Rafał Han, CEO of Silvair, interview for Parkiet TV
How would you recap 2018? It seems that it was a landmark period in Silvair’s history, among others, on account of your IPO on WSE, wouldn’t you say?
2018 was really a very good year, but the truth is that we have had a large number of landmark moments in our history. Our debut on WSE was therefore yet another event of that same type. It has enabled us to gain extensive credibility with our business partners. We are a company operating in the B2B segment. We work with large business partners and being a public company is a source of added value in their eyes. We have also sourced capital we are chiefly investing in marketing and commercialization of our products on the US and European markets.
Your business is very distinctive. Have investors and analysts managed to grasp it, or are they still mastering it?
We are a highly innovative company focused purely on software that operates in the Internet of Things, i.e. communication between physical devices so that they can share information and influence their status. We are devising a unique technology based on a global standard. We are implementing the first application under the concept of the Internet of Things in lighting, or more specifically lighting control. The US market alone has some 8 billion lamps, meaning that it is enormous. When we speak of lighting control, we have two fundamental benefits in mind. Of course, the first one is to conserve energy, while the second one is to give comfort to the people who are in a given venue. Our business is focused primarily on this topic at this time. We are chiefly pursuing commercialization on the lighting control market.
To illustrate this to a greater degree... your system makes it possible to turn lights on and off depending on whether they are actually needed, or to control their intensity?
That is exactly what I mean. Let’s imagine a warehouse in which there are many aisles for forklifts to maneuver. The lights in such a warehouse are turned on the entire time while they are only needed when a forklift is actually at work. Thanks to our solution we are able to conserve approximately 80-90% of the energy. We operate in the area of modernizing school and office space, warehouses and parking lots where LED lighting is selected. The choice of this type of lighting is obvious to users; however, what is not obvious is how to control it. Previously, such control was not overly popular as it entailed a very high quantity of indispensable hardware to control these processes and great skill to do the programming. What Silvair is proposing is a very simple process that is available practically to everyone. Thus, we can adapt every building to conserve energy and make it user-friendly. At present, we are showing the first buildings in the United States and Europe that are employing this technology. These buildings are proving that this technology works, while our partners want to take part in the lighting revolution.
Recently you reported the signing of a cooperation agreement with the Zumtobel Group. What does it entail and when will you start to derive benefit from it?
Zumtobel is a large company operating on the European and US markets. Everyone is assuredly familiar with the brands of Philips and Osram. Zumtobel is just behind these companies. The company is demonstrating the utilization of all available solutions at trade fairs. This contract is of such significance to us because such a large global player has elected to work with us and a new standard. This gives us a lot of credibility, also from a marketing perspective, as the message conveyed to the world is that such a major player has decided to back our technology. Moreover, it is being actively promoted on the market, and this also represents great value. In addition, products are being developed that are based on our technology and new projects will emerge from these products any moment now.
You collaborate with international companies. In your opinion, which market offers the greatest potential?
It is true that we are working mostly with entities from outside Poland. North America is a crucial market for us. Europe is, too. On account of the size of our company, we still have fairly limited resources, including time. That is why we are focused on the markets offering the greatest potential. For this reason, today we are chiefly forging partnerships on the US and European markets. These markets are a bit different; but we always strive to reach clients using our technology through partners. Can we therefore expect to see more agreements of this type this year? What plans does your company have for this year? 2019 is above all a year of implementation for us. Starting with small projects through which we can lend credibility to our business model, followed by our pricelists and all of our technology. Naturally, we will continue to move along the path of strategic partnerships. The entire time we are working on the US market, which is a highly fragmented market. We are endeavoring to reach companies of various sizes there.
Let’s revisit 2018 and your IPO. Have you already spent all of the money you obtained at that time?
Not at all. We are constantly investing that money, especially since the quantum of proceeds was fairly large from our vantage point. In particular we are investing that money on the US and European markets, and as I mentioned, this is being done chiefly to build sales channels and marketing. We are continuously strengthening the Silvair brand as a very reliable partner in lighting control. We still have
a lot of work to do. Let’s remember that this market has been operating for some time now, while the entrance of a new brand also requires time. We intend to play a key role in the lighting control business.
The IPO proceeds will be consumed at some point. Thus, the question about what’s next? How do you intend to fund your business?
There are many ideas on how to do that. However, for now, the time has not yet come to touch on that subject. We still have a lot of money. Today we are mainly concentrating on proving to the market how simple the solution we are offering is, how many projects we are capable of launching, how efficiently they function and how much energy we are able to conserve by running them. That is the most important thing at this time.
Your financial performance to date indicates that your company is generating a loss. When then will you generate your first earnings?
I am not able to state a specific date when we will be in the black. Naturally, that is a material issue but please remember that we need to do a lot of work to “send that rocket into space”. We are proposing to make a very large change; that is also why we need to make an investment and that is what we are concentrating on today.