After leaving Madrid I did a small stop in Milan to visit some old friends, but it wasn’t there where I’d meet the next start-up of the week, Velohub and its flagship product, the Blinkers. It was a bit more in the north, in Zurich, the biggest city and economic capital of Switzerland.
I met Javi (CEO and co-founder) at the office of Velohub.
Velohub is a start-up that manufactures and designs integral safety solutions for bicycles, but without leaving out the design or the user experience.
Blinkers is their first product, blinking lights with a refined design, with brake lights, lasers that mark a safety perimeter on both sides of the bike at night and position lights sensitive to darkness.
Let’s go in depth on what’s behind this start-up.
*Conversions Francs-Euro at January 2017
Who is behind Velohub?
Behind Velohub are four Spanish friends aged between 22-25 years old and all students of the ETH of Zurich, the place where they all meet.
Javier Fernández, the CEO and interviewee studied a masters in management. Javier Bilbao, in charge of sales and marketing, studied a masters in technology management. Nico studied a masters in mechanical engineering and last Toni, with a masters in electronic engineering but he would later leave the project to join a Swiss drone company acquired by GoPro.
As Javi told me, the structure of the team was organised according to attitudes and aptitudes. He had been project manager for a year in P&G Belgium and was selected as the CEO.
“The other Javi is a master in the one to one, so he went to sales to make the contacts. Nico is the mechanical engineer so he handles that area. When Toni left, we incorporated Angel in part time in the area of electronics. He is a genius! When he was 18 years old he built his first 3D printer and full time we have Carlos, another crack who manages the whole area of electronics.”
How do you come up with the Blinkers idea?
“I personally didn’t arrive in Zurih with the idea of building a start-up. I came for a masters in management, but that’s it.
The right moment was when we were getting out of a lesson in technology entrepreneurship. It was an optional course taught by a serial entrepreneur. We left the class thinking that we had to build something.
It could be said that we were affected by the environment that surrounded us. We saw how lots of people were creating things and the incredible movement of start-ups and spin-offs around us, so we went for it.”
It was interesting to me to see how in this case, the idea of starting something came even before knowing what to start. This example makes it clear how important the ecosystems are in the world of start-ups.
One of the key points is confidence. When you see that people around you, with the same capabilities as you have created start-ups, you might start thinking… why couldn’t I launch a start-up?
“After we decided to start something, I always had a notebook handy to write down anything that came to my mind. I didn’t want to miss any potential idea.
We thought about bikes. We all like biking and some of us were even working as bike-couriers. We saw that it was a sector quite within our reach.”
Once they chose the market, they started to refine the idea of Velohub and its first product, the Blinkers.
“We realised that everyone was hyper-connected nowadays. However, when it comes to bikes, people don’t use that much technology on them. Apart from the mechanical design there isn’t more added value. The integration of electronics in the bikes of the “mass market” is totally lacking.
We thought first about the indicators. Here in Zurich, you see people raise their hands when they are going to turn and that’s a risk. Moreover that system doesn’t work at night. Wet ground and the tracks of the tram all over the city do not help either.
We keep searching and thought about not only the indicators, but a more comprehensive solution and with a beautiful design. We looked at the market and there were already some indicators from China, but it wasn’t a proper integral safety solution. Plus the aesthetics wasn’t the best.
We used to see comments of people saying: I’d never put that hideous thing in my 700€ bike! So from the beginning we thought about doing something useful but taking care of the appearance.”
After some brainstorming and days writing down on notebooks, they found the product and start-up they were looking for.
How do you set up Velohub?
It was around mid-November 2015 when they met to further develop the ideas in one of the university buildings.
“From there, it was what I call the swimming pool effect. It’s when you enter a pool with the leaning floor in which you start to walk to the deep end and you end up totally out of your depth. That’s what happened to us.
In the same course where we got inspired to start something, we heard that a member of the ETH entrepreneurial club announced there was a competition of ideas and the winner could get 10.000 francs (9.395€).
At the beginning we didn’t think about presenting the idea. We hadn’t done anything, just a couple of meeting. In the end the team pushed and we decided to try our luck.”
It was already December 2015. They chose one weekend and further refined the idea of the Blinkers. In the competition there were 30 projects, 4 were going to the final chosen by a jury and one for popularity on Facebook.
“We thought, hey! Here is our chance! We believed in our possibilities of leaving an interesting digital mark and getting through to the finals this way. So during the next few days contacted as many people as we could to support the project. In the end we made it to the final as the most voted project online.
We made a couple of designs, pretty ugly. Horrible compared to what we have now, but it worked.”
And what about the funds?
They came third in the final and won 3.000 francos (2.818€).
“With money from the prize we bought Carolina, our 3D printer, which is already one more member of the team.
But with that money we couldn’t do much. The interesting part is that in the audience of the competition there was a guy who owned a start-up accelerator, Swiss Start-up Factory.
He offered us his acceleration program. We’d start in February 2016 and we’d receive training, access to a support team and other facilities worth 50.000 francs (46.972€) in exchange for a percentage of shares when we set up the company.”
Later, they did a prize crowdfunding on Kickstarter. They did pretty good and got 50.000 €.
“The Kickstarter round was a way to validate the idea. We saw that there were people interested in the product and we got a critical mass of 500 buyers that bought the product in advance. This was priceless in terms of feedback.
After the Kickstarter we set up the company as an Inc. That costs 100.000 francs (93.945€) in Switzerland… It’s a lot of money but without it we couldn’t do much here. We had to input some money from our pockets too.”
But in Switzerland everything is expensive and the cost of living is high, so they had to keep raising more money.
“In September 2016 we closed a funding round with private investors in which we got 220.000 francs. With that money we survived for several months but now (Jan 2017) we are negotiating another round.
The amount isn’t clear yet. It’ll depend on the volume of Blinekrs that we are going to manufacture and that will depend on the contracts we are able to sign with distributors. It’s like the fish that bites its tail. But I can tell you that the amount will be between 300.000 and 500.000 francs (281.835-469.725€).”
Do you have any partner to start the mass production?
“In September 2016 we made an agreement with one of the best Swiss companies of engineering, Zühlke Engineering. We moved to their offices to work hand in hand with its team of engineers.
They were looking to enter into the start-up world. They offered for us to participate in a specific support program for start-ups. In exchange, they’ll have us as a success story, in case everything goes well. “
As Javi told me they are very happy with their partners and the added value the provide to Velohub.
“It’s great working with them, especially from the cost efficiency and risks minimisation point of view. In a chain production it’s very easy to screw everything due to small mistakes. Working with an experienced company that have already done these processes a million of times gives us confidence and tranquillity.
If there was a small mistake and we had to re-work the whole batch (they estimate it would be of 7.000 units), that would be impossible for us to handle as a small start-up.”
To date (end of January 2017), they are at the point of selecting the necessary tooling to start the production, which is supposed to start in June 2017.
“In Kickstarter we were too ambitious. We said that the product was going to be ready for February-March, but we were too confident. We realised that we could further improve the product. We want the Blinkers to be perfect and remove all the production risks that may show up.”
In every start-up there are always moments of stress and failure, so I try to investigate more about this issue.
“Uff… we’ve had a lot of problems. We had a very “funny” situation the day before an exhibition organised by our accelerator. We always have a prototype of the Blinkers to show. At that time we only had one and we had a photo-shooting. Obviously we had to bring the Blinkers to the exhibition so we were extremely cautious with them.
We were in the richest area of Zurich. Suddenly, the magnet of the Blinkers failed and it fell on the ground. Before we could react a shiny and beautiful Ferrari drove over them and destroyed them completely.
We didn’t have a prototype and next day we had to show it to a crowd of 200 people. You can imagine… the whole night working: welding wires, painting and 3D printing. Next day we were all with bags under our eyes and without sleep but we managed to get a functioning Blinker. “
How is starting up in Switzerland?
“The regulatory system is Switzerland is pretty suitable for the proliferation of start-ups. All processes are simple and efficient but… It’s very expensive. If you have to hire some lawyers for the paperwork the costs will skyrocket.
Here the accelerator was very helpful, they already had some templates, which saved us so much time.
Setting up a new company requires a large amount of funds compared to other countries. For a private limited company you need 20.000 francs (18.789€) and for a limited liability company (Inc) 100.000 francs (93.945€).
The ecosystem is pretty mature here. There are many initiatives, public and private”.
With the information I got from Javi, I did a little bit of research about the start-up ecosystem in Switzerland. One very interesting public initiative is the one promoted by ICT (Commission for Technology and Innovation). In their site they define themselves as: the federal agency responsible for encouraging innovation through the provision of funding, consulting and networks. It also works to ensure that scientific research contributes to economic growth.
Within this initiative there’s another one called “CTI Start-up” already started in 1996, way before the trend of the start-ups started in Europe, with the slogan “bring science to market”. They offer coaching for future start-up founders.
On the private side, some of them would be: the accelerator Swiss start-up Factory, ETH entrepreneurs club, Fintech Fusion in Geneva, Kickstart Accelerator, Startup Camp, Venture Kick, Impact Hub Zurich or Masschallenge with one of their global hubs in Switzerland.
For those interested in starting-up in Switzerland, you already have some places to start looking for help. No doubt there are plenty of options.
And what about the future?
“The main target is to be in the stores by September 2017 and create a solid distribution network in Europe. Switzerland, Netherlands, UK, Sweden, Denmark and Belgium are the countries we have in mind.
Talking about sales, in 2018 we want to sell 20.000 units. We are taking other players of the industry as a reference and how they are doing. This estimation is a conservative one though.
If we manage to make some B2B (business to business) agreements with bike manufacturers or town halls to install Blinkers in their bikes, we could be talking up to 40.000 units.
The final market price will be around 90-140€. It will depend on the features you choose.
But this young team already has a clear vision of what they want to achieve.
“The idea is to gravitate to the IOT (Internet of things) concept. We want our accessories to pick up information from the ground and be connected to the smartphone. User experience and safety are our key elements.
In 5-10 years, we would like to be the reference in security, innovation and user experience in accessories for bikes.”
Any advice for other entrepreneurs?
“The first one: jump in the deep end. We sometimes procrastinate because we don’t have ideas, but there will be always an excuse to say no. I have a job, now I’m focused on this sport; I have to finish the university first, etcetera.
The easiest thing to find in this world is an excuse; if you want you can always find it. The thing is to start, even though you don’t have an idea, but start looking for something and be proactive.
The second one would be: ask for help. I have realised here that people are very willing to help. Even rich people with little time pay attention to you. People enjoy discovering new things and giving tips.
I don’t advise keeping an idea to yourself for fear of being copied. The idea must be validated and any opinion could be useful. Receiving advice, being in the ecosystem, going to meetings and talking to people are essential points to succeed.”
With these tips in mind I left the office. It was a very interesting talk in which I saw first-hand a couple of things.
The first is that the ecosystem is fundamental for the success for a start-up. Therefore the importance of encouraging them by private and public organisations.
The second is that it’s not necessary to have a team of 100 engineers to mass-produce a product with some technology on it. It’s enough with motivation and a dedicated team, although a hand from some experts and some cash is always welcome, specially if the country is Switzerland.
Thanks so much for everything Velohub! By the way! If you want to know more about the progress and don’t miss the launch of the Blinkers, sign up here.
This is all for this week! Next week we’ll cross half of the globe and land in Asia, where we’ll meet a start-up with the most innovative/interesting product we’ve seen so far.
Sign up down here and don’t miss it!