Success stories

Lithuanian Private Equity and Venture Capital Association

“Eldes” and “LitCapital”: Cooperation with the Fund is Like Support of the Elder Brother

- Team of “Eldes”: CEO Artūras Taicas
- Year of contract: 2014
- Achievements with the investment: numerous innovative products, such as “Fumerex” that holds 5% market share in Estonia; products of the company are now exported to more than 80 countries.

More than 90% of its production “Eldes” exports abroad, products of the company may be bought in eighty countries around the world. In those markets “Eldes” competes with the great producers of the world, such as “Jablotron”, “DSC” or “Paradox”, as a result of the ability to integrate all functions of modern smoke alarm systems, yet the head of the company Artūras Taicas and the representative of the “LitCapital” fund Julius speak of their success modestly: “We think that much more may be achieved”.

Why did you decide to cooperate?

 

Artūras, Eldes: We have cooperated for six years already and I think that our intentions coincided with those of “LitCapital” back then. We wanted to achieve good results and to create added value. As I call it, and always try to ensure it – “the chemistries must match”. It means that goals of both sides must be clearly visible and contribute to partnership. This way very interesting results may be achieved.

We contacted “LitCapital” because we needed financial resources, but we did not have tangible property back then. The property of our company was intellectual – the people, because we are software developers. For such institutions as banks it is hard to measure and demonstrate the value of such property, to prove the growth potential of such business, therefore banks do not finance such businesses or do that very carefully. Such institutions do not trust a young company, even though it may have big ambitions. In contrary, other institutions, such as risk capital funds, are able to look deeper and to see a perspective, a distant horizon and distant achievements, therefore they allow to attract money easier.

"In our understanding, it is important for Lithuanian companies to create their own products, not only to be service centres providing cheap labour force, because the latter ones are not sustainable in terms of Lithuanian economy."
Julius, LitCapital

 

Julius, LitCapital: When we considered investing into “Eldes”, for us it was important to see that this company was engaged in activity in which we believed. This included its technological direction, its know-how, R&D activities, which took place in Lithuania, not elsewhere, and the product itself was being developed in Lithuania. In our understanding, it is important for Lithuanian companies to create their own products, not only to be service centres providing cheap labour force, because the latter ones are not sustainable in terms of Lithuanian economy. If we are able to invest into a company which develops its own products, we believe that such investment provides great added value both for the company and for the economy of the State.

How did the fund contribute to the success of the company?

 

Artūras, Eldes: We cooperate with “LitCapital” in several fields, and in all of them we have had, and still continue to have, amazing results, and we keep cooperating. One of such things is financial discipline: it is of great importance to obtain reports, profit and loss accounts monthly. We also have a common board in which we discuss future perspectives. It is also very important to share experiences: members of the fund also work with other companies into which they invest, thus they have valuable information and practical experience, which provides a wider view and allows to pinpoint new opportunities. The fund also created synergy which brought us to better results: if we compare data of 2012 and 2019, we may see that the growth of the company was not in percentage, it was in times, and its results both in terms of turnover and EBITDA have been very stable so far. 

I think, one of the most successful projects for our company is that we have partnered up with the security services company “G4S” in Estonia. We have created a smart gas detector, which is sold in tens of thousands of units, and holds a 5% market share in Estonia. Over the last 2 or 3 years this device has helped to save hundreds of lives. Just imagine: this is such a unique solution that it allows to detect fire or its very beginning when people are not yet able to visually notice it, however, the sensors of the device may already spot it. What happens next? A signal is sent to the security company, its staff promptly arrives to the place and helps to avoid any accidents. We discussed this product extensively with “LitCapital” at the stage of its original inception as an idea, and later during the implementation stage. The fund provides a very Scandinavian touch, with its approach to protection of human life and health.

What was the greatest value created as a result of your cooperation?

 

Artūras, Eldes: When the fund invested, we did not know their people so well, but they brought a lot of money. We had to use that money wisely: to invest properly, to build a team which would be responsible for all the implementation and creation of value. By working together we knew each other and our competences better. Then we focused on the creation of specific added value.

Cooperation with the fund is like support of the elder brother, because you can always ask questions about things important for the development of business. And you always receive a response, no matter positive or negative. If it is a negative response, you do not stop, you try to consider other options. Situations may be different, just as right now, for example, – who would have thought we would have to talk about the coronavirus pandemic? Nobody expected that, but currently in our common board we are discussing not how to limit ourselves, but how to keep generating value, regardless of circumstances.  And our results are improving, because it is the time for opportunities. And the fund allows to understand that in practical examples. In our case, the fund does not allow us to slumber in our glory: it directs us and helps to realise how financial aspects might change in such situations. We receive a lot of statistical data to analyse and to rely on for decision making.

What stage of cooperation are you currently in and what are your future goals?

 

Julius, LitCapital: We made an investment into the company previously, now we aim at developing the company further and we plan to invest more, in order to introduce new products, to refine the business model and to make it sustainable. Our main focus is on the model of sustainable and ever growing business. We do not think that everything is achieved. Since we invested at quite an early stage of the company, we think that still a lot can be done, for sure.

"Cooperation with the fund is like support of the elder brother, because you can always ask questions about things important for the development of business."
Artūras, Eldes

 

Artūras, Eldes: We see it the same way, and that is so important. Right now we are working on the development of a unique product, which is not available on the European markets, as for now. This product is related to smart security systems, to health, property and automatization. It is currently our common goal, common direction, which keeps us bound together and drives us forward.

From the staff of the fund we expect support, contacts and help abroad, because more than 90 percent of our production we export to European and other countries of the world. The contacts that the fund has available, allow us to ensure a warmer approach to potential clients. This is essential.

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