My name is Vadym Melnyk. I worked for quite a long time for Microsoft and other companies, it was a cool experience, of course. I learned a lot of useful things. But as it always is the case in such work you feel as if there were a „glass dome” above which you will never be able to jump through. So I realized that was not at all what wanted to do in the future, my favorite thing being robotics.
At that time, as a 3rd-year student at the University of Information Technology and Management in Rzeszów (Poland), I had nothing to lose. It was then that my team and I started taking an active part in various competitions. For example, in the project to save rhinos from poachers by means of using drones. It is interesting that we still use some of the technologies developed during those competitions to create our main product – Dronhub. The difference is that 5 years ago there was no market for our technology. It is only beginning to form today. This is how our business journey began.
My project – Cervi Robotics – is already 5 years old. I started working on it as a university student. When I decided to launch my own business, I had no idea how it would work and who the investors would be. Before moving to Poland, I used to study in the United States, where I was able to display a talent to win technological competitions in robotics. It seemed to be logical that I did not think of anything better. I made up our first team and we went out to win! As a result, 11 of 17 wins in various international and local competitions enabled us to receive our first investment in Poland and claim our place in business.
In 2017, we signed the first major contract for 200 thousand Euro with the European Space Agency. After that our company began to develop and grow rapidly. It was together with ESA that we started working on the development of Dronhub, a universal mobile station for charging drones.
The most common problem with regular drones is that their battery can live about 30-40 minutes. Today, the concept of „autonomous drone” is an operator that has got replaceable batteries and change their time.
Dronhub completely replaces the operator and solves the problem of device autonomy. We have been working on this product for almost 2 years until we realized that these hubs are actually the key product of our company. The development was complex at all technological levels. Now we are fully focused on the production and improvement of hubs, and we are suspending all our side business and outsourcing projects. This was a deliberate decision: we are focussing on the most important and most profitable product. Thanks to this, the market value of our company has increased by 4 times.
We are currently working with Orlen, the largest oil and gas company in Poland. Also, we are in negotiations with Saudi Aramco, the world’s largest oil and gas company. Our clients are also Deutsche Bahn, Germany’s largest railway operator, and the Dubai police. Our team now consists of 25 specialists in different fields, and together we are preparing for new investments.
During our previous conversation for ICTV in June 2019, we have been involved in the implementation of various projects and prototypes, but we are focusing on the development of hubs happened later. As I said, we sell-side businesses and focus specifically on Dronhub products. And this is a completely different level and quality, other money, other connections. Paradoxically, there is less free time and more work, but we are confident in the direction in which we are moving.
As I mentioned earlier, we are not fully focused on Dronhub, but there is still another project designed more for entertainment. RoboSoccer is a table football game with robotic players – a kind of mix of PS and classic table football with a special mobile application.
The idea came up during gathering with friends when we played the PS game and table football itself. The next day we already started developing a prototype at our own expense, then closed several investment rounds and received 200 thousand euros from Platformy Startowe.
Recently, we successfully raised funding on Kickstarter. We already have a fully equipped team, and the project is starting to grow autonomously. Mass production was supposed to start in June, just in time for Euro 2020. This time, the situation with the coronavirus played into our hands, and now we have more time to prepare and are preparing hard for the launch before Euro 2021.
Yes, our products have analogs in the world and Europe, but we have 2 main competitive advantages:
It is difficult to judge success now, time will judge everything. If in a few years someone from such market giants as Deutsche Bahn or General Electric wants to buy out our technology, then we were moving in the right direction and achieved some success. If the total value of the company and its capitalization increases, it seems that you are doing everything correctly. But time will tell.
There were a lot of challenges. I faced a whole set of problems of a „young” startup: from the dismissal of a whole staff of employees through toxic relationships in the team, to financial problems and debts. There is no universal solution for each of these problems, everything should be approached individually, but correctly placed priorities and formed vision of the final result always help in this.
Sometimes you have to sacrifice something, constantly ask yourself the questions „by whom and then?” and „for which reason?”. Each founder must answer these questions independently, and the answers to them come with experience. The problems will not disappear – with the growth of the company, new, even more, complex ones will appear.
I thought about the possibility of moving to Poland thanks to my friend. In the conversation, he mentioned the Department of Robotics, which exists at the University of Information Technology and Management in Rzeszów, and that training there is free – if you do well with the entrance exams and maintain a good average score. That’s exactly what happened. Unfortunately, I never completed my training, because I decided to build my own business.
The Polish legal structure is absolutely inelastic for the formation of a holding company (in terms of intellectual property and patents), so now we are working on transferring all our intellectual property and IP of the entire firm to the jurisdiction that Common Law uses.
Apart from that, the biggest, and perhaps the only problem in Poland is the overwhelming participation of state capital in all investments and, as a result, a terrible bureaucracy, small investment rounds.
While in Ukraine, you can start working on MVP, build a minimal product, and find your first customers. After that, you should move the startup to a quiet, stable jurisdiction where investors will not be afraid to invest money (in Poland, Estonia, Great Britain). The full-fledged development of a startup in Ukraine is still absolutely impossible, there are no conditions for investment. From the banal things – in Ukraine it is extremely difficult to get a regular invoice, elementary international banking operations are also very difficult to conduct, or even impossible, without taking into account the space commission.
The only advantage is legal tax optimization. If part of the staff (engineers, programmers) works on outsourcing in Ukraine in the status of individual entrepreneurs (FOPS). Keeping RnD in Ukraine is quite a profitable strategy. I would like to do something in Ukraine, but in return, I want to have confidence in the future. Unfortunately, the country does not have the appropriate macroeconomic conditions to attract any foreign investment, the role of the national currency in cooperation with foreign clients is very limited, and its instability.
We participated in several acceleration programs. Among them are Platformy Startowe, from which we received 200 thousand euros for the above-mentioned startup RoboSoccer. In addition to funding, we also received good basic training and practical information about the development of our own business. Participation in the Polish Scaleup’ah brought us fruitful cooperation with Orlen. Indeed, it is worth taking part in acceleration programs and using the available opportunities to gain new knowledge and contacts. Based on my own experience, I can rate Polish acceleration programs at 8 out of 10.
There is an opinion that foreign accelerators are much better than Polish ones. I have learned the opposite of my own experience. Participation in one London program did not bring us any benefit – it was really a pity for the time and money spent. Therefore, you should carefully approach the choice of acceleration programs, and choose those that can significantly affect your future as an entrepreneur.
Now we are in a transitional investment round, and over the next 6-12 months, we plan to make the firm able to cooperate with global investment funds. In other words, we are waiting for the restructuring of the legal structure of the company for a comfortable acceptance of large external infusions. This is quite a unique, niche experience for the Polish market, but we have experienced consultants who have worked in international investment funds. The Polish market is changing rapidly, so the most interesting things are waiting ahead and we are closing this round exclusively from private investment, deliberately refusing public money. These funds will also be used for internal restructuring of the company’s structure.
How does it feel to get the 25 under 25 status from Forbes? For me, this was a litmus test that allowed me to compare my level against competitors of the same age and analyze my performance – this is „below average „or” above average”. That’s all :)
Against the background of the situation in the world and in the country, the #1 priority is to preserve all employees ’ jobs and not cut their pay funds. We also revised our attitude to the presence of a financial cushion in the company’s budget and realized that not all the money earned is worth investing in long-term investments.
First of all, you need to provide for yourself and your own company, take into account the likelihood of such unforeseen circumstances, and be prepared for them. Therefore, in this case, the crisis also benefited us. In addition, the goals for 2020 include preparing the firm for cooperation with global investment funds – I told you about this a little earlier. And of course to increase the company’s turnover by 2 times compared to 2019!
DON’T try to do everything yourself. Invest in a truly professional consultant, and be sure to cooperate with local acceleration programs to have a full understanding of the specifics of the local market, legislation, and other business conditions. I also advise you not to limit yourself to the market of one country. It is worth immediately looking for opportunities to enter other markets and scale-up. Also, don’t spend your entire life creating the perfect product. Make a beautiful prototype and start selling as quickly as possible until you really find your own. No sales – no investment. Try – and sell!
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