The story of COMODULE started about seven years ago and it feels like it’s taken out of a drama. The team had an idea for a totally different thing at first. They were able to raise some money from an investment fund, literally burned all of it and then started from scratch with a totally different idea and no money.
The company is now so successful that the CEO Kristjan Maruste turns down any request from investors. Now COMODULE is focusing on expanding the business portfolio and moving the parent company back to Estonia.
‘What is a one-pager, what is a business plan? Let’s Google them’
Many of the successful startups and technology companies you hear about daily started because their founders thought the world needed the product they were working on. COMODULE is different. Seven years ago, five electric formula car enthusiasts were playing with the idea of their own formula car, but they didn’t have enough money to build it. Hearing of the investment fund Prototron, aimed at financing prototypes, they straight away applied for it.
To their surprise they were picked for the next rounds and eventually were announced as the winners. After receiving the money, it took the team only two hours to spend it for components to build the car. Six months after the first application to Prototron they were out of money, the prototype had literally burned down and they were thinking of what to do after their university studies.
But every fairy tale has a good ending. The team got back together and looked at the business plan they had submitted to Prototron. They saw a real need for a modular battery management system. Over the years, the idea has matured into more of an IoT solution for small electric vehicles.
The story of COMODULE taking part in Prototron is quite interesting. For example, the prize money was transferred to CEO Kristjan Maruste’s personal bank account without having signed any prior documentation. Back in 2012, Prototron was just starting out and now they are more mature and don’t transfer money without contracts in place.
After submission they were asked for a one-pager and a business plan. Having no prior experience with these documents they Googled them and wrote something up in one night. To the finale they took a funny looking prototype with them. According to Maruste, the jury told them, ‘Your business plan is childish and ludicrous but you guys rock’.
With the 10 534 euros they got from Prototron they founded a company called Formula Battery Management System and built the car. The battery management system they built was meant to override the safety features in the batteries. The race ended for them with a melted and overheated battery.
‘We didn’t have a sincere desire to launch a company but eventually we did it and it’s been a great benefit,’ says Maruste.
Estonia could be the international parent company capital
Six months after recuperating and deciding to continue with the idea, the team decided to go all in and take part in an accelerator program, which would let them grow the idea rapidly. They were faced with the option to go to China, Germany or stay in Estonia. They chose Berlin because they saw that the Germans were thinking about mobility.
After visiting fairs full of small electric vehicles they knew what their field would be. They wanted to connect electric bicycles to the internet. The market was doubling each year, so the market potential was really high. Three out of the five founders went to Berlin with the initial thought of staying there for a longer period of time.
Maruste himself was in Berlin for a year. One member lasted for eight months and another for a year and a half. Right now the company has only one employee in Germany and about 40 in Estonia. To this day, the parent company of COMODULE is registered in Germany but they are going to move it over to Estonia this year.
‘The reason we chose Berlin is that we wanted to be closer to our clients and understand the market. During that time, we saw Germany as the most important market in the world,’ says Maruste.
Having first-hand experience doing business with big international companies, Maruste sees that there is no need to have a parent company in the same country that the partners are from. Most of the big names have subsidiaries in every country, so doing business with them is no problem. From the beginning, COMODULE signed every possible contract through their Estonian subsidiary. The reason they are moving the parent company back home has to do with bureaucracy.
A prime example that corroborates Maruste’s position is Bolt (formerly known as Taxify), which raised money from Daimler and Didi Chuxing through the Estonian parent company. ‘That means they went to the Estonian notary. If you are an attractive enough company then no one will miss out on the investment opportunity,’ says Maruste. He explicitly says that they don’t want to waste time on German bureaucracy.
No need for any new money from investors
COMODULE has had five successful founding rounds and according to the CEO they are not seeking any new investors at the moment. Right now they are even rejecting proposals from possible investors. Last year, most of the growth of the company has come from electric scooter companies providing short-term rentals. Bird and Lime, the best-known companies in the field, are not clients of COMODULE.
At the moment, COMODULE is offering two solutions for short-term electric scooter rental companies. Either they offer the full service to you or they provide you with the device and API. It takes only about 30 minutes to set the API up and get the system running. Whichever option is chosen, COMODULE gives their customer the option to modify all of the capabilities. For example, the customer can change the maximum speed of the scooter over the air. But regulating the speed is also possible with GPS coordinates. If a scooter enters the Tallinn Old Town, the speed would be reduced to a maximum of 15 km/h.
Maruste is an avid believer that it is possible to produce hardware in Europe. COMODULE itself is built in Estonia with parts gathered from all around Europe. The CEO does not want to disclose all of the news coming out of COMODULE this year but he gave hints of launching their own consumer-focused product.
COMODULE has clients all around the world, the devices have been shipped to 50 countries. There are over 60 000 COMODULE devices active at the moment and Maruste aims to hit 100 000 devices by this summer. He would be happy then because his hometown of Tartu has a population of around 100 000 people.
Maruste hopes that more and more international companies see the benefits of operating a business from Estonia and move their headquarters here. He hopes that the government sees this as the next opportunity to grow Estonia even bigger. Having first-hand experience of how to run a company in Germany, he says that it’s 100% true that, from the business administration and bureaucratic side, Estonia is the right place to be.
In regard to that, Maruste is a bit critical towards TransferWise, a successful Estonian startup based in London. After the decision for Brexit was made, TransferWise announced that they will move their operations over to Brussels. ‘Why are they moving to Brussels? They don’t have anything there. They might as well just move their business to Estonia,’ he says.