REOR20 Episode 2: Navigating Turbulence

An article by Raluca Maria Nedelcu

New week, new article, new location. We came to a bar by the Sihl river in Zurich, the ultimate after-work locale; flamingo-pink spritzes litter the tables all around, people chatting all jolly. As I set-up my iPad’s keyboard, I am not sure this is the best place for an interview, but here we are. We are about to delve into the narrative starting from the moment when REOR20 was finally incorporated, marking the beginning of the eventful initial years. As Danny settles comfortably into his chair, he prepares to share the exciting ride ahead.?

“The ESA BIC Switzerland?competition?was won. We were officially in their much-coveted incubation program, so this should have opened doors for us, right?

Our working assumption was that because we were building a brand-new technology, with which we were addressing an unsolvable problem, and we had the right set of people on board, everything would be easy-peasy. Who wouldn’t want our amazing solution? - we thought.”

“So where would you say the most challenges arose from?” I interrupt quickly.?

“Well, no one in our team had raised money before. Yes, we had a great idea, great tech and an interesting problem to solve. What we did not have was a specific solution for a specific client or audience. What we had in our hands wasn’t a marketable product. It was something that rendered most of our audiences speechless: The tech was impossible to understand, the application was difficult to explain, as was as the very problem we were proposing to solve. We weren’t exactly “the next Uber”. You could not define us by association. Even our client definition was rather murky. We were looking at good potential candidates - governments, insurers, banks, commercial enterprises – but none felt 100% right.

As a consequence, the first financing round was super difficult for us. Thankfully we knew enough people who trusted us as individuals and who decided to invest, despite not being entirely sure what we were doing or how their investment is going to pan out. The personal trust people had in us, the team – in that we would deliver a healthy product and of course a good return on their investment – is what pushed us forward. We are eternally grateful to that initial batch of investors. Upon reflection, now I could easily say that?I would not have invested in us back then, knowing what we know now - comparing the current tech to the one years ago. Crazy, huh?”

“As we went on developing, we had good instincts about what our tech needed to be, but we weren’t even sure it would be possible. We invested over a year of work in order to reach a good level of confidence in our AI and its capabilities. And as the technology was advancing, so was the business side: The client segments became clearer, but we weren’t yet sure how to address their everyday challenges, what they looked like - pragmatically, on the ground. We wanted to understand where our tech could show-up on a customer journey.?

At the same time the COVID pandemic hit, so communication and personal contacts – absolutely fundamental for funding - went dry. Uncertainty is an everyday presence in start-ups, of course. We expect that. But – as we all know, the pandemic enhanced all of it, making it at times difficult to see where the next salaries would come from. Investors embraced conservative business models rather than risky, big ideas. It was more difficult than ever to get anyone excited about our technology.?

Through sheer determination, we went on and started taking on small projects: We worked with City of Luzern, which made us think we should start focusing more on governmental organisations. Soon however we were introduced to the reality of long governmental financing cycles. Not exactly suited for fast-moving early-stage start-ups. The collaboration was a success still. Then we did also some work for one of the largest energy utility companies in Switzerland. With this project we learned that in order to replicate what we did for them; we would need a huge salesforce - also impossible for a small start-up.

We kept having the feeling that insurers were the right client, but despite initial enthusiasm from the ones we met regularly, they were never moving forward with us. Which confirmed once again that we needed to really comprehend their concrete challenges in order to add value.?Slowly but surely, we are now getting there.?

Today our technology is performing well. We defined what the insurance market needs from us, we are building relationships to clients, we are winning awards…?

…and all it took was 4 short years, countless sleepless nights, repeated risk of bankruptcy and never-ending rumination on opportunities for improvement. We raised over 2 million Swiss Francs to date, and in the past year we boosted our team by getting Julien Schroeter and David Schenkel on board. We are about to fly.”

I look up at Danny and while he is proud, I feel like these 700 words are nowhere near to doing justice to the last 4 years. One can say that that it only takes strong stomachs and great vision. And some good friends I would add.

Speaking of good friends, in our next article we look at the REOR20 team and their culture. Stay tuned and make sure you follow the page.?

#startup?#founders?#floods?#technology?#venture