Bulgarian seed fund LAUNCHub is holding its seventh Long Weekend edition in Sofia at the end of this week, choosing its next investment fr…
Aleš Špetič, cofounder and CEO of CubeSensors; Photo credit: CubeSensors
With a degree in computer science from the University of Ljubljana, an MBA from California State University in his pocket and few decades spent founding and running tech companies, Aleš Špetič has built up a CV longer than an arm. Naturally attracted to fast-paced work environment and allergic to big, slow and bureaucratic ones, Aleš rapidly found himself drawn to startups. Among the list of feats from this manager and seasoned businessman appear names such as TSstartup, the first industry backed accelerator in the CEE region, board management startup DeckReport, major Slovenian IT company Zemanta, Friedworks, a private coworking incubator in Slovenia, and since last year, CubeSensors.
Despite working in software and service businesses for years, and admitting that there are much easier ways to make money than hardware startups, this IT engineer turned entrepreneur has always nourished a deep interest for the field, leading him to take the plunge last year.
“With hardware, when it comes to the execution, making something out of almost nothing is the biggest thrill”. Also, he considers that building actual devices implies figuring out every single detail, which adds an exciting challenge to the venture. “We simply don’t have the luxury of a software business, where you can upgrade the page every five minutes: Once it’s out there, you can’t remotely log into it to fix it.”
Photo credit: CubeSensors; http://bit.ly/1pKYRvWVenturing into high tech
Like every good story, it started with a kind of a family crisis. “My daughter usually got sick in winter, so I was trying to figure out how that could be linked to her being indoors. It spurred the idea that there was a technology out there that could figure out what kind of environment influences our health.” Together with engineer Marko Mrdjenovič, they started to research it and a year and half later, in March 2013, CubeSensors saw the light.
Packed with sensors, the wireless device monitors pretty much everything that is measurable in a room, such as temperature, humidity, air quality, light, noise and barometric pressure, continuously streaming it to the cloud. Gathering and analysing those data, the related smartphone app tells users how to optimise their living or working setting for a better, healthier lifestyle.
Struggling to raise funding from investors despite winning the Best Hardware Award at the Launch Festival 2013, the startup didn’t go for a Kickstarter or Indiegogo campaign, and opted instead for a direct market-driven model to validate their product first. After they set up a pre-order page with a ten-dollar reservation payment for the purchase of Cubes sets, the first batch got sold out within three weeks. With their confidence in their product boosted by this success, the team kept bootstrapping, locally manufacturing the devices to ensure high quality.
Broader recognition came last January, when the startup won the first prize at TechCrunch Hardware Battlefield in Las Vegas, increasing media coverage. Recently, the company, which already counts customers in over 40 countries, received in bitcoins the equivalent to 700.000 dollars in seed investment from fellow Slovenian entrepreneurs Nejc Kodrič and Damijan Merlak, founders of BitStamp.
Although he welcomes the investment to take the business to the next level, to speed up the production of the second batch and developing the products further, Aleš keeps a cool head, arguing that getting money is not a success, but an opportunity to be successful.
“I believe that our success will be measured by the market: the day CubeSensors becomes a major reference for indoors comfort and health, that’ll be success,” he says.
Photo credit: CubeSensors; http://bit.ly/1mmUswOOf investors and hardware businesses
His experience with CubeSensors reflects the difficulties encountered by hardware startups when it comes to fundraising. “We’re battling with people not getting how hardware is a different type of business to invest in - a very existing one. It’s quite frustrating when you talk to 15 investors and they’re telling things that are very true in software, but just logically don’t apply to hardware,” he says.
He notes that although there are already a lot of advices available for entrepreneurs who wish to venture in hardware, very little is done for opening the field to investors. Out of his frustration, Aleš wrote An Investor’s Guide to Hardware Startups to provide guidance in terms of thinking about investments and explaining differentiation between hardware and software businesses.
Giving back to the community
Sharing his experience and know-how is actually essential to Aleš, who considers himself fairly seasoned and to be the among the oldest entrepreneurs in Slovenia. “This is my third startup already, and that’s probably the thing I know to do best.” He believes that everybody needs to help one’s own ecosystem and give back to the country. Thus, he says he has no problem answering calls, going into meetings and mentoring startups or whoever wants to seek his advices. “I do it gladly because I think it’s a very healthy thing to do, whatever environment you work in.”
As if his CEO, board member, Seedcamp mentor and various adviser roles weren’t enough to fill his plate, Aleš has also been appointed Slovenia’s Digital Champion since 2012, a volunteer function that he’s taking very seriously to improve the digital economy in its home country. “I’m not a politician, I’m not a doctor, and I’m not a warrior: I’m an IT executive and I do know digital economy and what I can do with that.”
Aleš presenting CubeSensors at the TechCrunch Hardware Battlefield; Phoro credit: http://on.fb.me/1mW5VCt“Slovenia hasn’t done enough yet”
Aleš believes that although Slovenia’s strategic location provides many advantages for startups, including an easy reach to a large talent pool within the Balkans, the major issue remains the access to funding. “We have local hurdles that occur in all small countries, but the real limitation for businesses here is in terms of money, not in terms of lack of competences or ideas,” he says.
He sees recent initiatives such as the launch of Silicon Gardens Fund as extremely positive moves for the country. “Bringing together experienced entrepreneurs and smart money is brilliant, and it’s one of the first times that the money comes from inside the startup ecosystem - not from the banks - and is returning back to it,” he says.
However, he stresses ”the necessity for the Slovenian ecosystem to build a stronger presence in the world startup scene, as there hasn’t been a big exit from any startup yet”. Although he notes that Slovenia is a leading country in the region, mentioning last year’s outstanding number of successful Kickstarter campaigns as an example of the strong activity going on, he considers that the local scene is keeping itself too closed.
“We are in the European Union, we’re in the Euro-zone, we need to make ourselves known like Germany or France, who are actively promoting their startup scene by pushing their local hubs,“ he says.
Although entrepreneurial ideas are always around, Aleš says that for now he’s focusing on CubeSensors. Expanding the company will imply extra efforts in the coming weeks and months, an intense phase that he’s ready for. “We’re going to work very hard but it should be fun!” he concludes.
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