Introducing Konetik – a connected car startup from Hungary who have won exclusive membership to the GTEC Lab. To be selected for the GTEC Lab, startups must be working on a technology-driven idea with global potential, in any industry. You can read about the other GTEC Lab startups here. Applications are open throughout the year: any startup looking to profit from the powers of German industry and Mittelstand should apply!
The nuts and bolts
Founded by Balazs Szabo, Gergő Nyikos, and Peter Varga in early 2015, Budapest and Berlin based startup Konetik produces smart devices to help companies manage company car fleets more efficiently. Konetik leases its devices to SMEs for a flat monthly fee (EUR 20 per car per month). These are plugged into company cars to record data and transform it to meaningful information, accessible through an online platform and mobile app, to manage car performance, private vs. commercial trips, and driver behaviour. Konetik’s mission is to help companies use their cars more efficiently and safely, and to solve the pain-point of reducing company tax liability to purely commercial trips without the hassle of manual logging.
We talked to Balazs about the idea behind Konetik and its plans to firmly establish itself in the German market and beyond.
Where did the idea come from?
“I come from a business background, having worked in and with startups and leading an entrepreneurial non-profit Kairos Society in CEE – somehow it felt like the right time to set up something of my own. We had a macro-level idea about wanting to build a service around driving data. Cars generate a lot of accessible data, with the current technologies we wanted to make it accessible for the benefit of companies, families and individuals. Being accepted onto European Pioneers was the perfect opportunity to find the right direction. Early in 2015, we came to Germany and spent four months experimenting with the value proposition. From that we realised the pain-point for many SMEs is around managing their company cars, calculating and planning costs, and distinguishing between private and commercial trips for tax purposes. Most companies ask employees to manually log this, which is unreliable and time-consuming. We thought we could build something which plugs into the car to automate that – along with offering all sorts of other automated car management services, such as engine diagnostics and driver behaviour. The product, as stands, gives drivers access to log their journey, which they can do on their desktop or mobile. Trips logged as private are hidden from the company to maintain privacy and are taxable for the individual; business trips are not. In this, there is an level of organic filtering against fraud: individuals will not want to log every trip as business to reduce their personal tax, because with this overview the boss can easily spot patterns and work out that it’s not true.”
“Once we had the idea, we created a prototype and, in parallel, worked on an in-depth market validation, first with online ads and later through interviews with our potential customers. This process really helped define our product. For example, it was clear that the German Mittelstand were not particularly experimental, so any solution we offered had to have a simply designed interface and be very user friendly.
The process was good for business development, too. Right now, we have more than 30 companies in Germany who are keen to use Konetik and this week we’re starting testing with two companies. With their feedback we’ll work on improving the product before releasing it to the next round. Our plan is to offer companies a 60-day free trial and then give them the option to shift to the monthly subscription fee. We opted for this flat-pricing model because our research into the market, competitors, and legacy solutions showed us that potential hidden costs in buying a device stopped business wanting to get involved.
We also had to develop the hardware. Producing the first 50 was complex, but a great practice to test our supply chain (circuit board printed in China, hardware has been moulded in Hungary, testing in-house). Going forwards, most of the manufacturing will be done in China and in larger batches.”
What about funding?
“After having pre-seed financing at the beginning, we got the funding support from European Pioneers to develop the product and validate it on the German market. We recently closed an angel round of close to EUR 200,000 with angel investors and serial entrepreneurs experienced in the automated driving assistance, IT security, mobile app development and corporate law. Among them Dr. Andras Ferencz, the CTO of Nasdaq traded company, Mobileye Inc. (NASDAQ:MBLY) joined us as the Member of the Board. The goal of the funding round is to start the German market entry.”
“Our immediate goal is having more clients using our product. With their feedback, we can improve the device, produce the next batch, and get it to more companies and be prepared for the scaling.”
“Germany is one of the biggest car economies in Europe. We knew we needed to start here. The question was how. Then through a friend, we met with the founders of Globumbus [one of GTEC’s founding partners], who told us about the brilliant platform GTEC is offering to startups looking to access the German market and plug into the Berlin startup ecosystem. We’re not here just to raise money in Germany – we’ve done that in Hungary/US already – but what we need from GTEC is access to the right partners and to be close to our target market. And that’s what GTEC is already providing – so, as an example, later today I’m meeting with Ecovis [GTEC ecosystem partner] to talk about the tax aspects of our product.”
Thanks Balazs – we’re delighted to have Konetik in the GTEC Lab.