How Innovation Stalls - Two Case Studies In Poland
Every drive a SpinCar or ride an IzzyBike? You probably never will, since both have been unable to raise funds necessary to go to production. The trouble today with *heavy* startups.
Two great Polish inventions looked destined for global success: SpinCar and IzzyBike. But two years later, both projects have stalled. What happened?
SpinCar- a perfect civic car.
D.E. Bogdan Kuberacki remembers the eureka moment that day in Warsaw. He had been thinking about a small vehicle that could work for the disabled. The goal was to create a vehicle with an electrical or pneumatic motor with two parallel wheels in the back and one in the front, that could spin around 90 degrees.
He took his models to a trade fair, and came home with a prize. The invention was reported on by the international media, and people from more than 50 countries visited his website. All were intrigued by the possibility of eliminating the need to drive in reverse or parallel park -- a vehicle that could fit everythere and was ideal for carsharing.
Kuberacki waited for the rush of investors, lured by his solution to parking problems and city congestion. He's still waiting...
The main problem is that although some investors are ready to help, no one wants to be there for the starting phase, since the details about production, finances, and marketing are not certain. Polish and Italian angel investors have balked and Venture Capital funds, which tend to invest about 10 to 20 million PLN, ($3.1 to $6.2 million) do not want to take SpinCar under its wings. Business incubators, Kuberacki says, are more interested in taking money just for evaluating the probability of success.
Starting the production would cost about 20 million PLN, but there are also the additional costs of related services. This is just one exciting Polish invention that has stalled before even getting started.
IzzyBike- a cycling revolution
Meanwhile, Marek Jurek had dreamed up a pedal vehicle that could be rented by tourists in resorts -- that was easy to carry.
With IzzyBike, there would be no website to try to drum up interest, just a demonstration model that was produced to show investors.
It doesn’t look like a regular bike- the seat is different and there is a different way of handling it. Eighteen months ago, the bike got a gold medal at the Nuremberg International Trade Fair iENA. It is the only bike in the world with a 2x2 drive and the only vehicle that can be folded with just one hand, thanks to a two-piece hanging chain. The real secret is a small disc and a rope connecting the steering system. Thanks to that, the bike is stable: it doesn’t fold while riding but only when we want it to. One mechanism- two different functions. Magic!
How was it invented? Jurek, an engineer working in one of the Warsaw Physics institutes, wanted to have a folding bicycle for himself. Those that are on the market are either too heavy or too big, so he decided to make a better one.
Jurek is more optimistic than his SpinCar counterpart, but still admits that if he doesn't find funding, his project is doomed.
A demonstration model is not enough for Polish factories or angel investors. The only investors that were interested were Technology Park in Krakow, a national crowdfunding platform, and one distributorship from Italy.
The inventor says he wants the bike to be produced in Poland, but only big companies with major equity can count on support here. If nothing works, he will be forced to look for funds abroad.
A desire for blissful profits
There are a lot of people with ideas, others with money. Investors are driven by doubts: is the market ready for another small car (after Smart)? Will clients consider it safe and comfortable? An inventor focuses on the technology and innovation.
Technology that can’t be commercialized is useless. It is not only about interesting ideas but also about the evaluation of cost structure and rate of return. If they are convinced, after about six months investors could be ready to put in up to $1 million, but will expect to sell the company in a few years for a substantial turnover.
The statistics show that only every 20th invention gets funded, and these are mainly digital ones where launching costs are lower. The victims of this system are the inventors with good, but expensive, ideas. And perhaps us too -- we might have been happy SpinCar and IzzyBike customers...