Success stories

Lithuanian Private Equity and Venture Capital Association

“PVcase” and “Contrarian Ventures”: The stance should be that you choose the investors, not vice versa

Team of “PVcase”: CEO Deividas Trainavičius, CSO Douglas Geist, CPO Adomas Pažarauskas.
Year of contract: Q4 2018.
Received investment: “Contrarian Ventures” – 250k EUR. “Practica Capital” – 250k EUR. 
The investment helped to increase sales to 2m EUR and to attract around 150 clients internationally.

The solution developed by “PVcase” makes designing of solar power plants faster and cheaper by several times.  The technology not only improves the engineering in the field of solar energy, but also contributes to the achievement of goals of green energy, set out in the strategy “LE 2030” by “Ignitis Group”. Smart energy risk capital fund, which belongs to “Ignitis Group” and is managed by “Contrarian Ventures”, invested 250k EUR into “PVcase”. Rokas Pečiulaitis, the managing partner of “Contrarian Ventures”, believes that “PVcase” will become an example of success in Europe and maybe even in the whole sector.

How did your partnership begin? 

Rokas, Contrarian Ventures: We are non-traditional investors of risk capital, we specialise in the field of energy and electrified mobility. We met with Deividas personally, it was not a pitch in a usual sense. Deividas had a successful company, he lived in Germany back then, and only later I found out that he had been considering a possibility to develop a new product: he was solving a problem inside of his company, which was not the only one facing it. This very problem spurred him to develop software for designing solar power plants.  

When Deividas was considering the establishment of “PVcase”, he was not sure if risk capital was required. We talked a lot, until he finally made a decision that cooperation would be beneficial. It was no quick “yes” or “no”, because quite often companies come and say: “we are seeking x amount of money and we are going to do this and this”. They introduce their business idea, we perform a deep analysis of the idea, technology, product and team, and evaluate how our investment strategy corresponds to them, then all things are considered in the investment committee and the decision is made, which takes from 2 to 6 months. Deividas did not come to seek money, we just found the product and the field interesting: there was no great competition in there and we thought that Deividas was capable of growing a big business, he had a clear ambition and vision. We wanted to be a part of his success.

Deividas, PVcase: At that time I was thinking about coming back to Lithuania to help start-ups operating in the field of energy. Since our first meeting until the investment there was a prolonged period during which we communicated extensively with Rokas. At first I did not see why an investment from the fund would be necessary, however, during discussions with the investors they told me how companies are grown with the help of risk capital, and how they differ from companies growing on their own. Back then, the greatest task was to prepare a technical roadmap and calculate the costs of its implementation. 

Upon having a look at what we have done over the course of two years, I think, we could have achieved that even without the investment, but it could have taken double or triple amount of time, because we would have been slower and more careful. However, since we were in the quickly developing market of solar energy, we had no luxury to waste time and not to take the opportunity. So the decision was made. Then I initiated a poll and our clients were curious about what we were developing, because there was nothing similar on the market, it seemed. I gathered some feedback and got a very long to-do list, for them to buy such a product. It would have taken too long without an investment.

Rokas, Contrarian Ventures: Deividas had been developing a completely different business before – it was project related and not scalable: not all businesses are fit for risk capital. Ninety percent of businesses, as we know them, do not fit for risk capital, because they are very local, do not have a multiplier or a unique technology, they can be outcompeted with a big amount of money, they are not appropriate for fast growth, and most often they do not have a team capable of growing international business, because local business is very different from international. Deividas had been switching from simple business to scalable. He came from a sector in which he had worked for a long time and had knowledge and good connections. So it was not from the scratch: he understood the sector, its dynamics, he knew his partners who he could have relied on. There is a saying that the best companies are those which know by themselves what to do. Such companies treat risk capital not as a counterbalance for every issue, but, instead, take advantage of the strengths of risk capital.

What is the achieved value of your cooperation? 

Deividas, PVcase: For me the most important and beneficial thing is that investors have changed my view on business and its development. Before that, I had always thought this way: if a company grows organically, money helps to expand, but products should be developed and team expanded only when it is necessary. When the company has more orders, then more people might be hired. However, with the acceleration money and thanks to the push of investors, I have changed my mind, now our company even operates differently internally. We are expanding our team faster than it is currently required, but in the long run it generates much more value. Working with investors has changed my thinking and strategic view – planning two or five years ahead. This has been the greatest added value of working together.

Our cooperation is changing, maturing, we better understand who can do what and how everyone may contribute. We have never been a company of such size which would need advisors, or a large network, which could help strategically. This is the topic we discuss most often with Rokas.

Rokas, Contrarian Ventures: For a company it is always important to hire people who are more experienced than yourself and who bring to the company new competences, necessary for raising the business to a new level. Because, one way or another, the goal is to grow faster, and that is only possible with people who had done this before. What is the value of risk capital? For example, such companies as “Sequoia” or “Andreessen Horowitz” are so huge that they have operation teams, which may say: “There, Deividas, an HR specialist for you, you may use this asset.” And those people have 15 years of experience in HR.  This is one level how risk capital works. Another level, which is how we position ourselves currently, lies in that we are focusing on the network of the energy sector: we try to know better all investors, advisors, consultants, clients and to increase their accessibility. Thus we work with companies of our portfolio, save their time, to allow them to direct all their effort at the generation of value of their company, instead of fundraising. 

Deividas, PVcase: Previously, I used to hire people with completely different thinking. When you have money and resources, you develop certain profiles of people or designate desired skills and then you may hire the best on the market. I think, that was our main source of acceleration: whatever expensive and experienced an employee might be, the possibility to hire him/her would create a lot of added value in the long run.

In what stage are you now? 

Rokas, Contrarian Ventures: Different investors focus on different stages of a company, because the team of a company might need different resources. Deividas was in a favourable situation: his company was cash flow positive on month 9, which means that the company spent less money than earned. This allowed Deividas to keep his shares without attraction of additional capital, and to grow fast and successfully.

Some companies, for example, in Silicon Valley, raise money every year and every investor brings their added value, and then the company picks an investor depending on how they might help at that particular stage of the company. With Deividas we have an opportunity to work together for longer, in the context of the board of the company: through the board the technical work is done, the success of the company is monitored, and all other kinds of tasks are done ad hoc. Deividas may call 24/7 and ask for any help, such as, for example, checking if the motivational system of the company is similar to corresponding systems of other companies, and we may help him understand how things are done in this market. The goal is to have as many reference points as possible, to avoid mistakes. We are aimed at minimisation of the amount of mistakes – be it a motivational system which might be in disparity with the market situation, or the strategy of the company, which has not been started to develop in due time – all those aspects may have a negative impact in the long run.

Deividas, PVcase: Now we have come to a stage which is less chaotic, we know how to keep growing. We grow fast, but our processes are prepared for that. We know who to hire and how. People get involved really fast and begin to generate great returns, in relation to both development and sales. Now we are developing new products, so we are planning strategically how they will interact, what clients we will have, how to increase the number of clients and to expand the total addressable market. With investors we discuss quite often how the company will grow and in which directions.

Rokas, Contrarian Ventures: In the case of Deividas, we had always known that the product had a potential to generate 5-10m EUR sales within a couple of years, but each stage has its challenges: one thing is to grow a business of 10m revenue, but building a 100m business is a totally different story. One of the three challenges Deividas has already successfully overcome: he achieved 1m EUR of revenues, or 100k MRR (monthly recurring revenue). Most companies are unable to reach even this first milestone. The success in the first stage is the confirmation that the product is market-fit. Which means that the product is in demand and it is sold successfully. There are numerous other metrics which indicate that the business of Deividas is quite impressive: do the clients stay or leave, do they buy more as a result of onboarding. The next step is to achieve 5m ARR (annual recurring revenue), and then 10m, and after that a large business is made: much effort must be put into expansion, highly experienced people have to be attracted, new offices have to be opened in foreign countries, etc. Every stage will demand different competences and different people – advisors, board members, who already have experience in building such businesses, maybe even in the same sector, in which the company of Deividas operates.

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