Born out of the Royal Institute of Technology in Stockholm by a brain surgeon who was convinced that existing technology wasn’t doing enough to protect the brain, MIPs is a Swedish technology company that created the Brain Protection System. At its essence this is a thin layer that is integrated into a helmet to allows for rotational motion of the head during a crash. Sadly, rotational motion can result in some of the most severe head injuries during accidents, so protection from this is proven to improve injury outcomes of trauma. While MIPs were early in recognising the importance of rotational motion, several organisations and regulatory bodies are now acknowledging the role that rotational motion plays. This is leading to changes in safety standards and more growth opportunities for MIPs.
While the technology is exciting, on purely on financial terms, the business model is similarly as attractive. Simple, yet hugely valuable, MIPs operates as an ‘ingredients brand’. This means that they do not manufacture helmets themselves but license their technology to large brand owners who integrate the MIPS BPS (brain protection system) into their end products. You can, however, recognise a MIPs helmet by the small yellow dot on its surface. The large brand companies will make the helmet, pay MIPs for using the technology, and market the product to their customers. This leads to a lower requirement for MIPs to invest in large factories, so they don’t need new capital from shareholders to fund growth. The result is high profit margins and a lot of cash generation.
MIPs are early in their life cycle and we believe that there is potential for a lot of growth for a long time. They have made great strides in cycling, horse riding and snowboarding, but are far from saturating these markets. The real long-term growth, however, will likely be driven by other areas where they have barely started. American football, ice hockey, motor cycling, military, and police are natural end markets for MIPs, yet they have only just begun announcing their first clients in these areas. Over time, we expect awareness to grow as there’s wider acceptance of the benefits of reducing rotational movement. As it does, more and more people will be looking for that yellow dot.