How now, brown cow?
Mario Fallast and Stefan Rosenkranz (both 36 years old) became friends at their high school in Graz, but their academic paths diverged after graduation. Mario studied industrial engineering and economics while Stefan studies electrical and biomedical engineering. Both men did work-study programmes abroad – Mario in Finland and Stefan in Spain – and after returning to Austria they met up to brainstorm some ideas for how they could develop products together. They were curious about the startup scene and thought they might give it a try themselves.
But what made them decide upon the field of veterinary science? Were they from a livestock- farming background? “Not really, no,” laughs Mario, a lifelong urbanite. “but, with Stefan’s background in biomedical engineering and my interest in sensors and electronics, it seemed like an interesting field to apply our combined talents.”
The smaXtec sensor; Photo credit: smaXtec
In the mid-2000s, the veterinary researcher Dr. Johann Gasteiner (now Deputy Director and Head of Research and Innovation at the Federal Agricultural Research and Education Centre Raumberg-Gumpenstein) was searching for a better, more humane way to take biological measurements from a cow’s stomach. Up till then, this was done by shoving a probe down the cow’s oesophagus – not an ideal method for the cow, as you might imagine, nor for the researcher, who could not obtain samples frequently enough without endangering the cow’s well-being.
A friend of Stefan and Mario’s who worked at the research centre introduced them to Dr. Gasteiner and in 2006, they came up with the idea that would become smaXtec. A small electronic sensor-transmitter would be swallowed by a cow and data from the animal’s rumen (sort of a pre-stomach organ) would be conveyed to an external computer. The device could remain in the stomach indefinitely and measurements of temperature, ph levels, etc. could be recorded on a constant basis, in real time.
From the lab to the market
The main value of being at the Science Park lay in the networking and consultation possibilities there.
Their prototype was built and tested in 2007. “It started out as curiosity, not as a way to make money,” claims Mario. “But in the back of our minds, we thought it could have commercial uses.” That same year, the Science Park Graz, an AplusB incubator centre, organised an Idea Challenge. Mario and Stefan pitched their project and they were accepted into the incubatorprogramme. Although they already had an office space, “one table and a coffee machine isn’t so exciting from a social point of view,” remembers Mario. “The main value of being at the Science Park lay in the networking and consultation possibilities there. We didn’t need to schedule specific meetings to get information we needed.”
They found out that getting from prototype to a real product would require substantial financing. In 2008, the year they successfully presented their research findings at the World Buiatrics Congress, they received pre-seed financing from AWS and the FFG basis programme. But to realise a self-sustaining business, they realised they needed to set their sights beyond the relatively small market of veterinary research institutions.
Following the herd
The animal-care basestation; Photo credit: smaXtec
Livestock farming has been growing more technological in recent years as herd sizes grow larger. The umbrella term, “precision farming” encapsulates a wide range of technological applications to both agriculture and livestock farming, including automated tractors and milking machines, as well as Apps like Viennese-startup Allibra’s “Wuggle” (featured in our 2015 Ventures Almanach Austria) that measures a pig’s weight with an iPad’s camera. The common goals of precision livestock farming technology are increasing the safety, quality and, of course, economic efficiency on the farm, while simultaneously improving animal welfare.
“A lot can go wrong on a dairy farm,” says Mario. “60 per cent of the cost is for feed. Every kilogram that’s fed inefficiently – too much or at the wrong time – increases costs to the farmer.” Mario and Stefan realised that their sensors would “help the farmers to find out where the inefficiencies are, by showing them the direct impact of the feed quantities and timing on the cow.”
Mario and Stefan founded smaXtec animal care sales GmbH in 2009. Expanding their potential market directly to the farmer became their main challenge. They realised that only transmitting a raw-data stream from the cow’s stomach wasn’t going to help the farmer, so they developed a software solution to provide easy-to-understand decision support and feedback. With smaXtec’s sensor system, the farmer not only receives real-time information about his herd’s health directly on his mobile device or PC, but also gets research-based recommendations for how to deal with potential problems.
Mario counters those who are concerned such modern, industrialised dairy farming lowers the quality and humane treatment of the livestock: “The cows on modern farms are treated quite nicely, because if they don’t feel well they won’t give enough milk. On some farms, you can even see water beds for the cows, for example.” By being able to detect and monitor a cow’s digestive health, as well as its oestrus state, the smaXtec system improves the overall health of the herd, so that they require fewer antibiotics and other medications.
Our highly technically skilled staff is what makes us stand apart from our competitors.
In 2010, smaXtec won awards at European livestock trade fairs, including the Inel d’Or at SPACE in France and a silver medal at Eurotier in Hanover (the second largest agricultural trade fair in the world). They also won seed financing from AWS, which led to private investment, from the Austrian company that manufactures their equipment, as well as from a business angel. By 2014, they had sold some 5000 units to several hundred customers throughout the EU, and are starting to get some traction in the USA and Canada. Their typical customers are big farms, starting with herds of 100 cows, “up to our biggest customer in Saudi Arabia which has thousands.”
With turnover of 1.5 million euros since they started (600 thousand euros in 2014), smaXtec has come quite far along in their market approach. Their team now numbers ten, including sales and marketing. “Our highly technically skilled staff is what makes us stand apart from our competitors,” says Mario, and they remain in close cooperation with Dr. Gasteiner and his research institute, one of the leading institutes worldwide in this field and for whom smaXtec is a showcase of how they approach not only theoretical research but also practical solutions.
Additional private investment in 2014, leaving the co-founders with a minority stake but no less engaged in seeing their company grow internationally. “We are still searching for investment, but now to scale up. Our product is registered and certified, and we are prepared. We need local players, sales partners who have market approach and existing channels like trade fairs, to bring the product to new markets. We are expanding in North and South America, as well as the near and middle east.” They hope to break even by the end of this year.
With the venture’s growth, the roles of the two co-founders have become more distinct. While Stefan is the CEO, Mario is the Innovation Manager. What innovations are in store for the future? While he gets requests to customise their system for other ruminating animals, like camels, sheep or goats – or even zoo animals – “we haven’t developed this yet,” says Mario. “Rather, we’re focusing on a combination of refining and adapting our solution to partnerships. We always seek out new elements that increase the value of our system: new software features and determining which data from other systems we can integrate into ours. Right now it’s a stand-alone solution, but likely won’t be in the next years.”
Might they be capitalising on recent M2M trends in technology? Cud be! But remember, you “herd” it here first!
This story is brought to you in partnership with AplusB, a programme funded by FFG.