Successful Exit for Indoor-Navigation
Alec Essati (43) is an attentive businessman with a sense for innovation. Before he founded Zenotrack he worked for one of the first indoor-navigation providers in Munich, but was not quite satisfied with companies’ approaches. “It is a very exciting topic for me but the technological approach was not convincing. It was very complex and very expensive so I asked myself ‘Isn’t there anything simpler out there’,” Alec remembers. With the idea of adding an optical solution to the indoor fleet-management of forklifts Alec conducted a feasibility study with his alma mater, the technical university of Graz, and founded Zenotrack in 2008 as a single-handed attempt. “Nothing ventured, nothing gained,” Alec says of his bold decision.
Working at the company in Munich gave him an understanding for financing, technology, customers and the market but for the technical and organisational implementation of the firm he needed some support form outside. “The only things I was lacking at the time of founding Zenotrack were the people and the money.” While finding the right people was quite a challenge, in the end it was a mixture of coincidence, connections, and hard work that did the trick for both challenges.
Finding people and money
You always need more money than you initially thought. So, if you decide to make a business plan, take a look at it again and multiply it by two or three and that’s the money you have to raise.
“When I was looking for coworkers and team members, I quickly learned that simple job advertisements won’t get you anywhere. You just can’t explain a startup with all its ideas and visions on a piece of paper,” says Alec. So in order to headhunt and enthuse others with his project, he went to TU Graz and TU Wien and talked to as many experts as he could. In the end he found his match in Christian Schachinger (COO), a friend of a friend, and Martin Forst (CTO), a classmate back from days at the TU Graz. Later, Horst Wildenauer also joined the team as Head of Research and Development of Computer Vision. Having built a motivated team with great expertise, Zenotrack was heading towards its first round of financing.
“I wanted to stay my own boss and as I see it, there are three options for receiving money as a startup: funds, business angels and VCs. You always have to have your goals in mind when you are looking for financing.” At the beginning, his financial needs were modest, so he decided to apply for a funding programme with aws. “I just went there as a one-man-show with a business plan and a prototype in my pocket and said ‘Here I am, I would like to apply for a seed fund’. Actually receiving it was a big game changer for me,” he recalls. The money helped him through two years of work, development and restful sleep and was a big push for the young venture. “It was a huge external validation for us. Now we had a reference and this helped a lot with further funding,” Alec explains.
Next to the seed money from aws, Alec and his team got support from FFG, ZIT as well as another double equity support form aws.“You always need more money than you initially thought. So, if you decide to make a business plan, take a look at it again and multiply it by two or three and that’s the money you have to raise.” So, when Alec and his team were looking for some fresh input, he was able to convince four business angels to join his startup. “Money givers are important but they can’t help you with business. That’s why I decided to get four people on board who can help me improve the four areas networking, strategy, technical issues and legislation.” Later, Alec and his team could also win the logistics company Gebrüder Weiss as financial shareholders. With a strong backing Zenotrack soon became a well-known name in the fleet-management sector and the right contacts even got them their desired exit earlier this year.
Joining the big players
The cofounders Christian Schachinger, Martin Forst and Alec Essati; Photo credit: Zenotrack
“What many wish for – to make their product so appealing to others that they want to take it over – happened to us with Bosch.” The exit was not only a relief on the financial side but opened the doors to new fields of activity and inspirations for the CEO. “After the exit and the post-merger integration there is a lot of paper work to be done in terms of compliance, regulations and changes in the company,” says Alec. “On the other hand, there are more ways for me to be active in the business now. I have always been responsible for the financial issues at Zenotrack. Day in, day out I had to worry about the money, and the financing of the upcoming months or year. Now I can concentrate on other things, such as distribution.”
At Bosch, young companies have the chance to meet with the big industry and their in-house startup platform aims to bring in fresh minds and innovative technology. “It’s often hard to realise good ideas within a big corporation. This can be a much quicker process when you hire a startup that is already dealing with those issues. As a startup, on the other hand, you remain independent and can continue working on your project with a big partner at your side,” Alec explains how such a merger can be positive for both sides.
Preparation is everything
Starting a business from scratch and getting it to exit level has taught Alec a lot about business, life, and everything in between. „If you want to be self-employed you have to take a big risk. Not only a financial but also a private one,“ Alec warns.
While an Internet startup might not need a lot of money to survive in the first years, this is not true for a technology company. „I was working on the topic all the time and it was hard for me to not think about business.“ Working 16 hours a day was no exception for Alec, and with a family and two kids there was not much time for hobbies either. „Some sports and a strong partner on your side can help you through the tough times – but you have toprepare for these challenges before jumping into an adventure like that head over heels.”
While the team at Zenotrack, which had grown to include 16 people, are used to a lot of day-to-day planning, they now have to deal with the fact that they are integrated with over 360.000 coworkers. “What we need now is mutual understanding and making the best use of the great possibilities we are offered with our new partner Bosch.”
This story is brought to you in partnership with aws