher was designed to send signals to the partner device via ultrasound at the push of a button. The partner device picks up the signal and vibrates to let the diver know that his/her partner is trying to get their attention.

An overview of the individual Buddy-Watcher functions:

Buddy-Watcher was specifically designed with divers' needs in mind. Divers consider being able to get their partner's attention at any time a very important aspect. After all, being able to explore the underwater world together is one of the main reasons to go diving. And this is best done if you can easily communicate with your buddy.

Buddy-Watcher is the first product on the market that fulfils this function. If a diver discovers something out-of-the-ordinary, he/she can quickly and easily call the other diver and they can explore the wonders together. Fast reaction times while diving are also especially significant if problems arise, e.g. issues with the equipment or physical limitations (such as cramps).

A further benefit of our product is that you can signal your partner without making any noise that might disturb fish or other divers. Your diving partner is always in range and you can attract his/her attention at the push of a button thanks to ultrasound communication. The personalized signal will only reach the intended recipient, who will feel an active vibration. Wearing Buddy-Watcher has an additional safety benefit that is crucial for underwater athletes: The new distance alarm signal turns itself on the moment both divers have moved too far away from each other and therefore provides extra security.

We are currently working on more functions for our product. Our main focus is on underwater navigation to make it easier to find the "lost" diving buddy. This function is being developed by Free-Linked GmbH in cooperation with partners and universities.

Our users have confirmed the advantages of Buddy-Watcher for diving:

We generate our revenues through sales of Buddy-Watcher. Sale of our product occurs either indirectly via external partners and specialist retailers (55%) or through our own online shop as well as trade shows (45%). We ensure direct contact to our customers through our sales channels and also receive valuable feedback on our product. We regularly evaluate the customer feedback, which allows us to implement future developments that are perfectly geared towards our target groups.

Indirect sales are primarily implemented by specialist diving retailers. Free-Linked GmbH already has more than 170 international partners, mainly in Europe, the US and parts of Asia. At the moment, we are in negotiations with further US and East Asian distributors.

The Buddy-Watcher Basic Set consists of two standard Buddy-Watchers, two bracelets, two charging clips and a power cord, and is sold to end customers for EUR 199.98 in Germany. A single Master device costs EUR 119.98.

The newest version, which includes the distance alarm, can be bought separately for EUR 139.98. The prices in the US are USD 279.98 and USD 139.98 respectively. The distance alarm version is not yet available on the US market.

Our product is currently being manufactured at our headquarters in Pforzheim. We plan to outsource the entire production of Buddy-Watcher to system manufacturers, i.e. external manufacturers, by 2018. By doing this, we will be able to significantly reduce manufacturing costs while ensuring that the quality remains unchanged. We personally handle national and pan-European logistics in our warehouse. International distributors, especially in the US and South-East Asia, already implement large portions of the logistical process themselves. This approach ensures reliable storage and rapid shipping of Buddy-Watcher to end customers.

Buddy-Watcher boasts numerous features that are not offered in the present combination by anyone else on the market. Buddy-Watcher sends a silent and personalized signal that does not disturb other divers or marine life. Furthermore, the device can cover distances of up to 80 meters. Buddy-Watcher is even equipped with a call-back function as well as a function that continuously measures the distance between the diving partners and prevents that diving buddies move to far away from each other.

Other products on the market also offer solutions with which to call the diving partner. However, many of these products, such as Tank Banger, create a lot of unnecessary noise. This does not only disturb other divers but also scares the marine life you are trying to watch on your dive.

A common solution is, for example, a buddy line, which creates a fixed connection between the diving partners. While this ensures that diving partners cannot lose one another, the line significantly limits freedom of movement. Also, there is a real risk that divers might get tangled up in it. Other products with the same purpose, such as e.g. the Ocean Reef mask, make verbal communication under water possible, but at EUR 800, the device is much more expensive than Buddy-Watcher.

In order to eliminate all the drawbacks of these popular products, we developed Buddy-Watcher for a broad target audience. Thanks to the price, ergonomics and size, we fulfil all underwater athletes' most important needs.

In the following, we have listed the most important rival products and compare them to Buddy-Watcher:

The brands Buddy-Watcher and Free-Linked were registered in Patent and Trade Mark Offices throughout Europe. We have also filed a comprehensive patent application (DE 102012100679.2) for Buddy-Watcher that includes all intended components of the product. These include, on the one hand, the Basic version that enables the diver to call his/her partner. The Master version, on the other hand, allows diving instructors to call an entire group of divers. The third version with a distance alarm lets divers know when they have moved too far away from each other. With the help of our "boat unit" that can be installed on a boat, entire groups of divers can be called from boats.

We are not aware of any other product on the market that uses ultrasound technology in the same was as Buddy-Watcher. Based on our own experience, we estimate Buddy-Watcher's developmental edge in terms of hard- and software to be 2-3 years in comparison to other businesses. This assumption is based on the lengthy processes required for the development of such a device. These include, above all, the development of the hard- and software, various prototype tests, tool construction, production design, component delivery, production itself, and introduction of the product.

Free-Linked GmbH focuses on its core competences in market-oriented product development and international sales. All development steps are performed by our company and in cooperation with partners and universities. The research program KMU Innovativ, an initiative of the German Federal Ministry of Education and Research, promotes innovative development projects in small and medium-sized businesses. The program has also decided to support the current development of the Buddy-Watcher navigation function.

Diving associations, such as "Professional Association of Diving Instructors", "Scuba Schools International" and "Verband deutscher Sporttaucher" (Association of German Scuba Divers) have expressed a concrete interest in our product. They have all included Buddy-Watcher in their online shops and treat it as a fixed component of the training guidelines. This proves that our product is appealing to our target group and that we will receive the support of important associations. Furthermore, the development of Buddy-Watcher is being supported by experts from the diving industry (e.g. from Kallweit GmbH). In addition, management consulting agency Kieffer and Partner has been coaching and advising Free-Linked GmbH in the areas technology development, production, and controlling for three years.

The two major European diving associations, DAN and Aquamed, are also convinced of the benefits of Buddy-Watcher and are part of the large partner portfolio of Free-Linked GmbH.

Buddy-Watcher test campaigns have proven to be particularly promising. Divers can order Buddy-Watcher from the online shop and test the device for a few weeks for a fee. Furthermore, divers can regularly borrow and test the device at popular diving spots. A total of 87% of our approx. 200 testers opted to purchase the device after testing it.

According to the Caribbean Tourism Organization, there are 25 million divers around the world, of which approx. 8.3 million are considered active divers and in addition, more than 25 million snorkelers and around 200,000 active freedivers. The largest markets are in the US, Europe and Asia. Our core target groups are active divers who almost always dive in pairs for safety reasons, freedivers and providers of snorkeling excursions. In addition, we have also identified a target group of 1 million snorkelers. All in all, we assume a total market volume of 9.5 million users around the world.

Divers are generally characterized by their passion for travelling and love of adventure, their affinity for technology, an above-average income and a strong sense of responsibility. Furthermore, they own their own diving equipment and regularly practice their sport.

Additionally, the 3000 diving centers around the world, or organizations that provide equipment and support for divers, also play an extremely important role. Most forbid acoustic signal transmitters as the majority of divers consider them disruptive. Buddy-Watcher sends silent signals and therefore complies with current standards. This makes it possible for us to provide our test devices to divers at these types of centers and, at the same time, to directly promote our product among the target group. Therefore, we consider diving centers an important sales and marketing channel that provide us with direct access to divers around the world.

We conducted reliable customer surveys in cooperation with the student market research institute at Pforzheim university in 2010 and 2014. A total of 600 people from Germany, Austria, Switzerland and Australia participated in our surveys. Of these, 23% participants from Germany, Austria and Switzerland indicated that they would be willing to purchase Buddy-Watcher. In the US and Australia, 4% of the participants confirmed that they would immediately buy a Buddy-Watcher set with navigation for USD 400.

Due to the similarities with other products and industries, such as diving computers and avalanche beacons, as well as past Buddy-Watcher sales values, we have deduced a global market potential of 10%. With a market volume of 2.9 million people in Europe, we can assume a target group of 290,000 potential customers. If we add the US market volume of 5.5 million people to that figure, we end up with an additional 550,000 customers. These figures can be increased by the market volumes of the remaining countries (1.1 million) and their respective potential customers (110,000). In sum, this works out to 950,000 potential customers around the world. If we assume that Buddy-Watcher is sold in a set, we will end up with 475,000 sold systems throughout the entire product life cycle.

As we are currently still developing a holistic and international marketing strategy, a more realistic sales volume in the sense of risk reduction for the next 5 years will be set at 140,000 systems.

We will us the equity-based crowdfunding capital to develop and expand various business areas with the aim of further promoting growth.

Investment Level 1: €100,000

The capital collected at the first investment level will be used to revise the product. We deduced improvement potentials from customer surveys, guarantee claims and experience gathered in the assembly process of the current Buddy-Watcher. In particular size and charging mode of Buddy-Watcher require redesigning. Furthermore, we realized that changes to the current product could result in assembly and production savings of at least 30%.

Investment Level 2: €300,000

Investments that surpass the first level will be used to conclude framework agreements with suppliers in order to further decrease procurement costs. This will allow us to order materials for 3,000 sets and to achieve target production costs of EUR 41 per set.

We will place ads in print and online media to increase brand awareness. Furthermore, we will organize events with well-known diving centers, where we will present our product in designated advertising booths and establish direct contact with divers. Also, we will continue to contact prominent figures in the diving industry in order to win them over as advocates of Buddy-Watcher in the market.

Investment Level 3: €500,000

In addition to the investments effected at the second level, we will use the capital from level three to ensure liquidity for the second production batch.

We will apply the marketing activities for the European and US markets in the Asian market with a particular focus on the target countries Japan, Korea and Australia. Furthermore, we will hire a new employee for our sales team.

Aside from investments made on Companisto, we are happy to receive any kind of support. Join us on any of the following channels:

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Activate investor networks: Help us find further investors for our campaign.

Activate diver network: Tell them about the advantages of Buddy-Watcher.

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We are happy to receive all and any feedback!

Free-Linked GmbH
Blücherstrasse 32
75177 Pforzheim

Phone: +49 (0) 7231 6038470
E-Mail: service@buddy-watcher.de
Website: www.buddy-watcher.de

Facebook: facebook.com/free-linked
Twitter: twitter.com/Freelinked
Instagram: instagram.com/buddywatcher
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