Since launching the investment fund Iskratel Startup at the start of the year, Iskratel has established contact with more than 30 startups that are potentially interesting for collaboration with the leading European provider of information and communication solutions. That’s because they don’t immediately dismiss the startup teams that don’t fulfil the investment conditions, but rather keep track of them, some teams even give them weekly progress reports. Iskratel advises them how to get traction, how to change their business model or which steps to take so that Iskratel management will someday decide whether they are suitable for an investment or not. We talked to Damjan Slapar, Iskratel’s CTO, about the reasons why they’re actively looking for strategic partnerships with startups, about the process that potentially interesting teams go through, and about what personally convinces a manager with rich experiences from the startup world. As this year’s PODIM Challenge blue-chip partner, Iskratel will pay attention to teams developing breakthrough solutions in ICT, cloud solutions, IoT and 5G, but our interviewee also revealed examples of potentially interesting solutions based on the mentioned technologies.
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The investment fund Iskratel Startup was launched at the beginning of this year. What have been your first experiences and what is currently your key role in the company Gotoky, which received your first startup investment?
Collaboration with startups isn’t something new to us. We have been active in this field for a number of years, but by founding the fund we wrote down the rules of the game, formalizing these activities. Since we entered Gotoky as owners, we mostly looked over their road map. The team is giving us monthly progress reports, but I am also a procurator in the company. We collaborate in the management and technical fields, whereby the latter is currently more topical due to our specific knowledge and experience. When Gotoky works on the components for the hardware part of their solution, Iskratel is a partner that can significantly simplify and speed up all processes, because we know the suppliers, materials, purchasing process … If a startup doesn’t have experience with, for example, housing plastics, this can result in a 14-day or month-long exploration, while in collaboration with a partner such as Iskratel, the matter can be sorted with a single afternoon phone call.
So the fact that startups aren’t looking only for money is confirmed in your case as well.
That’s right. Of course money is important for startups, but it is necessary to be aware of the role of a strategic partner that can offer a whole range of services that enable a faster transition from development to launching the product to the market. In the case of Iskratel, this includes financing and different possibilities of capitalization, but also our entire industrial know-how, based on 70 years of tradition, access to sales representatives in more than 30 countries of the world, support environment of the business incubator RC IKT, complete development infrastructure and, of course, industrialization with one of the most advanced electronic manufacturing services
in this part of the world.
You will then manufacture components for Gotoky in Iskratel?
Yes, whereby we will ensure our EMS services with competitive prices. We are planning for the first series of around a thousand pieces to be manufactured in the summer, and we would go to serial production at the end of the year. Collaboration between us is going very well, we also have the opportunity to learn something, for example in the field of digital marketing that the Gotoky team lives and breathes, while for a big industrial company such as Iskratel, this is a field that we only recently tackled seriously.
How are you otherwise looking for startup teams that are potentially interesting for collaboration?
We collaborate very well with the startup ecosystem, attend events of the ABC Accelerator, Initiative Start:up Slovenia, Business Angels of Slovenia … This year, we are a corporate partner of the PODIM Conference. We are also establishing connections abroad, and we recently made an arrangement to be present at demo days of the established Dutch accelerator Startupbootcamp, for example. Startups also come to us on their own and pitch their ideas, there are also quite a few applications through our website
What is the process in Iskratel for a startup team pitching its idea?
In Iskratel, several people from key segments listen to startup pitches – technical part, marketing, architects, development part, manufacture, sales … This way, teams get valuable feedback from about five to eight experts, while a decision on whether the startup is interesting for us or not is made on the highest management level.
How would you summarize the key reasons for collaborating with startups, considering that Iskratel is seen as an industrial icon at home and in the region, that you are intensely investing into development and already have experience creating “legendary” products?
As an interesting fact – Iskratel’s telephone set ETA 80, which we colloquially named “fitipaldi”, is one of the most copied products across the world, as the number of made plagiarisms is over 200 million. The field of telecommunication solutions, in which Iskratel succeeded, is considered to be one of the most complex technologies in ICT, developed in only ten countries in the world. In the era of the fourth industrial revolution, telecommunications are becoming virtual, which is why Iskratel modernized its business strategies and restructured to other verticals, namely to transport, energetics and public safety, including solutions for smart homes and smart communities.
We can detect similar reasons in other corporations that are this year’s PODIM Challenge blue-chip partners. But mentioned industries are very broad fields with a large number of possible interpretations and actual examples of use …
That’s true. These are broad industries where we can fill the gaps or needs for new innovative products in three ways – collaboration with partners, mergers and acquisitions or collaboration with startups. An important criterion for collaborating with startups is that they already managed to prove a certain traction, for example with a certain number of pre-orders, followers on social networks … It is also important that their solutions are complementary to our previously mentioned programmes. Otherwise in new verticals, technologies that are interesting for us are cloud infrastructures and apps, the Internet of Things, smart and 5G networks, network virtualization, virtual and augmented reality, big data, advanced analytics and artificial intelligence, operative and critical communications, and emergency communications. We are also looking for solutions supporting mobility and safety of people and things, solutions for digitalizing the energetic infrastructure and infrastructure of the rail and road transport.
If we take the first example of IoT – what kinds of solutions are you trying to get to, what examples of use are there?
We don’t make IoT hardware ourselves because it currently isn’t part of our strategy. But all these devices, such as various sensors, wearable technologies, cameras, tracking devices … will have to communicate with each other. It is impossible to expect that different industries will standardize this. That is why there is a need for a certain “translator” that will gather information from different devices, convert them so that on the other side, smart applications will strip the information through standardized interfaces and do something with it. Information forwarded by the sensors will need to be stored somewhere. We are currently already working on data analytics, namely in collaboration with the Jožef Stefan Institute … In short, there is a lot of such data and Iskratel will be able to do big data analytics based on them.
What about new technologies and solutions for public safety, safety of people and things?
When we talk about pillars of public safety, we talk about solutions such as a single call centre – 112. There are quite a few countries that don’t have that yet. For smart cities, surveillance centres that will monitor different areas will be important – from occupancy of parking lots to traffic, infrastructure, which includes gas, electricity, water supply, sewerage … This is also where surveillance cameras belong, which are not often talked about but are crucial for preventing crime, monitoring traffic, ensuring bigger safety and faster reactions in solving situations. In Istanbul, for example, we recently got a project for unifying surveillance cameras, because they use devices of several different manufacturers but we will try to unify them into a single surveillance centre.
If we touch upon the fields of transport and energetics with the examples …
When we talk about transport, we mostly have rail transport in mind, partially also road transport. What is important here for us are signalling and safety devices and their updates, there is also the communication part such as GSM-R, a private mobile network that Slovenian Railways set up for their needs. In the field of energetics, ESB (enterprise service bus) solutions are important for us. We are interested in solutions that help us combine data from different sources to a certain common denominator, collecting data from sensors in the electrical network, big data analytics. We are also talking to a couple of startups about smart home solutions.
What is then the common thread in planning all these new products?
The common thread through all the four pillars – telecommunications, transport, energetics, and public safety – are IoT platforms, surveillance centers and big data analytics.
How would you describe a typical startup team that definitely captures your attention – what kind of people are they, what is their technical background, experience, also personality characteristics …?
We are looking for high-tech companies and teams developing breakthrough solutions in ICT, cloud solutions, IoT, and 5G. These are girls and boys from very different environments, because people can get an excellent idea completely by accident, through solving their own needs. They are usually people who aren’t only observers, they aren’t passive, instead they actively get engaged when they’re trying to solve a certain problem. From my previous job in a startup company, I also have experience with looking for investors, and I will never forget how someone told us that our product isn’t anything special but that he likes us very much as a team, as people, and that’s why he supported us in the end. I personally find energy important when talking to startups, that the people presenting their idea believe in it and are prepared to invest a year or two of their life energy into the project’s success.
How many startups have you already interviewed since the fund has been founded, how many investments are you planning to close this year, and how are you thinking about future investment rounds?
So far, we established contact with about 30 startups, but there were altogether around 50 startups that introduced themselves to us directly or indirectly. Some teams are in the stage where we advise them to get traction, change their business model and take some new step … In fact, they get coaching from us, because we don’t immediately dismiss teams that don’t fulfil all conditions for investment. Some of them, for example, give us weekly progress reports; through it we get to know each other better and all of this of course makes it easier to make a decision. I reckon that by summer, we will be able to close at least one, if not even two new investments, and at least four or five by the end of the year. I would like to point out that Iskratel encourages startups to get also investments from other investors, because we realize that more people know more and can help in several different areas. We try to make an arrangement to be invited into the next investment rounds of all startups into which we invest, because we are aware that the key to successful collaboration lies in building long-term relationships.
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Get in touch with Iskratel
If you wish to introduce Iskratel to your innovative idea in ICT, cloud solutions, IoT or 5G, contact Roman Kužnar (firstname.lastname@example.org
), manager of Iskratel’s startup programme and director of Iskratel’s business incubator RC ICT, who is in charge of the first contact with startups, or visit their website for more information about their startup programme at the address iskratelstartup.si
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More information about how to collaborate with Iskratel
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Author: Stanislava Vabšek
, Start:up Slovenia Initiative